Monthly Archives: February 2024

From Yellow Jersey to Blue Bin: Wine Bottle Innovation Steps Up

February 27, 2024 By in French Rabbit, wine, wine markets, wine research 6 Comments

Last week’s Wine Economist stressed the need to adapt to changing wine market conditions and to embrace innovations as part of that process. However, innovations are not always readily accepted (often rightly so). There is often the fear that change will simply ruin whatever good or service is being considered.

Curse of the Paperback Novel

The economist Paul Krugman likes to point to an innovation in the publishing industry that was initially met with fear and alarm. It will be the end of publishing and literature as we know it, critics said. What was the next big thing that got authors and publishers all worked up? No, it wasn’t the e-book, as you might guess. It was the paperback, which ended up vastly expanding the literature’s reach.

Paperbacks opened up a new world for book lovers. Packaging is one area where wine has embraced innovation, too, but slowly. Bag-in-box was once seen as only fit for inexpensive bottom-shelf wines, but now premium (which in this context means $4+ per bottle equivalent) 3-liter boxes are a hot commodity, one of the few growth categories in the U.S. market.

B-in-B and Beyond

Bag-in-box shows that wine packaging need not end with the traditional glass bottle, but how far can innovation go (without going too far)? My first glimpse of the possible future was back in 2007 when I wrote about two wines that were part of the Boisset portfolio back then. The innovation: extremely lightweight containers.

French Rabbit got my attention with its lightweight (40 grams for the 1-liter box) tetrapak container. The French Pinot Noir in the box was just fine and I liked the smaller sizes, too. Perfect for picnic, backpack, or boat. This kind of container is no longer unexpected, the innovation found its market, although the most recent sales data suggest that 1-liter boxes are not currently a growing category.

Le Tour de Vin

Boisset introduced me to another packaging innovation that did not catch on quickly: the plastic (or PET) bottle. The wine was a French Sauvignon Blanc brand called Yellow Jersey (a reference to the Tour de France leader’s signature shirt). The yellow bottle with a yellow label and screw-cap closure held a perfectly decent wine in its 56-gram container. A delightful bonus (which I did take advantage of) was that the empty bottle could be re-filled with water and then fit perfectly into a bicycle water bottle holder. What could be better? Seriously.

The idea of the PET wine bottle did not catch on, however, and it is easy to see why. Although it preserved the basic traditional wine bottle format, the lightweight turned some people off and many expressed concerns about the interaction between the wine and the bottle itself. I recently found a bottle producer with a PET product line and the recommended shelf life was 18 months. It was a brave (or forward-thinking) producer who took a chance putting wine in a bottle like that.

Enter changing attitudes and innovation. Lightweight wine bottles now have a broader following as environmental concerns have risen in importance and technology has advanced, too. I know of a couple of firms that are working on hybrid solutions that use lightweight PET for structure and a special internal coating to keep the wine from ever touching the PET itself. (This is similar in concept to the cans that hold canned wine, which have a liner to keep metal and wine from interacting.)

Blue Bin to Blue Bin

Blue Bin Wine from Ron Rubin Winery is the first of this next generation of wine bottles that I have seen on the market. The bottles, which are made by Amcor Rigid Packing, are made from rPET (recycled PET) and the bottles are themselves recyclable, but you put them in the plastics bin rather than the glass bin. The bottles are lined with Plasmax, a thin glass-like oxygen barrier. The Plasmax coating holds the wine, rPET holds the bottle, and everything is recyclable.

The shatterproof Blue Bin bottles weigh just 52 grams compared to 450 grams for a very lightweight glass bottle and 550 to 850 for standard glass bottles (the Wine Economist record for an empty wine bottle so far is 1218 grams). A full bottle of Blue Bin (812 grams on Sue’s precision scale) weighs less than many empty glass bottles.

It is easy to see the weight savings from adopting lighter-weight bottles, and there are additional advantages from efficient recycling. Recycled materials are used to make the bottles and the used bottle is easily recyclable, too. As you can see from the photo above, Blue Bin’s label doesn’t hide the recycling story behind this innovative wine.

The wine’s name comes from the ubiquitous blue recycle bins that Rubin and his team saw everywhere they looked in California. The material for the bottles comes from blue bins and that’s where the empty bottles go, too.

Ron Rubin is also the driving force behind River Road Family Vineyards and Winery in Sebastapol (certified sustainable and B Corp and recently recognized by Sonoma CountyWinegrowers for their commitment to sustainability ) and that’s where the wines (Sauvignon Blanc, Pinot Grigio, Chardonnay, and Rosé) come from.  Initial distribution is targeted at California, Texas, and Florida plus through the winey website.

