It’s Going to be Huge: 2020 Unified Wine & Grape Symposium

 

The Unified Wine & Grape Symposium is just a few weeks away (February 4-6 in Sacramento) and I am already excited. The Unified is North America’s largest wine industry event with about 14,000 in attendance for the trade show and seminars.

Bursting at the Seams

The 2020 Unified promises to be bigger and maybe even betterthan ever before. The event has been moved out to the Cal Expo fairgrounds for 2020 while the Sacramento Convention Center is expanded and remodeled — the Unified  simply outgrew the old facilities. The one-year move means even more room than in the past for trade show exhibitors, including outdoor space for big machines and equipment. It’s going to be huge — literally!

And the program organizers have gone to some trouble to expand seminar offerings, too, with 110 speakers divided among about 30 sessions. Something for every need and interest with programs for growers and winemakers, marketing and business management. As has been the case for several years, some of the technical sessions are offered in both English and Spanish.

Labor cost and availability is an important issue in the wine business, so I am interested in one session that examines mechanization in the vineyard and includes a wine tasting. I’m guessing that the audience will be offered the opportunity to see if they can taste the difference between wines made with machine-harvested versus hand-picked grapes. Should be interesting.

State of the Industry

I’ll be moderating and speaking at the “State of the Industry   general session on Wednesday morning. Danny Brager (Nielsen), Steve Fredricks (Turrentine Brokerage), Jean-Marie Cardebot (University of Bordeaux), and Jeff Bitter (Allied Grape Growers) will be joining me on the big stage. A great team with deep understanding of the wine market.

Jeff O’Neill of O’Neill Vintners and Distillers is giving the Tuesday luncheon keynote speech this year and I am looking forward to hearing what he has to say. These are uncertain times for wine in the United States and it is easy to be pessimistic about the future. O’Neill’s company has been remarkably successful in navigating the treacherous seas, taking advantage of favorable winds. Everyone will be looking for lessons and insights they can take back to their businesses.

This is important because one cloud hanging over the meetings is a structural surplus of grapes and wine in some categories. U.S. wine demand is plateauing, which is better than some countries where demand has been falling for years. Overall wine expenditures are still rising even if overall volumes have declined.

The surplus creates a problem that may take years to correct through a combination of rising sales in old markets, development of new markets, and adjusting production capacity. Heidi Scheid is leading a session that will address the issues directly titled Strategies for Managing Through Over-Supply. Should be a standing room crowd.

Trade Wars Shrink the Pie

Trade wars are another concern. President Trump has said that trade wars are good and they are easy to win, but the wine industry has found little to celebrate about being in the center of the battlefield. Having invested years of effort and lots of dollars opening up Chinese markets, for example, many wineries have watched hoped-for opportunities disappear with retaliatory Chinese tariffs on U.S. wines.

It looks like French wine producers have dodged a bullet, avoiding sky-high U.S. tariffs that were threatened as retaliation for France’s digital tax scheme. You might have expected U.S. wine producers to celebrate tariffs on wine imports because some buyers are likely to shift from imports to domestic wines. But this substitution effect is not the only impact the tariffs have.

Prohibitive tariffs on imported wine are more likely to shrink the wine market pie at every stage of the product chain. It is hard to see how retailers or distributors can justify investment in the wine category when overall sales fall and uncertainty about future conditions is high. The uncertainty effect looms especially large, despite the recent wine tariff trade truce. If wine was caught in the trade war cross-fire before, there’s no reason it couldn’t happen again. And truces are by their nature temporary and fragile.

When tariffs work to protect an industry they tend to do so only temporarily and at high cost (struggling Harley-Davidson is a good example of this). But they more often backfire. The recent tariffs meant to protect manufacturing jobs in the U.S., for example, seem to have only accelerated the decline of the manufacturing sector generally because of the complex international interweaving of manufacturing chains and other factors.

Food (and Drink) for Thought

There a lot to think about as the wine industry moves into 2020, so I encourage readers to check out the Unified’s seminar programs and start working on a strategy for the trade show.

I’ve been to a lot of wine meetings both here and abroad, but there’s nothing like the Unified. Hope to see you there.

Wine, Adapting to Climate Change, & the Peter Parker Principle

beforeThe Red Mountain AVA is Washington’s smallest, warmest, and maybe its most distinctive wine-growing region. The warm part has been advantage for most of Red Mountain’s history. But not any more, according to Gaye McNutt and Benjamin Smith, owners of Cadence Winery and the Cara Mia Vineyard.

