“LVMH Bets on Booze-Free Bubbles at $100-Plus a Bottle” was the Wall Street Journal headline. The story, which you may have read when it came out last month, is that luxury goods conglomerate LVMH was buying a 30 percent stake in a (luxury) non-alcoholic wine start-up called French Bloom. The new NA wine boasts both good DNA (one of the founders and the winemaker are members of the Taittinger Champagne clan) and a bold business plan. The WSJ reports that

The brand sells bottles of sparkling white for $39 and sparkling rosé for $44, mostly in high-end bars and restaurants, or through luxury retailers. Its latest nonalcoholic fizz, La Cuvée Vintage 2022, which accounts for a small percentage of its production, sets consumers back $119 a bottle.

While the brand initially expected customers would mostly be pregnant women and nondrinkers, it estimates that about 80% of its clients drink alcohol.

NA Wine Challenges and Opportunities

I think the logic of the investment was pretty simple for LVMH. Someone is going to develop a non-alcoholic luxury sparkling wine brand, so they might as well do it themselves and capture the high end of the market. The acquisition is driven, at least in part, by the same logic that led Moet Hennessy to create an international network of wineries to satisfy the local thirst for sparkling wine. Argentina, California, Australia, China, and India. And now in NA-land, too.

What I found particularly interesting about the French Bloom article was the discussion of winemaking challenges. Making quality NA wine or beer is not as easy as just taking the alcohol out. Millions of dollars are being invested in innovative processes to make the NA products as appealing as their alcoholic shelf-mates. The WSJ reports that,

When a wine is dealcoholized, it loses about 60% of the aromas. “We have to start with something that has, we like to say, wider shoulders, versus if you dealcoholized a Chardonnay from Burgundy, you’re not left with a lot,” …

French Bloom sources its grapes from the Languedoc region of southern France, where the sunny climate results in grapes with naturally high alcohol content and sugar levels. They also harvest the grapes two to three weeks early, depending on the year, to have maximum acidity. They then age the wines in new oak barrels from Burgundy. … The wine is “undrinkable before the dealcoholization process,” said Frerejean-Taittinger. “It’s so overpowering.”

The goal, as we here at The Wine Economist have proposed, is for NA wine to pass the “Second Glass Test.” An NA wine should remind us of the type of wine it represents (an NA Sauvignon Blanc should remind us of a Sauvignon Blanc) and it should be good enough that you ask for a second glass. It is a simple test but, as we reported last year, one that many wines seem to fail. Either they don’t really taste like the wines they mimic or they just aren’t that fun to drink. Sad!

Bolle Sparkling Wine Passes the Test

LVMH’s investment in French Bloom provides evidence, if any is needed, that NA wine is a thing. We haven’t had an opportunity to put French Bloom to the Second Glass Test yet, but we could not resist an invitation from the makers of Bolle Non-Alcoholic Sparkling Wines to give their wines a test drive.

I was intrigued by the innovative production process. There are several ways to remove alcohol (French Bloom uses a process called vacuum distillation). The Bolle method first ferments the grape juice in the usual way, removes the alcohol, then adds a little grape juice, and allows a second fermentation to replace some of the characteristics that were lost earlier in the previous process. It is a clever idea, don’t you think?

The resulting wine has less than 0.5 percent ABV, which is within the “non-alcoholic” range. Does the second fermentation put the magic back in the bottle?  Does Bolle pass the Second Glass test? There was only one way to find out.

We tried the Bolle sparkling Rosé and were quickly convinced: this is probably the best NA wine we have tasted so far. Did it remind us of Blanc de Noir sparkling wine? Yes. Would we accept a second glass? Absolutely. The wine was nicely balanced, dry, but with some of the fruit that we have found missing in earlier “second glass” trials. Whatever they are doing at Bolle the results are excellent.

The Bolle sparkling Rosé is made with a combination of Chardonnay and Pinot Noir wines. We are looking forward to trying the Bolle sparkling Blanc de Blanc, which is Chardonnay blended with Sylvaner. The grapes are from Spain and the NA wine process happens in Germany. Production is still quite limited, so the best way to purchase Bolle is probably directly from the winery website.

Abstinence NA Spirits

As long as Sue and I were testing NA wines we could not resist an invitation to expand our experiments to include a NA spritz product. One of the best things about a trip to Italy is the excuse it provides to enjoy an Aperol or Campari spritz. We make them at home, too, and they bring back that warm Italian feeling.

