Home Wine Business Editorial 10 Insights to Conclude: Consumer Choice is a Myth

10 Insights to Conclude: Consumer Choice is a Myth

12
0
Advertisement

by Laura Ness

Matt Kettmann (Photo Courtesy of Wine Industry Symposium Group)
Matt Kettmann (Photo Courtesy of Wine Industry Symposium Group)

Listening to the presentations at the 21st annual Central Coast Insights, I couldn’t help but come away with these observations:

  1. The majority of “wine” in the US is sold through supermarkets, drug stores and supercenters. With the bulk of the stuff being under $20, with an average price of less than $10/bottle, much of it is homogenous, bearing little, if any, stamp of terroir.
  2. Consumers buy primarily Chardonnay, Cabernet, Merlot, Pinot Noir and Pinot Grigio because that’s what’s there in front of them. They could be called “The Royal Flush of Wine Grapes.”
  3. Big players are planting/replanting primarily Pinot Noir, along with some Chardonnay. Oh good, more of the same.
  4. The biggest players in the wine industry have no incentive to plant or make anything but what has been in demand: they are doubling down on what the market is already buying, because that’s what they are selling. However, they are at the mercy of the next merciless movie, which could trash Chardonnay or Blends, for all we know, just as Merlot was crucified on the altar of Pinot Noir.
  5. Consolidation in both distributors and brands (smaller ones getting bought up by larger ones) is reducing consumer choice. Even though the average consumer sees a sea of wine labels in front of them, they are largely all from the same major conglomerates.
  6. Small wineries that dare to grow their brands large enough to need a distributor are faced with miserably few choices.
  7. Overall pressure from the megabrands to keep prices low on the grapes needed to make the large volume beverages has led to the decrease in diversity in the overall grape population. For example, Riesling and Gewurztraminer are being pulled out of established Central Coast vineyards in favor of Pinot Noir.
  8. There is little —perhaps no —room in the mass market for true wines of place. How can one really compete with a wine over $25 that says “Central Coast,” when consumers have been conditioned to associate those two words with value pricing of $9 to $15?
  9. The number of varieties worldwide planted in any measurable number has decreased. In 2000, 21 varieties made up 51% of plantings: in 2013, the number had been reduced to 15. Further, in France alone, in 2000, there were 285 varieties: today, there are fewer than 96. An alarming trend.
  10. When winemakers approach bankers for vineyard planting loans, they are extremely unlikely to support oddball varieties. Meaning, anything else other than Chardonnay and Pinot.

What does this mean? Well, it most certainly reduces real choice in the marketplace. Basically, the US consumer is faced with the same juice presented in a variety of different formats (375, 750, 1.5, Magnums, tetrapacks etc.), and under different labels, in an attempt to pretend diversity. The truth is that the Big Five make the majority of the “wines” in grocery/drug/superstores.

Commoditization

Rob McMillan of Silicon Valley Bank pointed to a slump in Central Coast grape pricing, due to other regions planting these varietals more cheaply. “This is the problem you have when you allow your product to be commoditized. Hawaii has given up on pineapples because other regions can grow them cheaper elsewhere.”

The State of the Industry

Randall Grahm (Photo Courtesy of Wine Industry Symposium Group)
Randall Grahm (Photo Courtesy of Wine Industry Symposium Group)

Randall Grahm of Bonny Doon made some insightful observations: “The wine business is not as much fun as it used to be. I loved the days when wine was not a business. You were in it because you loved the craft. But now you have mass production. A healthy society needs a middle class. Consolidation has been nothing but bad for the consumer. Big wineries are often using their prodigious talents for evil.”

By evil, he’s referring to the flood of “wines” on the market that are not really wine at all, not by his definition. In contrast, wines of place are utterly unique vs. wines that are concocted.

The Next Big Thing?

Some of the comments made during the “Central Coast Diversity: Blessing or Curse?” panel coordinated by Matt Kettman, were illuminating. Indeed, the Central Coast’s vastness incorporates vastly dissimilar regions. What on earth does the Santa Cruz Mountains have in common with Livermore, Paso Robles, or Santa Rita Hills? But that is a topic for another discussion.

Marta Kraftzeck of Scheid noted, with a degree of sadness, the alarming decrease in number of varieties planted, as quoted in point #9 above. She remarked, “The wine world is becoming a monoculture, a limited gene pool. More should be done to encourage grapes to do their thing.”

She lauded FPS at UC Davis for their efforts in cleaning up varieties from around the world to try and market them. But what large grower would stand up and take the risk? It’s laudable that Scheid is doing their part to keep diversity alive. Kraftzeck crushed 600 tons of 34 varietals in more than 100 separate lots in 2014. She expects to do more as their experimental vineyard with Fiano, Dolcetto, and Gruner Veltliner comes on line.

Asked if she had trouble selling all those varietals, she quickly replied, “No! There’s big interest in trying new varietals.” Scheid has two tasting rooms, one in downtown Carmel, which attracts an international audience.

Tim Snider of Fess Parker noted that commoditization and consolidation are impacting his ability to bring “other than the norm” wines to the broader marketplace. “I have to beat up on the distributor to take Grenache Blanc, even though Somms love it.”

Is there hope for new varieties to break through? Kettman thinks Grenache Blanc has a fighting chance, also giving a nod to Riesling. Karen Steinwachs of Buttonwood, who is a champion for Sauvignon Blanc, Semillon and Cabernet Franc, hopes it’s Cab Franc. Tim Snider would bet on Grenache, while Mike Sinor of Sinor-LaVallee, who has a tasting room on Avila Beach, gives the nod to Albarino, saying “It tastes great on the beach!”

Steinwachs wanted to know what kinds of wines Kettman receives at Wine Enthusiast for review. He replied that 70% of what he receives is Chardonnay, Sauvignon Blanc and Rhones. Kettman expressed appreciation for varietals he’d never even heard of before, like Charbono and Carignan, which were eye-openers. He noted, “These are heritage grapes. More people need to taste them.”

People need more opportunity to have their eyes opened. Not fewer.

Advertisement

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.