Posted on 02/05/2019 8:39:25 PM PST by LibWhacker
Just as the wine industry is discovering that many Millennials find wine boring, new plantings of grapevines are gradually turning California from 32 Flavors into a chocolate, vanilla or strawberry state.
The State of the Industry presentation Wednesday at the annual Unified Wine & Grape Symposium in Sacramento wasn't quite as gloomy as Silicon Valley Bank's dark take on the future two weeks earlier. Instead of "duck and cover", it was more motivational, as grapegrowers were encouraged to strap their boots on and fight for their future.
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But the numbers for the immediate future aren't promising for the industry – though they might be for wine drinkers. That's the good news: prices are not going up.
Why not? Wine may have to recapture the image of cool; to not be your father's beverage. As Glenn Proctor from the Ciatta Company grape brokerage put it: "I don't know if another wine in a 750ml bottle, cork-finished with a pretty label is going to get Millennials involved."
Here's a mind-boggling stat courtesy of Nielsen. Rosé, we know, is as hot as wine gets. Rosé sales continue to grow fastest of any wine category in the US (as well as in France). Rosé wine is so popular that it's a cultural phenomenon. Now comes the slap in the face.
Hard seltzer – sparkling water with alcohol added – currently sells as much in the US as rosé wine, said Danny Brager, Nielsen vice president of client services. And hard seltzer didn't even exist six years ago! But hard seltzer appeals to Millennials, especially those who perceive it as somehow healthier, and perhaps more interesting, than "traditional" alcohol. And you don't need wine grapes to make hard seltzer; any industrial alcohol will do.
California apparently had its biggest wine grape crop in history in 2018 (we won't know for sure until the harvest report, a victim of the Trump shutdown, is released.) Projections are for the crop to be even bigger in the next several years. But of the 2018 crop, a much larger percentage remains unsold than in recent years: especially Cabernet Sauvignon. In the past, unsold bulk wine has mainly been from the hot San Joaquin Valley, but currently the Central Coast has the biggest inventory problem. Even Napa and Sonoma Counties have more wine right now than they can sell.
This backlog of unsold grapes drives down prices growers can charge. One presenter showed a video from a Central Coast vineyard of a mechanical harvester spraying grapes onto the ground; the grapes couldn't be sold, and the vineyard owner decided they would be better off as fertilizer.
From the wine drinker's perspective, a big year for wine grapes globally in 2018 will prevent wineries from being able to raise prices. Moreover, even after a historically small global crop in 2017 due to weather events in Europe, wine production is still outpacing wine consumption.
"The world has gradually built up into a global grape surplus," said wine economist Mike Veseth.
California still dominates the US market, responsible for about 60 percent of all wines sold in the country. Meanwhile, of the new plantings in California, the overwhelming majority are the three big varieties.
"Two-thirds of all coastal acres, by 2021, will be Chard, Cabernet or Pinot," said Jeff Bitter, president of Allied Grape Growers. "They are the chocolate, strawberry and vanilla of the wine industry. Here they are."
Is this a problem? Several speakers talked about how wineries should work harder to attract Millennials, who aren't as interested in wine as older consumers.
To reach Millennials, "we are trying to market outside the chocolate, vanilla and strawberry of varietal wines", said Marissa Lange, president of LangeTwins Family Winery. "We are trying to showcase some of the exotic and interesting varieties that grow well in our area."
But Veseth told Wine-Searcher after the symposium that he wasn't sure different grape varieties are the answer. Silicon Valley Bank's Rob McMillan, who was in the audience Wednesday, said the same.
"It's the marketing of wine that needs to evolve," McMillan told Wine-Searcher. "We keep chasing booms. Remember the Moscato boom? It lasted what, three years? People spend too much time chasing the next hot varietal. I don't see the vanilla, chocolate and strawberry part as an issue."
In fact, Veseth told the audience of more than 1400 wine industry professionals, they shouldn't be surprised Millennials aren't excited about wine because they're not even interested in sex.
"What is better than sex? It's there all the time. It's close to you right now. It's your smartphone," Veseth said. "Some studies have shown Millennials are less interested in wine, spirits and beer – but also sex. Birth rates are at their lowest. Is this a presentation about gloom and doom? No, it's about sex."
It was also about money. The one price range doing well for wine in the US is $15-25. Wines under $11 continue to drop in sales, while growth has slowed of wines over $25. E-commerce (such as wines you order via a Wine-Searcher link) is different: the average price of wine ordered online is $40.
According to Nielsen, some of the biggest wine companies are struggling the most. Sales for the world's largest winery, E. & J. Gallo Winery, were down 4.2 percent by volume last year. Bronco, makers of Charles Shaw, was down 9 percent. Constellation sales were down 1.7 percent.
Veseth pointed out that Constellation, the third-largest US wine company, has pivoted its business, investing heavily in beer and cannabis. The Wall Street Journal recently called Constellation a "beer-brewing company" in a casual reference.
"I look really closely at what Constellation does," Veseth said. "They do really good research. They know stuff and they're acting on it.
A series of negative reports about alcohol and health, without corresponding coverage of alcohol's positive health benefits, are having an impact on the market. Brager showed a recent survey that said almost 50 percent of regular wine drinkers are trying to drink less – and nearly two-thirds of people aged 21-34 are trying to drink less. Brager says this is why the non-alcoholic beverage market is $7 billion larger than just four years ago.
"We're in a war for [market] share," Brager said. "We're in a war to win the hearts, the minds and the pocketbooks of the consumer."
For California, it's a war that may have to be won with three flavors.
Too much reading but I think you’re right.
Young people in America are said to be drinking less alcohol overall, but a shift in their tastes has helped the world’s largest spirits company
Millennials have been blamed for the demise of everything from movies to dinner dates to golf. But now the much-slighted generation is getting credit for something unexpected: saving hard liquor.
Smirnoff vodka and Bulleit whiskey maker Diageo said it has received a boost from American millennials.
While young people in America are said to be drinking less alcohol overall, a shift in their tastes has helped the world’s largest spirits company DGE, +1.42% beat half-year earnings and sales forecasts. In addition to showing a tapering in alcohol consumption among millennials, research has shown that demand for lager has dipped.
U.S. drinkers have been switching to spirits from beer and wine, lifting sales at the drinks giant, which also makes Ketel One vodka and Casamigos, the tequila brand co-founded by actor George Clooney and acquired in 2017 by Diageo.
Let’s give the kids a chance.
Wine probably is boring compared to meth, fentynil and this synthetic crap they’re all into. No thanks. I will stick with boring old wine.
Wow. Talk about sick puppies.
Wine biz in va doing okay. Maybe it’s just califu syndrome.
Tide Pods are sooo much better.
Ironically the sexless prudish society of fanatics they warned us of coming from the fundamentalists, we’re getting with leftwing sjw millenials. Life is strange sometimes.
so much for the myth that millennial foodie hipsters actually savor foods.
They follow fads as the hippies did before them.
Good. We need a lot less snowflakes born.
Wine bkmk
This is wonderful news for this wine guzzler.
Real men have both wine and sex. Millenial men just whine about not being able to find a woman to have sex with.
That’s the difference between “Real Men and Fake Men”.
Box wine?
Hey, it’s cheap!
Here’s hoping the CA wine industry completely tanks. I’m for anything that reduces CA to the pitts of hell.
a much larger percentage remains unsold than in recent years: especially Cabernet Sauvignon.
Good. Still my fave.
Around my neck of the woods, the hipsters all drink way overpriced, over-hopped “craft” beer.
Northern Michigan is becoming a major force in the wine industry with numerous wineries producing great wines.......
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