Thursday, January 12, 2006

California Losing? Bah....

Wine writers need stuff to write about just like all journalists, but c'mon Jerry - you can do better than this. As I mentioned in a post below, I'm highly suspicious of of wine consumer surveys and I'm doubly dubious of this one because it comes from the Wine Market Council, an entity I've been highly critical of in the past for doing little to spur consumption in the US.

Regarding the article:

First, California is not slowly losing market share to imports. In 2004 Gomberg-Fredrikson (purveys of wine statistical gospel) reported that California's domestic shipments rose by 4.4 million cases while imports rose by just 2.7 million. G-F hasn't published its 2005 data yet, but even if it does show a decline, one year does not a trend make.

Next, if you actually read the results at the bottom you see that some of them are pretty close between the geographic categories. I don't know what the sampling margin of error was nor the statistical significance of the results, but they don't look very conclusive to me.

Third, if you take [yellow tail] out of the mix, then by any standard, Australia is not increasing shipments and California is not losing ground. If you do include [yt] then Australia is gaining in volume, but losing severely in price per unit - slitting its own throat but slowly, like with a butterknife.

Last, the fact that more European wines are consumed on the East Coast and that they are cheaper there should be filed under 'D' for "duh". French wines are cheaper in New York than they are in California because they are closer which means lower freight costs. Plus, Easterners have always consumed a larger portion of EU wine, this has been a known, accepted fact for decades.

It is interesting to note the dissatisfaction with wine by the glass pricing as that has become up to 50% of some restaurants pours (the balance being full-bottle purchases) and shows a strong upward trend, even at high-end restaurants. More people are drinking BTG and restaurants do need to reflect this with lower pricing and broader selection.


Blogger St. Vini said...

(Pasted from a comment I made on Professor Bainbridge's site)

I posted something about this yesterday, but did a little more research this morning....

Of course, if one remembers that there are two kinds of lies in the world, one can see that this data uses the latter type (statistics).

While it is true that imports grew over domestics (domestics are 95% California) in 2005, that was not the case in 2004 (per Gomberg-Fredrikson) and the 2005 change can largely be attributed to [yellow tail]. Further, according the AC Nielsen scanner data, while imports grew their CASE sales by 6.6% vs 2.7% for domestics the DOLLAR sales growth was 10.3% vs 10.7%, respectively. The magnitude of the dollar growth was $108 million for imports and $321 million for domestics. Is this really a problem for California then?

Australia, the only country with significant growth, is selling more cases, but at much lower prices ([yellow tail]). Basically, this means that the Glen Ellens and Woodbridges of the world are losing market share, but everything above $5.99 is solid.


January 13, 2006 10:45 AM  
Anonymous Anonymous said...

As posted in

I think it is a trend, or at least the beginnings of a market shift.

The U.S. wine market has been so California-centric for a decade or more that this sort of shift was inevitable.

It would be an overstatement to call this a "backlash", but the increasing variety found on the shelves of even a small wine section in a mediocre liquor store is enough to breathe more adventurous notions into the mind of an uneducated wine lemming.

Price comes next. Australia and Chile in particular are beating California at the lower price points with quality. More and more of Italy is finding its way onto shelves and its reputation would seem to be improving (and very rightfully so). It is even quite possible that the post-9/11 anti-French backlash is wearing off and having some effect as well.

California is just too big and produces too much wine to have any hope of continuing to define itself by its nicer wines (which are too expensive, by and large, anyway). The public's perception is shifting from "produces a lot of great wine" to "produces a lot of wine, much of it not so good", expecially at the lower price points. Sure, Argentina and Chile produce some iffy vino at these price points also, but this is about perception.

California reds are becoming just too darn alcoholic for everyday consumption. They no longer go well with many of the foods we eat everyday.

Of course, I think the single biggest factor is the general fickleness of the U.S. consumer when it comes to wine or anything else. They want something new and different. I think Joe and Jane Corkscrew are looking at different grapes and different regions. They may start with baby steps to Pinot Noir and Viognier and Shiraz and Oregon and Washington and Australia, but the momentum will (hopefully) carry them much further.

January 13, 2006 9:28 PM  
Anonymous Anonymous said...

"California reds are becoming just too darn alcoholic for everyday consumption. They no longer go well with many of the foods we eat everyday."

The vast majority of wines in the price point being discussed do NOT have alcohol at levels above 13.9% - the producers don't want to pay the extra taxes on the higher % alcohol wines. I think the idea is that the 'cheap' imports are making some headway.
While true that many of the "cult" wines DO have high Alcohol levels, that's hardly the point here.

And California will still be the largest player in the US wine market even with cheaper wines losing a little ground. When you get down to it, all regions produce wines that are "iffy" - with imports you'll see fewer of them if the importers and distributors think they're "iffy" also. They're looking for wines which will sell, and have a tendency to filter out much of the lowest quality wines, I think.

Personally, when in the EU, I've had some truly horrific wines, most of which were from the local co-op, and were passed off as the House wines. I love Italy & France, but they were the source of the wines first called "plonk". These never will be exported because they'll never sell in a competitive market. It's not that I'm behind all wines from Cali, I just don't think we're looking at the same offerings from both sides (domestic vs import)- some filtering has occured to skew imports upward slightly.


January 16, 2006 7:23 AM  
Blogger St. Vini said...

Imports, as a percent of the domestic market have varied significantly (my data goes back to 1975). For example, in 1985 they were 28% of the market, same as 2002, 2003 & 2004. Maybe 2005 will show a slight increase, but they may again dip to 15% as they were in 1995! Its all part of the markets cycle.

Second, as to California wines having undesirable alcohol levels, you're primarily referring to wines made in small production lots for high scores. Critics are turning their noses from these wines (and fairly so, IMO) but remember that the data regarding loss of market share came from SCANNER DATA. Scanned wines are supermarket/drugstore wines (yellowtail, Fetzer, Cavit, Franzia winetaps, Beringer, etc.) and the difference in % alcohol for these wines is not only insignificant it is also totally irrelevant to the supermarket shopper who is looking for consistency, varietal and price.


January 17, 2006 9:24 AM  

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