Month: February 2017

Essentially from our previous pieces, we have suggested that the whole wine landscape has changed over the last twenty years as wine became more engrained in a larger segment of the population. However as the baby boomers, the first generation to really embrace wine, pass from the active market place the wine industry will have to reevaluate itself. That is something it has failed to do thus far with one of the most monumental changes in the history of mankind, the internet.

We have posited that the new, millennial buyer is more likely to be comfortable with wine because they grew up at a time where many more households had wine on the table on a regular basis. They will have more information at their fingertips 24/7 that they can access instantaneously via a number of devices. There will be no reason to wonder any more about anything but the most arcane aspects of wine, and even a lot of that info is out there if someone wants to dig a little harder.

Most will think of wine as an acceptable beverage, but we suspect fewer will have the opportunity to have that first ‘epiphany’ because this is a faster, noisier, more instant gratification group for whom burgers, pizza, buffalo wings, and forays into ethnic cuisines, most of which aren’t necessarily wine friendly nor bring with them any kind of wine culture. We’d go out on a limb and say that, in the vast majority of the venues we’ve just mentioned, it is unlikely you will find anyone who knows much of anything about wine. Things are way more casual than they used to be food wise. Millennials go out more, but typically don’t take the fine dining thing particularly seriously and don’t spend as much when they do go out according to studies we have read.

Are we saying that is bad? Not at all, simply that it is and is not the most conducive environment to recruit new wine drinkers. In a world of texting, Facebook (or whatever the hippest new social media platform is), virtual reality and self driving cars, fewer people take the time (or have it) to sit down and have a quiet dinner and a bottle of wine. Fine wine is a special, contemplative experience and that sort of entertainment is kind of out of vogue. We could go in a number of different directions from here but, suffice it to say, the speed and sensory overload of today’s world doesn’t necessarily pair well with an elegant, subtle red.

On a broad market level, the wine industry is attempting by and large to amp up the wines and the ‘kitch’ trying to make an impression. Bold, if not necessarily complex flavors via a little manipulation in the cellar mediates vintage. This uniformity makes wine ‘brands’ more like Pepsi (or Coke, we aren’t biased). It’s a homogenization of wine to a frightening extent. Everything is starting to have annoyingly similar flavor profiles as if a ‘control group’ is dictating styles.

So in the face of that, where’s our millennial generation going to get hit by the wine bug? Word of mouth and random contact with people who have already been bitten will still be a great way. But it’s that person on the street just going through life…where are they going to have that defining moment that changes their perspective? A lot of folks learned wine at an outlet where they found someone to talk to that was truly passionate. But such places are disappearing in California as a function of brutal competition, high rents, and an inability in such an environment to find good floor people.

Most of the people in ‘chains’, if you can find anyone to talk to at all, are not that far from novices themselves and definitely have some sort of employer mandated agenda like selling their own exclusive brands. Big box stores? Good luck finding anybody to ask a question of any kind, let alone something in depth.

Sommeliers? You aren’t going to find one of those in anything but top flight restaurants and, given the markups, it’s going to cost a ‘regular Joe’ a lot more to learn something. The casual dining experience, which seems to be where the restaurant expansion is these days, is less likely to produce that ‘discovery’ scenario. The accelerating pace of life in general (both real and virtual), coupled with fewer opportunities to experience some kind of ‘connection’ to wine outside the home, will make the whole embracing of fine wine as more than a ‘casual beverage option’ much more difficult.

We don’t mean to sound like depressed 1920s poets in some French café. Some will find a way. But today’s environment and generation just don’t seem as fertile a mix for fine wine appreciation. And we haven’t considered the effects of surging factors like home-delivery of meals on an unprecedented scale, presumably bringing food to someone intently engaged in some FPS (first person shooter) video experience who won’t even have a free hand to eat let alone hold and ponder a glass of wine.

Other stuff we think about…

Global warming: Whether you believe that greenhouse gasses are the cause of global warming or that it was an inevitable direction of some 10,000 year weather cycle, there is hard data that it exists. We have extensively studied European vintages back into the 40’s, and seen how many truly crummy vintages there were in the period from 1945 through 1980. In the last quarter century, the percentage of ‘great’ vintages has increased, and true ‘stinkers’ are relatively rare. But even casually saying that the average temperature increases a little every couple of years (we have heard specifics as high as 1 degree per year), what happens down the road is the issue.