Abstinence Spirits sells a range of non-alcoholic spirits products that are made in South Africa using the distilled essence of botanicals of the Cape Floral Kingdom. There are a variety of interesting NA spirits both bottled straight and used in NA RTD spritz beverages. We were tempted by the lemon spirits (I was thinking lemoncello), but could not pass up the Abstinence Blood Orange Aperitif, which is flavored with African wormwood, cinchona bark, allspice, clove, blood orange, and spice distillate.

We tried the spritz as directed with both tonic water and soda and the result was a split decision. I liked the tonic spritz because it reminded me of an Aperol spritz, and I’d definitely take a second glass if offered. Sue admitted the resemblance to Aperol but found the drink just too sweet (both the NA spirits and the tonic are sweetened).  The soda spritz was less sweet but lacked a bit of the bitter punch we were expecting.

Two cheers, not three, for the Abstinence Blood Orange aperitif, but we will keep experimenting. Lots of innovation in the NA beverage category. Watch for our next report in a few weeks.

There is a lot of work to do to restore wine to the place (in the market, in society) that many of us believe it deserves. Here in America, for example, we have recently concluded the successful launch of Come Over October, a program that seeks to replace the image of wine as dangerous alcohol with the idea of wine as an integral part of healthy and satisfying lifestyles.

What I liked best about Come Over October 2024 was that it provided a broad umbrella that wineries and wine regions big and small used to reach out to their customers. By seizing the opportunity, wineries and others generated a grassroots buzz. It is a very good beginning. The question now is, what next?

The headwinds that wine faces are global, not just local, and come from several points of the compass. So it is a good sign that Come Over October is not an isolated response. I want to draw your attention to two international movements that seek to advance wine’s agenda on different levels and in different ways.

VITÆVINO Declaration

Wine is threatened both from below (diminished consumer appreciation) and above (neo-prohibitionist government policies). Come Over October is meant to address the former problem. In Europe, a movement called VITÆVINO has been mobilized in part to take on the latter. The program is supported from above by powerful European industry groups (Comité Européen des Entreprises Vins, Confédération Européenne des Vignerons Indépendants. Copa-Cogeca and European Federation of Origin Wines), but also seeks to draw support from grassroots advocates.

Wine’s essential identity is under attack, according to VITÆVINO, and it is important to take action.

Wine is facing a significant existential threat as a growing anti-alcohol movement increasingly seeks to demonize alcoholic beverages. The responsible and moderate consumption of wine — which is the way the overwhelming majority of wine consumers enjoy it — is being stigmatised by the removal of the distinction between alcohol abuse and the moderate wine consumption within a healthy and balanced lifestyle.

Policy-makers, wine industry professionals, and wine-loving citizens are invited to sign the VITÆVINO Declaration in order to protect and preserve wine’s cultural role, value its socio-economic impact, and to give voice to moderation.

VITÆVINO went live on October 1 (what is it about October?). About 10,000 individuals (some of whom can be seen in this collection of video presentations) have signed the declaration so far, mainly in Europe but around the world, too, including a few in America. Significantly, some of the first to sign were elected members of the European Parliament, where alcohol regulation is an important issue.

The discussions that produced VITÆVINO began several years ago when European wine industry leaders realized that the wine industry was being increasingly attacked by anti-alcohol forces. Ignacio Sánchez Recarte, general secretary of the Comité Européen des Entreprises Vins, determined that an organized two-prong approach was needed, both political action at the national and EU level and also the development of broad-based grassroots support for wine culture and the wine industry.

This campaign invites everyone — from wine producers and exporters to sommeliers, bartenders, policymakers, and wine lovers alike — to unite in support of wine. It encourages participants to defend a product that embodies agricultural heritage, cultural legacy, and a symbol of conviviality. Together, we assert the right to enjoy wine in moderation, preserving its legacy and securing its future.

The next step is to broaden and deepen the movement by encouraging more stakeholders around the world to sign the VITÆVINO declaration, making it a true global movement, and to forge alliances with other groups such as Fondo Vitivinícola Mendoza in Argentina and Come Over October in the United States.

Looking ahead, our plan is to gather as many signatures as possible to amplify the voices of those advocating for wine worldwide and to create a united platform for wine supporters globally.

Beyond our ambition to expand both numerically and geographically, we aim to build a network grounded in shared goals and values. To start, the campaign’s results will be presented at the European Parliament in mid-January 2025, hosted by MEPs. We also encourage everyone in our field to feature VITÆVINO at wine and agricultural events with a dedicated stand or corner. Additionally, we are developing an art-based project to further support our mission, with details to be shared soon through our dedicated channels.

