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The Wine “Reset” Hasn’t Been Long Enough or Hard Enough

Despite reports that numerous wineries have sold or are on the market, and a recent Wine Spectator analysis indicated that 190 Wine Spectator wine award-winning restaurants have closed in the last two years, the economic struggles within the wine business haven’t been deep enough to create the kind of everlasting change that is necessary for healthy, long-term domestic growth.

And, despite the fact that a “double-dip” recession looms like gathering storm clouds on the horizon, 2010 feels like we have escaped the nuclear winter business climate of 2009, and a return to “normalcy” has cautiously crept back into our lives.

Yet, it is exactly this “return to normalcy” that is the problem. 

Obviously, for the wine business, the “old normal” was not healthy in the first place.  There are too many wineries growing on expensive land with a high degree of financial leverage selling wine at too high of prices with too few distribution options.  When coupled with the “lifestyle” marketing that the wine business is addicted to, it makes you wonder if a harder slog is necessary to jolt the wine business into a new set of rules that run parallel with the U.S.’s ascent to the top of the heap in worldwide consumption and sales.

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Simply, a wine lifestyle could be the centerpiece of genteel living and not the province of snobs, recasting the notion of the “good life” as something obtainable for all … wine as a vessel for something bigger and more profound than conspicuous consumption …

However, as evidenced by wines over $20 leading dollar volume sales growth, as reported by Wine Industry Insight from Nielsen data, I’m fearful that the wine business will continue in its current form, taking the last half of ’08 and all of ’09 as an aberration instead of seeing that a golden opportunity is within its grasp if only the fortitude existed to wean itself off the luxury and lifestyle positioning that has substituted for imaginative engagement with customers.

And, dollar volume growth in the luxury segment is not the only indicator, either.  Elsewhere, I have noted that Visa Signature now has wine benefits associated with its credit card.  Crushpad has set-up Napa Valley concierge-like services for its customers at other wineries, and Destination Cellars has bolstered its management team for its very high-end, membership only wine club, amongst other clues that the wine business is still planning to be in the luxury business as a rule.

Perhaps I have been running a fool’s errand in thinking that this economic crisis would be good in the end – giving the wine business a chance to collect and recast itself after a 25-year run that pinned it into being the nearly impenetrable drink of the affluent. 

Maybe I was naïve in thinking that wine could be a salve in a return to a simpler way of life and a means to reclaim our souls, a level-setting part of life that celebrates conviviality, the joy of family, friends and a good meal shared with those we are closet to, a spirit-nurturing tonic that enlivens relationships, but forsakes the importance of a wealthy lifestyle to go alongside it.

As writer Kurt Andersen said in his influential book Reset on the long-term impact of post-recession consciousness, “The new economic culture should be about proportion and function, efficiency and accessibility.”

Yet, I fear that a short-term recovery in the economy will bear no fruit in bringing clarity of purpose to the role that wine can play in our lives – there will be no reset on proportion and accessibility.  I fear that a recovery in the near-term will continue to engender luxury lifestyle as the marketing vehicle for selling something that should be viewed in an entirely different light. 

The Pacific Rim’s embrace of wine can act as the folly of a lesson learned already in the states – wine is a beverage in which there is a luxury segment, but for which luxury does not define the public perception of its place in our life.

Perhaps the last bit of idealistic zeal that I possess after realizing that the American dream can come crashing down in a near instant is that the mistakes of old won’t be repeated in the future.

Wine?  Are you listening?



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Posted in, Good Grape Daily: Pomace & Lees. Permalink | Comments (9) |


Comments

On 07/18, .(JavaScript must be enabled to view this email address) wrote:

Increases in the $20+ category may be based on items that were in the $40+ moving down to eliminate excess inventory. 

Wineries and distributors have been reducing inventories of high priced goods.  It’s better to get 1/2 of the original price than nothing.

There have been many many items reduced so that they will hit a 19.99 at retail.