Warmer weather has given us a plethora of noteworthy vintages in recent times. So, ‘hooray, global warming’ from a wine perspective? But fast forward a decade or two and think about this. All of the greatest growing sites are ‘great’ because their situation/exposure/terroir allows them to ripen the grapes consistently. Those great sites will eventually become too warm and not be as hospitable to the grapes for which they are renowned. It’s a little early to start planting Mourvedre in Germany. But the thought of doing so is considerably less insane than a couple of decades ago and freak vintages (like super hot 2003 was in Europe) might start coming around more regularly. Maybe these are the good old days.

Paradise Lost: We have often said that the wine industry has succeeded in spite of itself. We attribute that to the times and the innate appeal of the product. There were some very successful business models that worked back in the 70s and 80s that created a number of brands that have been solid for years. Here, decades later, the wine industry still holds those programs (Cakebread, Far Niente, and Sonoma Cutrer among them) as holy grails. But the times they are a changin’.

Labels are still trying to emulate the success those brands achieved ‘back in the day’ by using the same formula of perceived exclusivity, premium pricing, and restaurant focused marketing. The thing is that, back then, there were substantially fewer brands vying for people’s attention. It’s a lot harder to catch someone’s eye in a group of 500 labels than a group of 50, yet the market is saturated with would-be superstars who all want to play the same game. We have exactly the same conversations with wineries about how ‘special’ their wines are that we had three decades ago, only more of them because of the sheer volume of wineries.

The rise of the critic changed how wine was marketed, and the internet changed the world. Yet the wine industry still blindly preaches the mantra of the old days. There’s a lot of unsold wine out there because of ‘the games people play’. Still, as wineries come to grips with their own failures, they still cling to ‘the ideal’. Shhh, don’t tell anyone, there’s a bit of big time wine being dumped at restaurants at a fraction of the price to move it. There’s a lot of wine sitting in warehouses unsold.

We get people coming to us regularly with wine they need to move at heavily discounted prices, many of them good labels, with the request that we sell it for the same price that they did (or clearly failed to) so as not to hurt their image. Our take is that maybe their image isn’t what they think it is. Maybe it shouldn’t have been that price in the first place. If they couldn’t sell it to people who supposedly like their wines within those parameters and nothing else to sell, what makes them think we could do it against our very competitive selection.

Wine Spectator recently published that direct-to-consumer shipping was at an all time high. Fair enough. We’d say that more wineries are adopting that model because they make the most money that way, and there are record numbers of wineries playing that avenue. We also would suggest that without a tout from a significant critical source, that plan is not sustainable and people will tire of paying $60-80 (or more) for a ‘$30’ wine just because it is ‘exclusive’ or ‘rare’. We don’t see millennials putting up with that nonsense at all.

The wine industry has lived a charmed life over the last three (or four) decades. It has been a good ride, but much has changed. If the industry as a whole does not accept the new reality and rethink their approach, they will not only attract fewer new buyers, but are in danger of losing a bit of their existing audience. Finding new buyers is going to be difficult enough moving forward for reasons we have discussed. But it is considerably harder to bring back buyers you have alienated.

Our last piece (Part II) ended with a very telling question. It is based on different patterns of the populace and tries to predict the behavior of the generation that grew up with the internet, cell phones, more ‘less traditional’ households, and, now, the dawn of virtual reality and Wingstop. While we can only predict with limited accuracy (if we were really able to predict that stuff, people would pay us money), there are some reasonable basis for hypothesis.

One is that ‘entertainment’ happens more outside the home in casual restaurants, gastro pubs, pizza places, et al. Clubs, cocktails, and craft beers are much more ingrained in the culture. Entertainment options are at historic highs (since now you’ve added virtual reality to plain old reality), as are the dining choices. A generation of immigrants (we do not make presumptions about anyone’s status), mostly not from Europe, have brought their food traditions with them. There’s an amazing array of cuisines from South and Central America, Asia and the Pacific Rim. Mexican cuisine, longtime staples in California, has countless more regional examples.

In places like Los Angeles and San Francisco, there is a dizzying array of food choices. All kinds of folks are eating all kinds of different foods. The thing is, and we say this in the most objective way possible, the majority of this new, expanded ‘food scene’ are from places with no ingrained wine culture. We interpret that as a potential problem from the standpoint of the learning curve. Everybody who ultimately gets ‘serious’ about wine has an experience or two that tickle the imagination, that motivates them to follow the path.

The typically bustling, high-decibel eating environments of today don’t necessarily support the quiet contemplation of your beverage. Sometimes you can’t even hear the person across from you, let alone talk about the wine. The energy of such a room is part of the experience, but the odds of randomly discovering wine is reduced by the fact there us so much other stimulus. In most Thai, Vietnamese, Chinese, or Indian eateries, if there is a wine ‘program’ at all, it’s usually a small list of ordinary, very commercial bottles selected by a distributor rep without necessarily any regard to the cuisine but rather what they are supposed to sell. Often times the restaurateurs themselves don’t care. Beer is easier (though less so today with the craft explosion).