How was the wine? Sue and I opened a bottle of the Sauvignon Blanc at our annual Open That Bottle Night gathering. The bottle itself was the main topic of conversation. It was so different from any of the others on the table. But while we talked about the bottle, the wine in our glasses steadily disappeared. The consensus was that the wine showed well, especially considering its very reasonable price point (about $13-$15 depending on where you buy it).

Who will buy a wine like Blue Bin? Well, as with Yellow Jersey a few years ago, there are niche markets that will be attracted by the obvious utility of the lightweight and unbreakable bottles for outdoor activities of various sorts. Our tasting group thought that lots of wines and lots of occasions might be well suited to this packaging, with obvious environmental benefits.

But I think there is another audience that will be attracted to the environmental benefits as well as the convenience factor. Restaurant wine-by-the-glass programs might be interested in the easy recycling element. Fine wine? I don’t see DRC and Screaming Eagle in a bottle like this for now. But wine drinkers, especially younger people concerned about the impact of consumption choices on the environment, just might find Blue Bin irresistible.

Blue Bin wines are a big step in the right direction for wine innovation. Can’t wait to see what’s next.

Got Bacon? What Can the Wine Industry Learn from Pork’s Problems?

February 20, 2024 By in economic crisis, Uncategorized, wine, wine history, wine markets 9 Comments

The outline of the Wall Street Journal story was very familiar to anyone who has followed wine industry trends in recent years. The product had a long history and was well-loved in America and around the world. But the industry itself was in crisis. Demand was down. Part of the problem was health concerns and part of it was price (its retail price was higher than the most popular substitute). Worse of all, younger consumers were turning away.

Production costs kept rising and rising, but retail prices not so much (or at all, in some cases) eating margins and leaving red ink stains on the account books where black ink profits once regularly appeared.

It all had a familiar ring, except (here’s the punch line), the story was about pork, not wine. “We’re not eating enough bacon, and that’s a problem for the economy,” the headline proclaimed.

Does misery like company? If so, I guess I now feel solidarity with pork producers. Or is it a case of miserable company? I don’t know. But I decided to dive into the article, looking for lessons from the pork crisis.

Lesson One: Re-Education is Difficult.

Wine has a health problem. Moderate wine consumption can be part of a healthy diet (the French Paradox effect), but alcohol itself has many detrimental effects. If you define wine by its alcoholic content, then that’s a problem for health-conscious consumers, who are increasingly drawn to no- and low-alcohol wine (and to the not-wine alternative, too). A challenge for the wine industry is to tell a positive story in the face of the negative anti-alcohol headwinds.

Once upon a time, pork had serious health issues, too. Pork was fatty, which discouraged health-conscious consumers, and needed to be very thoroughly cooked (165-170 degrees) to avoid the disease trichinosis. Changes in production methods over the years have created a healthier product, which is leaner and safer to eat without over-cooking. Pork has become so lean that foodies now seek out fattier heritage breeds with more flavor.

The facts about pork have changed, but consumer attitudes have not changed with them. It isn’t easy to re-educate consumers once the conventional wisdom has been established. It will be hard for wine to change the narrative, too.

Lesson Two: The Perils of Generic Marketing

What would a generic marketing campaign for wine look like? I don’t know (I’m not sure “Got Wine?” would do the trick), but a lesson that we can learn from the pork industry is to be careful what you say and how you say it.

“Pork, the other white meat” was a popular ad campaign that raised awareness of pork products and created an opportunity to establish pork as an alternative to low-fat chicken.  The good news is that it might well have prevented a steep decline in pork consumption in the past.

But, the WSJ article reports, the campaign seems to have backfired in the current environment because, if you compare pork to chicken, the chicken is likely to be cheaper — and that matters a lot.

The WSJ article quotes one stakeholder who suggests maybe they should have tried to position pork as a cheaper alternative to beef rather than the new chicken. But, as the graph shows, beef consumption is falling, so maybe that’s not the optimal strategy. The current campaign is “real pork makes a real difference.” Really? Is the goal to lure people away from fake pork? Or is it to discourage chefs from using chicken instead of pork in traditional recipes? Not sure.

Wine needs to take the pork experience into account and remember that wine is more expensive on a per-serving basis than beer or spirits (on average) and a moderate wine consumption message, even if effective, can’t change that.

Lesson Three: Innovation

I was especially interested in the WSJ’s report on how pork producers are innovating to try to stimulate demand. Innovate? How can you innovate something as basic as bacon or a pork chop?

As noted above, some farmers are going back to the future by re-introducing heritage pig varieties that have more fat and flavor than the lean pork products that have taken over the market in recent years. Foodies will look for (and pay for) heritage breeds.

Bacon is a favorite pork product and there are lots of different styles in the supermarket meat case. Smithfield is innovating by making bacon that is more convenient to use, needing just 10 minutes in the oven to crisp up rather than the usual 20 because of special processing before packing. Quick bacon.