On 07/18, Jim Caudill wrote:

Among the many reasons for our collective tin ear is the bubble we live in out here in Northern California.  For reasons both personal and professional I’ve been out and about all week and found our hotels and restaurants full of happy people, our tasting room appointments maxed out, and bids on auction items at the many different events hosted here and elsewhere rising again.  Our eyes and our heart tell us the old norm is returning, regardless of what the depletion reports say.  This is a tiny sliver of reality, but it’s our sliver, and we like it.  If optimism had a proof, we’d be at 100 and rising.  Aspirational is still the order of the day, and is likely to stay that way for some time to come (or at least run on a parallel track to a more mass-market, wine is good for everybody, everywhere, always approach).

On 07/19, Thomas Pellechia wrote:

Oh well, Jeff, you’ll be having this conversation until wine really IS a food item in the culture. The first order of the day will have to be to stop talking—or writing—about wine as if it were something more; the odds of that happening???

Once more, just look to history. There’s nothing new in this “news.” It’s been happening over and over since the Sumerians.

On 07/19, Mart S - Grotto Wine Cellars wrote:

Nice Jim, i agree, especially to this one “Aspirational is still the order of the day”. Let’s just be positive! Cheers!

On 07/19, 1winedude wrote:

Great article, and great comments.

I, for one, fear business as usual as well.  But then, you had me at “long enough and hard enough!”  grin

On 07/20, Wine for Normal People wrote:

Great article. I’ve been thinking about this a lot lately—will these hard times bring change on a larger scale post-recession (i.e., Will consumer greed wane? Will we incorporate things into our lifestyle because we like them, not because they represent status to others?)?

I don’t know to the answer to this question but I don’t agree that wine will remain aspirational and not part of the “daily bread”. There will always be the effete, who try to make it an exclusive club, and speculators who plan to exploit the luxury market, but I feel like there is a movement afoot of people who know or have heard that they don’t have to be rich or live in N. California to enjoy good wine.

The rising generation of Millennials (which is essentially the Baby Boom Echo generation and is huge) has a very different opinion about wine from the Boomers. They feel it’s a beverage for them, not just for people with giant bank accounts and they know they can get great bottles for everyday drinking for $10-$15. Don’t write them off—they are going to bring the cultural change about which you write. They are living this recession and are impressionable now, and so although the jolt may be delayed, it’s most certainly coming.

I’ll write off the Boomers any day of the week (I’m a GenX’er, so that’s my job!). They will overspend, partake in consumerism to the max, and not feel a shred of guilt. Wineries will market to them and they will do well. The old “normal” will return for them for a few more years. But this will all change as the Boomers get onto fixed incomes and don’t have the budgets for luxury. I think you’ll be surprised in the next 10 years to see that there will need to be a reset the domestic market, if it is to compete with global imports that are cheaper, as good, and are accepted by mainstream consumers. 

Thanks for the piece!
Elizabeth, Wine For Normal People

On 07/20, .(JavaScript must be enabled to view this email address) wrote:

Hello Jim

Thank you for mentioning our company, we appreciate it.  I enjoyed your article but I don’t agree with all of it. 

Everyone has been challenged by the economy however some more than others.  Truly depends on where you market is and who your client is.  Our clients come from around the world, some clearly have a passion, some wish to have a magical experience and some want to learn. 

If a client of ours clearly has the desire and the wealth to experience the finer things in life, who are we to judge them?  We believe the “value” of an experience is within the eyes of the beholder.  Or perhaps the value of the wine!  Truly up to the client. 

Having been in business for three years now, we’ve seen the market getting better.  Again some have been challenged more than others, just depends on who your target market is and how you’re gaining access to them.

Thank you again

David Keuhner
Destination Cellars

On 07/20, Jeff Lefevere wrote:

Hi David,

Thanks for the comment. 

Please don’t take my linked reference to Destination Cellars as any sort of indictment.

It’s not.

But, yes, I did use the very high end experiences you offer as context to making a point about how this period of time, an inflection point, could be used to bring wine to a more egalitarian point of view, forsaking wine’s existing perception as something for the elite.

Surely, you provide a tremendous service to a very high-end audience, there is nothing wrong with that in and of itself, and certainly I cast no aspersions towards those with the means to engage your business.

On 07/20, .(JavaScript must be enabled to view this email address) wrote:

Hi Jeff

No worries.  Thanks for the response.  Be well.

David Keuhner


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