Wine in Moderation

Come Over October and VITÆVINO are both relatively recent initiatives, but Wine in Moderation traces its history back to 2007-2008. Originally focused on Europe to provide a countervailing voice to neo-prohibitionist policies and rhetoric. It is now a global movement, although it has not caught fire here in America yet.

When I mention Wine in Moderation to my friends in California, they seem to roll their eyes (maybe it is just my imagination). I think what they hear is Wine in MODERATION and wonder why in the world they would want to tell people to drink less wine. But the intended message, as I understand it, is WINE in Moderation, promoting wine as a natural element of a healthy lifestyle.

A 2019 Wine Economist column asked, “What Can We Learn from the Wine in Moderation Movement?” The answer, in part, was this.

Wine in Moderation movement members are given the tools they need to spread the word, which is a model that could work here in the U.S. Leadership is needed, of course, but it seems to me that our many regional wine associations and wine companies, too, would benefit from bringing a coordinated message into their diverse communications programs.

I can imagine a program with a general message agreed at a high level, but implemented with creative local twists and turns by the dozens of regional wine associations around the U.S. Such a plan would share the creative energy (and cost) while leveraging wine’s broad and diverse base.

Work together? Is that realistic? Well, what’s the alternative? In Europe, as George Sandeman said, the alternative was being regulated like tobacco. The alternative here in the U.S. might be a  gradual (and then sudden) wine market bust.

Obviously I was skeptical when I wrote those words back in 2019 that the industry could come together to address market challenges, but recent events in the U.S. and across the global wine patch make me more optimistic.

Will Come Over October, the VITÆVINO Declaration, Wine in Moderation, and other initiatives solve the wine world’s problems? Silver bullets are hard to find and hope is not a strategy. Much hard work is required and strength in numbers is welcome, too. It is a good thing that many individuals and groups are tackling the problem on different levels and in different ways.

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Thanks to George Sandeman for alerting me to the VITÆVINO Delaration project and to Susana Garcia Dolla for introducing me to Wine in Moderation a few years ago when we were both speakers at a meeting in Porto.  Special thanks to Gaya Ducceschi, Head of Wine & Society and Communication for CEEV for answering my questions about VITÆVINO (some of which are quoted in the text above).

A cynic, according to Oscar Wilde, knows the price of everything and the value of nothing. For some reason, this characterization is often associated with “dismal science” economists like me. Today’s Wine Economist column hopes to make an exception to Wilde’s rule by focusing on wine’s value problem and how understanding it can help explain recent market trends.

Price versus Value

Inflation is on everyone’s mind these days (both as an election issue and in more general terms), so it is not surprising that there is concern about the high cost of wine. But when I look at other consumer categories (as I did on The Wine Economist several weeks ago), I find that price isn’t as important to consumers today as value.

Consumers seem to recognize that sometimes when you pay less you get less. They are willing to pay more when they believe they get better value. A focus on value and not just price is not new, of course. Although it is easy to imagine that the Two Buck Chuck boom of a few years ago was driven by low price, it was true that there were even cheaper options. Many of the wine drinkers who embraced TBC cited value as the appeal. TBC is a two dollar wine, they’d say, that tastes like a five dollar wine.

Push versus Pull

Many wine consumers have shifted up a shelf or two on the wine wall in recent years in a process called Premiumization. Why have they done this? Did they wake up one morning and think that they just weren’t spending enough on wine? Probably not. Maybe they were pulled up by the higher quality of more expensive wines. I am sure that is the case for many.

But it is also possible that they were pushed up by falling quality and poorer value of the wines they had been drinking before. Did the value proposition of those mainstream wines deteriorate?

The Big Squeeze

Both wine producers and winegrape growers have been squeezed in recent years as costs have risen faster than price. One way that winegrowers have reacted is by increasing vineyard yields. This can be often be done without affecting grape quality, but only up to a point, as I understand it. When growers are squeezed so hard, quality can suffer and this can affect the perceived value of the resulting wine.

I know some growers who believe the value problem comes from a different source. They see wineries, caught in a cost squeeze themselves, substituting cheaper imported bulk wine (there is a lot of it on the market these days) for higher-cost domestic wine. California growers might argue that this dilutes quality.