My favorite innovation idea (I like the idea, but I haven’t tried the product yet) is Tyson Food’s “pork griller steak.” This is a new cut of pork that Tyson seasons and marinates. It is designed to be flavorful and easy to cook. You can grill it, broil it, pan fry it, or even cook it in an air-fryer so long as you stop cooking when the internal temperature reaches 145 degrees. Note that the recommended temp is well below the old cooking standard for pork, producing a result that is more tender and juicy.

The Folly of Complacency

Some people may be uncomfortable with this wave of innovation in the pork business, but it seems to me that change is nothing new for bacon, ham, and chops. A lot of new ideas will need to be tried to discover the ones that make a difference.

The same is true in the wine business. As a traditionalist, I am not always persuaded by the new wine ideas I see on the shelves. But, as I said recently in a public radio interview with reporter Tina Caputo, “If we simply make the same wine, packaging it the same way, sell it with the same message, we will get the same result.”

Stalin, Machiavelli, and Nutritional Labels for Wine

February 13, 2024 By in health, wine, wine markets 4 Comments

If you want to start an argument among wine industry people, bring up the issue of nutritional labeling. Should wine labels provide consumers with the same kind of nutritional information and ingredient lists as found on most other food and drink items? Stand back!

The Soviet System

There is an old joke that everything in Stalin’s Soviet Union was either mandatory or forbidden and sometimes it seems like that’s the logic behind wine label regulations.

All wines in the U.S. market already have some required information on the label, but thi smainly  takes the form of warnings. Beware of alcohol! This product contains sulfites (without any explanation of what this is and why it might be a useful thing).  Negative labeling is required, but FDA-standard nutritional information is not.

Some wineries already provide nutritional information. Some do it because they believe consumers seek transparency in wine as in the other products they buy. Some do it to differentiate their products.

Stella Rosa wines, which are incredibly popular, are the exception to the rule. They do have nutritional labels and they are required to have it. Stella Rosa wines have alcohol levels so low that they are regulated as both wine and also food. The back label of a Stella Rosa wine bottle is a glimpse of the future whether you like it or not. Note that the Stella Rosa label shown here includes sulfites in the list of ingredients, but it also explains its antibacterial function.

A Lot to Learn about Labels

Machiavelli advises us to do willingly that which we will otherwise be compelled to do. Although I don’t accept this as a universal rule, it pretty much sums up my position on the issue of nutritional labeling of wine here in the United States.

The program committee of the Unified Wine & Grape Symposium seems to have embraced the inevitability of wine labeling regulations. There were several sessions devoted to label regulations including the two I have reproduced below. Read the descriptions to get an idea of the topic and issues that were discussed.

Prepping for Nutrient and Ingredient Labeling.  The EU is changing its laws to require labels on all wines sold there to have nutritional and ingredient information. The US is exploring this option and potentially will follow suit in several years. What does this mean for you in terms of how you make wines and how you will need to label them?

This session will explore actual EU requirements and some recommended practices to best describe and comply with these regulations. We will also discuss managing your ingredient list and nutritional levels and how to message this information to your customers. Some people have already been doing this for decades and we will discuss their reasons for why they were early adapters and why and how they have managed this through winemaking and messaging over time.

and

Labeling Requirements and Regulations. Join us for a two-part comprehensive session on labeling regulations and requirements in the wine industry. The first part of this session will focus on the intricacies of the California Bottle Bill, featuring insights from industry experts and regulators. The second part of this session will explore proposed and anticipated changes in federal labeling regulations and strategies for addressing these changes. Our panel of distinguished speakers will provide valuable insights, and you will leave with a clear understanding of upcoming changes and compliance deadlines.

My Machivellian view is that it is better to accept that the labels are coming (and are already here in the European Union) and try to shape them to best suit both consumer and producer needs rather than to fight an all-or-nothing losing battle. But that doesn’t mean that there aren’t problems with labeling requirements.

Forest vs Trees

My issues with nutritional labels go beyond the wine category. I am a label reader. I want to know what’s in my food and drink and where it came from. But in the process of atomizing products into their parts, I think we have missed something important, which is a focus on the whole. Individual properties are important, especially to people with specific health issues, but the overall characteristics of foods and diets more generally are important, too. And the forest gets lost when we focus so tightly on trees.

This was not always the case. One of the factors that drove wine’s Golden Age, for example, was the French Paradox, which argued that wine was a vital part of a healthy diet and lifestyle. A healthy diet, like a good wine, is about balance.

You might not be able to exactly say that wine was good for you, but like this Wine Spectator cover, you could argue that a diet that includes moderate wine consumption is healthy for many people.

