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THURSDAY THORNS
08/10/2017
Americans Are Turning Away From Wine
      ~~No, They are Not. Yes, They are.

By Charles Olken

In the last few days, we have seen arguments on both sides of this question, and I am here to make things clearer. Well, maybe “clearer” is the wrong word. I am here to ignore both sides of the argument because they are both right and they are both wrong—and it all depends on how much you want to argue one side or the other and whether you like to lie with statistics.

Let’s take the “Yes, They Are” side for the moment. Sure, the proponents of this position can point to surveys which show that wine is dropping as the favorable tipple of the American public. Never mind that overall consumption is not dropping because the “Are so” side would have to admit that they exaggerate and are using the survey result cited without context. Worrywarts and axe-grinders tend to do that—ignore other facts in order to fit one bit of information into a larger context. Let’s ignore these people.

On the other side of the hill is the “No, They Are Not” crowd. Proponents of this position can point to actual consumption data to show that the amount of wine being consumed is going up and that the amount of wine being consumed per capita in the United States is also going up. “Up”, as you may remember from your high school physics is the opposite of down.

It is pretty clear that both sides have arguable points, yet I look at the arguments (wine is too pricey today; other forms of alcohol are getting more popular—cider, cocktails, craft beer) that Americans are turning away from wine and conclude that there is truth here but truth that is of almost no consequence.

Wine is pricey precisely because it is being consumed at high levels.

Yet, I look at the arguments that wine is going up in consumption and cannot prove that it will always be thus. The Olken household, a wine household if ever there was one, is drinking more cocktails and is drinking more cider. I can’t say that we are drinking more beer than ever, but that is because our beer consumption is pretty high and enthusiastic so I don’t worry about beer.

And here is the only conclusion that makes sense to me: Wine is not going anywhere and there is no reason to think that we need to worry about soon being awash in a sea of wine. There are ebbs and flows in the wine business and there will continue to be. But the finding that Americans are turning away from wine can only stand as some form of larger truth if it is taken without context. And we know that the context is one that shows wine consumption, both totally and on a per capita basis, continuing to rise.

Phew. Thank goodness.


 

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Comments

Wine up or down
by Kerry Phillips
Posted on:8/11/2017 5:33:52 PM

I understand your feeling, Charlie. I've been drinking a little more cocktail, a little less wine. And it's not like I've been afraid to spend $100 or more for wine at times. It's just that the $50-80 dollar bottles I've been buying aren't giving me a satisfactory QPR.  I can buy a very nice, satisfying bottle or spirits for that price.

Factoids for the cocktail party crowd
by Bob Henry
Posted on:8/13/2017 4:06:13 AM

Excerpt from WineBusiness.com

(May 12, 2010, 2012):

“The Market for Fine Wine in the United States”

Link: http://www.winebusiness.com/news/?go=getArticle&dataid=73903

"According to the data presented by [David] Francke [managing director of California’s Folio Fine Wine Partners], US wine drinking is compressed into a small segment of the population.

"SIXTEEN PERCENT OF CORE WINE DRINKERS consume wine once a week or more frequently, which ACCOUNTS FOR AROUND 96 PERCENT OF CONSUMPTION. Thirty-five million adults drink virtually all of the wine sold in America, Francke said."

[QUESTIONS: are the 16% core drinkers increasing in percentage over time? -- am indicator that infrequent drinkers and the abstemious are becoming wine converts.  Are the 35 million adults increasing in number over time? -- likewise  an indicator that infrequent drinkers and the abstemious are becoming wine converts.  Or is the 96% increasing in percentage over time? -- an indicator that the 16% core drinkers are responsible for the increases in overall per-capita consumption.]

Exerpt from The Gray Report (July 31, 2017) titled "Wine trade secrets revealed at OIV Wine Marketing Program"

Link: http://blog.wblakegray.com/2017/07/wine-trade-secrets-revealed-at-oiv-wine.html

"John Collins, CEO of a company called GreatVines that sells alcohol distribution software, started the week off with a slap in the face to all wine companies: 'None of the wine companies are getting any attention (from distributors). Period. Because the spirits companies are that important to the distributors.'

"Collins compared the profit size of Diageo, a huge spirits company, to Jupiter. Gallo, the largest wine company, is Neptune. And if Gallo doesn't matter to a big distributor like Southern Glazer's, no wine company does.    . . ."

The money these days is in spirits -- not wine.

How else does one explain this purchase price?

From Fortune magazine (June 21, 2017):

"Diageo to Pay Up to $1 Billion For George Clooney's Tequila"
One more quote from OIV wine marketing conference
by Bob Henry
Posted on:8/17/2017 11:21:04 PM

And one more quote from Blake Gray's blog on attending the OIV wine marketing conference.

"The opposite of Constellation was a presentation by Bruno Walker, director of sales and marketing for Chambers and Chambers Wine Merchants, a California distributor with an outstanding fine wine portfolio. 

"Walker was one of several speakers to caution people that large distributors won't do much to sell wines by small wineries. 

" 'If your wine is not on some kind of special of the month, it won't sell' at a big distributor, Walker said. 'That sales person is not out making presentations of your wine. Their manager is telling them, you've gotta sell this and you've gotta sell that. That's how their bonuses work. That's how they're hired and fired.'

"But Walker also chilled expectations for what a distributorship like his can do.

" 'The reality is, I have 15,000 unread emails,' he said. 'Most people are really, really busy.'

"He said that when his salesmen present wines to stores or restaurants, they only have about 45 seconds per wine. 'We have to be able to deliver a compelling story, quickly,' he said."

Underscores this Wine Spectator (November 12, 2013) news report:

"West Coast Wineries Are Up for Sale -- Quietly;

(A wave of recent deals show investors see opportunities in wine, while owners see an exit strategy.)"

Link: http://www.winespectator.com/webfeature/show/id/49221

Missing text: OIV conference
by Bob Henry
Posted on:8/17/2017 11:25:17 PM

The missing text:

Underscores this Wine Spectator (November 12, 2013) news report:

Excerpt from Wine Spectator Online

(November 12, 2013):

"West Coast Wineries Are Up for Sale -- Quietly”

(A wave of recent deals show investors see opportunities in wine, while owners see an exit strategy.)

Link: http://www.winespectator.com/webfeature/show/id/49221

Missing text: OIV conference
by Bob Henry
Posted on:8/17/2017 11:27:06 PM

"West Coast Wineries Are Up for Sale -- Quietly”

By Tim Fish

Senior Editor

“. . . While small wineries can succeed by selling most of their inventory direct to consumers and large producers have muscle with wholesalers, those in the middle -- annual production of 5,000 to 15,000 cases, for example -- can’t get much attention from distributors unless the brand is hot.”

Nice article
by Vineyard Financial Associates
Posted on:9/6/2017 8:09:44 AM

Nice summary of the debate. But those of us who say we're not turning away from wine are right ;)

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