Whatever the reason, the demand for wines below $10 (and now above $10, too) has been falling for many years. There are certainly many reasons for this phenomenon, but I think the value hypothesis is part of the problem. Value-seeking consumers have reacted to changing circumstances by shifting their wine-buying behavior, pushed by lower value here, pulled by high perceived value there, and squeezed by general economic conditions.

Some Implications

If budget-constrained consumers find themselves forced to move to higher price points in order to find the value that you used to get at lower cost, then it is not surprising that they have reduced the volume of wine they purchase.

If consumers believe that white wines give them the value they seek at lower cost than red wines, this might explain some of the red-to-white wine shift that we are seeing.

If correct, my speculations about value explain some but surely not all of the changes we have seen in the wine industry and raise an interesting question. Are the wine industry’s reactions to the current crisis addressing the cause of the problem or only the symptoms?

The global wine market is in flux these days and much of the attention is focused on falling consumption in the post-pandemic era. Global wine consumption actually peaked a few years ago, as the graph above shows, but the trend was disguised for a while by Covid pantry-stocking and other factors.

The falling sales volume is a stark fact that concentrates the mind, but it isn’t the only wine market change to consider. The strong trend of premiumization seems to have lost momentum, too, which may be related to a growing affordability crisis affecting many products including wine. (It is noteworthy that both Burberry’s luxury stores and Dollar Tree budget stores are experiencing sales declines associated with strained consumer budgets.) Do consumers think wine is good value for money?

Bottle of White? Bottle of Red?

Another trend that bears watching is the shift (in both production and consumption) from red to white wine (increased rosé sales are also part of this pattern). The change is so dramatic that last year the  OIV produced a special report on the topic. The OIV data for wine production shows a dramatic shift from red to white (see below). Like the decline in global wine consumption, this trend started a few years ago but has picked up steam (and attracted attention) recently.

The figure below provides a demand-side picture of the situation. Global white wine sales (by volume) held up better in the current climate than did red wine sales, so white’s share of the pie has grown. Changing production is a response to shifts in demand. Good news for white wine producers like New Zealand. Not-so-good for red wine producers like Argentina and Spain.

The changing color of wine shows up in both the data and on the store shelves. We have encountered more examples of white wines made from red grapes, for example, as producers look to align production with demand within the constraints of existing vineyard varieties. White Malbec from Argentina? It was the surprise hit of one of our tastings. White Pinot Noir from Oregon? Yes, that’s a thing now, too, and it can be very nice.

The China Syndrome

Part of the global decline in red wine production and consumption is no doubt due to the collapse of the Chinese wine market in the last ten years (wine production and sales in China are disproportionately red) as shown in the graph below.

French Paradox?

The pattern of changing red-white consumption differs considerably among the largest consuming countries. In France, for example, the volume of red wine sales has trended down for many years, with white and pink wines holding their own.

Do you remember the “French Paradox”? That was the title of the 60 Minutes program segment about how the French stay healthy in part by drinking red wine. It helped power a red wine boom in the U.S. Well, it looks like we have another paradox on our hands now as French red wine consumption slip slides away at the same time, we are told, that consumer interest in health has increased.

American Exceptionalism?

In the United States, on the other hand, red wine sales by volume have been stagnant (premiumization has pushed value up, however). White wine sales (and pink too, to a lesser extent) have risen modestly as measured by volume (see below) The red shift in U.S. wine consumption is less pronounced than in China or France … so far.

(Note that the OIV data shown here end in 2021, before U.S. wine consumption began to sharply decline.)

The NIQ sales data for the U.S. (found in the most recent issue of Wine Business Monthly) suggest that this red-to-white trend may be accelerating.  Total sales value for the most recent 52 weeks, for example, was $9,172 million for red wine and $7,857 for white wine (red still leads by dollar value). But this pattern changes when you look at the most recent four survey weeks, where white wine’s $619 million outpaces red wine’s $583 million. Seasonal factors surely account for some of white wine’s lead, of course, but it still comes as a surprise.

The shift is more dramatic when measured by volume of sales. For the most recent 52 weeks the numbers are 72.9 million cases of red wine versus 79.9 million cases of white wine. White’s lead lengthens for the most recent four weeks. Measured white wine sales were 6.2 million cases compared with 4.7 million cases of red wine.

The patterns of red-to-white sales shift differ by country, but the fact of the global trend seems pretty clear. What’s behind this surprising change in consumption patterns? Every time I come up with a simple answer to this question I quickly find a reason to dismiss it, so I won’t bore you with my theories. I note that the OIV report is long on factors but shorter on analysis, too.