Two cheers for nutritional labels for wine. They are coming and we need to make the best of the situation. Many consumers will find that wine isn’t as unhealthy as they think. But there is much off-label work to do to get wine’s positive message back on the public radar screen.

The Road Ahead: Lessons from the Unified Symposium

February 6, 2024 By in economic crisis, Unified Wine & Grape Symposium, wine, wine markets 7 Comments

What’s the state of the wine industry? Here are four observations inspired by things I learned at the Unified Wine & Grape Symposium‘s State of the Industry session and in hallway conversations. The theme, if there is one, is a spin on Robert Frost’s poem about the road not taken. The industry needs to choose a direction. Follow the well-trodden path that got us where we are or break away? Frost thought the choice was significant. What do you think?

One: The wine industry has a problem. But it isn’t just wine’s problem.

Everyone knows that the volume of wine sold has declined in recent years, which is a serious problem for many people in the wine value chain. Not every category has suffered equally and there are a few areas of growth. The picture improves a little if we look at the value of wine sold, but this mainly highlights segments where increases in average price have outpaced declining volume.

For many years the industry was built on an expectation of continued growth and it is difficult to re-gear for a declining market with high inventories from previous vintages that cloud prospects for the near future.

Some people were shocked when Jeff Bitter, President of Allied Grape Growers, called for the quick removal of 30,000 net acres of vineyards in California in order to bring supply into line with demand.  Jeff has been saying this for several years and I think his message is finally starting to sink in.

What’s behind the headwinds blowing against the wine industry? We used to blame spirits and craft beer. The story was that consumers were shifting to beer and cocktails in preference to wine. But that’s not true in general today. Both beer and spirits have falling overall demand, too.

Wine’s problem is not just a wine problem, it is a beverage alcohol problem. The situation is so bad that even once-hot tequila is cooling off. The Financial Times recently reported that some agave farmers in Mexico are balking at requests to replant for another harvest cycle. Maybe demand will be there when the plants mature. But maybe not, especially if U.S. demand tumbles (markets in other countries are not large enough to absorb a big U.S. surplus).

Two: We are not alone.

OIV data show that global consumption has fallen after a decade of stagnation. The soft wine market is just about everywhere you look, but especially noteworthy in the U.S. and China. I highlight the U.S. because it is the world’s largest consumer of wine (and still, many would argue, the best market around because American wine declines are relatively small compared to some others).

China? Well, that’s my own addition to the list. Chinese wine consumption increased dramatically before the pandemic struck and many imagined that its growth would be enough to offset declining sales elsewhere.

But then came covid, which crippled critical on-premise sales in China, and then the trade wars and tensions that have followed. The Chinese market is opening up again now (Australia has its fingers crossed that Aussie wine will be granted favorable access to China soon), but the market there has changed, and lost its dynamism. China after covid is not the growth market for wine that some counted on. It’s a small world after all and wine’s share of it has shrunk.

Three: The prisoners’ dilemma.

It is one thing to say that the wine industry needs to become smaller, more efficient, and more profitable (and it does!), but how do you do that when there are thousands of growers and wineries each protecting their own interests?  There is an element of the prisoners’ dilemma problem here. Collectively, the ideal strategy would be for many winegrowers to reduce vine acreage and take surplus grapes off the market. That would help everyone gain some control over margins.

But collective interests and individual incentives aren’t aligned. If everyone else is going to pull up their unprofitable vineyards, then it is in my interest to keep vines in the ground and gain from the higher prices while they suffer from smaller production. The private incentive encourages everyone to keep production high and the problem continues.

How do you overcome the prisoners’ dilemma created by this conflict of collective versus individual interests? Well, one solution is to play and replay the game over and over until the participants learn that cooperation is a better solution (even then, the “defect” strategy is always a problem). Or some sort of collective action mechanism can be employed, which is one of the things that the Spanish industry’s strategic plan hopes to achieve.

Four: A tale of two futures.

Susana Garcia Dolla, the director general of Spain’s broadest wine industry organization, framed the question in terms of two cycles, one a vicious cycle that reduces the wine industry through crisis and shake-out, and another, a virtuous cycle, that moves ahead toward sustainable profit by design.

Lots of forces will shape the wine industry’s future and it is impossible to expect any predictions to bear up over time. That said, it seems to me that the facts above suggest that we have reached a fork in the road and need to take the right path.

One road leads … well, it leads nowhere in terms of the future of wine. And it seems like the road we are on right now. This road blames consumers for the soft market and fails to confront over-supply in any coordinated way. The industry will lurch along until a critical point comes along, forcing action.

The other road leads to a smaller, more efficient, and profitable wine industry through timely and intentional actions.  The process is painful but follows Machiavelli’s advice to give the bad news all at once and the good news a little at a time. Which road will be taken for wine? And what’s the road not taken?