A lot more people eat at these types of restaurants as a percentage than three decades ago. Heck the extent and diversity of cultural food options really didn’t exist back then, and the ones that did were an occasional novelty for the typical family. The key point is that the expansive landscape of more ethnic fare will provide fewer opportunities percentage-wise for people who have yet to have that ‘definitive’ wine experience.

One would think that there would be more avenues than ever where someone might stumble into wine. But that’s not necessarily the case in today’s world. We old-timers learned by tasting, reading, and finding a few folks to talk to in a wine store. Since all the prices were fixed back in the 70s, a standard wine venue could support itself by carrying ‘the hits’ and a lot more options that grocery stores did not. When price fixing went away, so did a lot of those types of venues because they couldn’t adjust to the new reality. Fast forward today and buying patterns have changed (at least in California) because of the market shifting to a different group of venues that provided convenience and price advantages.

People today are a lot more harried. They will shop ‘specialized’ for big purchases, but most would like to take care of the day-to-day stuff in as few stops as possible. So they are less likely to make the extra trip for wine when they can find something palatable in the now-somewhat-expanded grocery store selection or ‘big box’ set. Are they interested in trying something new? Maybe, but there is little information on the shelves in such places save for an occasional point score from some publication that they may or may not know. It’s not likely there is anyone that can answer even the simplest of questions, either.

Big box stores? There’s a modest selection of ‘the hits’ and no one that knows anything on the floor. So unless you know what you are looking for, you’re flying blind and likely to just buy the same old things. Is just buying the same old thing wrong? Not for a lot of people. But even if you have the desire and motivation to expand your horizons you might need a little help. In such venues, if there even is anyone ‘working the floor’ (which is rare), it’s usually some supplier rep with an agenda to sell their own stuff.
The wine store of old is generally gone, replaced by more hybridized versions that have passionate buyers and innovative selections. The problem is that most aren’t going to have many of those old familiar favorites for you to fall back on because ‘big brand’ giveaways by grocers and big box stores have made these brands untenable even to carry for convenience. So basically to make that extra trip, you have to have made the decision that you want to get out of the ‘rut’ and get into wine. That’s a big commitment for most people.

What about those alcoholic beverage chain stores that advertise they have ‘experts’ on the floor to help you? Good luck with that. The term ‘experts’ is tossed around rather loosely, and most of them are only trained to move you into that high margin ‘store brand’.

Restaurant-by-the-glass programs should offer the best opportunity to learn. But there are a host of problems. In a busy, noisy restaurant, the likelihood of being able to talk to someone who actually can spend the time to help you and knows the wine is small (though they are out there). Plus, as we have mentioned in other pieces, you don’t know if the wine you’re tasting is representative of the genre it represents if you don’t already know the genre. Moreover, given the generally marginal condition of most ‘back bar’ wines, where you have no idea how long that particular bottle has been open, you don’t really know if the juice in your glass is even representative of that wine. Given that, it is fairly remarkable how much energy wineries put into wine-by-the- glass offers since they have little idea what the customer is actually drinking. They could be turning off potential wine drinkers to their brand or wine in general with some half-dead white or decrepit red.

As for experimenting with wine list at restaurant, where you see them open the bottle, you can learn that way provided it’s an eatery with a more enlightened yet still consumer friendly list. It’s no easy task to find one of those, and the learning curve will be the most expensive of any. This of course also presumes the person running the wine program is actually concerned about the diners themselves and doesn’t have some sort of personal agenda.

There are suggestions of forming tasting groups where a bunch of people all learn together. They work, but they are at least step B or C. At that point you have already gone to the next level of interest and aren’t a novice any more. The same goes with wine education classes. The passionate will find a way. Our point is that the person who might potentially be interested in learning more will have a much harder time in today’s market stumbling onto that formative ‘aha’ moment that will give him/her the fire. More to the issue, those who might have it may never find out they do because, under a wide range of scenarios, the situation may never present itself.

The ‘next generation’ of wine drinkers, whoever they might be, will have the most to do with how the next couple of decades play out for the wine industry in general. They are likely to be more open to wine as a beverage choice than any generation to date, but less likely to go far beyond that (other than the occasional tech millionaire who wants to fill the wine cellar in the mansion he just bought). As the prices of better bottles get to be more expensive, and the range of beverage choices competing for the consumer dollar continues to expand, wine geekdom will likely be even more ‘the road less followed’.

Pricing, marketing, global warming, is it the ‘juice’ or the ‘show’? We’ll take a swing at that stuff in a couple of weeks…