Too Darn Hot

Climate change has had a variety of effects that condition Smith’s ability to make the elegant wines he prefers. Earlier harvest, potentially higher alcohol levels, sunburned fruit, tough tannins — none of these impacts is desirable. Working with vineyard manager Dick Boushey, McNutt and Smith considered many alternatives and found each potential solution problematic in one way or another.

Then they hit upon an insight — to transform the vineyard in the image above to the emerging vineyard you see below.

after

The result is the first vineyard in Washington State specifically designed to mitigate the effects of climate change by doubling the row density of the vineyard. First planted in 2004 at three feet between vines and eight feet between rows the vineyard is now spaced at four feet between rows.

This tighter spacing provides up to two hours additional morning and afternoon shading of adjacent rows thereby cooling the fruit, reducing the effects of high heat, and ultimately producing more elegant, lower alcohol wines even in hotter vintages.

All around the world winegrowers are facing up to the challenges that climate change presents and, because wine people are creative by nature, they are finding ways to adapt through innovative viticultural techniques. Cadence is a model of how this can be done.

The Cadence solution is not inexpensive, of course, but it promises to allow them to continue to make excellent wines and even has benefits as an opportunity to add additional clonal selections to the mix.

Peter Parker Principle

A 2000 case winery like Cadence is to be commended for setting an example of innovation to mitigate the effects of climate change. Larger wineries can do the same, but the Peter Parker Principle (familiar to all Spider-Man enthusiasts) holds them to a higher standard. With great power comes great responsibility.

Many large wineries have risen to the Peter Parker challenge. Familia Torres and Jackson Family Wines, for example, have taken the lead in forming a global wine alliance to fight climate change, the International Alliance for Climate Action.  Adrian Bridge of Port producer Taylor Fladgate was instrumental in creating the Porto Protocol and the global conference on climate change and wine that Sue I and attended last year.

Many wineries embrace their social and environmental responsibilities by becoming benefit corporations (B Corps for short). Certified B Corps commit to a social and environmental responsibility agenda and agree to transparent assessment of their activities. Are you familiar with B Corps? A number of large businesses have taken this step including Patagonia Works, which has a B Impact Score of 151.2 on a scale of 0-200 (the minimum score for B Corps certification is 80 — an “ordinary” business might score about 50 points).  The craft beer producer New Belgium Brewing is also a B Corp (B Impact score 136.5).

It is easy to be a B Corp skeptic because it seems so unlikely that a business really would elevate people and planet to the same level as profit in its priority list. And I am sure that some are more committed than others. But a number of my former university students have become practitioners of and advocates for the B Corp program and they have persuaded me to take it seriously (Steve, Russ, Portland, Douglas, and Colleen — I’m talking about you).

Many wineries are entering the B Corp economy. Oregon’s A to Z Wineworks became the first certified winery B Corp in 2014 and is now joined by a growing international community including Symington Family Estates in Portugal and Fetzer Vineyards in Calfiornia. Fetzer, with about 2.5 million case production, is the largest B Corp winery in the world.

The Symington Family’s sustainability program, Mission 2025, is especially ambitious and includes a recently announced €1 million Impact Fund. The primary use of the funds will be for community well-being and health, environmental protection and conservation and cultural heritage and education in the Duoro and Alto Alentejo regions where the company has vineyards.

releasingmapping_1562881603835-512x288

Mapping the Road at Fetzer

Fetzer has doubled-down on the Peter Parker Principle. Fetzer and its Bonterra brand have long been known as environmental stewards and activists. Chilean leader Concha y Toro’s 2011 acquisition has given Fetzer greater scale and even deeper commitment to corporate social responsibility.

Fetzer’s 2017-2018 “Peter Parker” report, Mapping the Road, makes good reading because the range of activities and commitments is very impressive. As the report says,

Fetzer Vineyards understands that transforming the future requires not just small, incremental steps toward sustainability, but rather an ambitious framework—like regenerative development—applied to every part of its business. With the knowledge that the road will not always be easy, Fetzer Vineyards is poised to continue taking bold steps toward its vision of a regenerative, net positive company, and to be part of the movement to redefine what responsible business is all about.

One thing that I admire is that Fetzer is willing to “own” its supply chain. Many environmentally ambitious firms limit their universe of concern to their own operations, which is both practical and understandable. But wine’s supply chain is long and complex and progress in the vineyard and cellar alone is commendable, but not enough. Major players like Fetzer need to take responsibility for the whole chain. It’s the Peter Parker thing to do.

And, increasingly, they are. Congratulations to Cadence, Symington, Fetzer, and others  for their leadership.

Wine and the Dry January Syndrome

 

It is easy to dismiss Dry January (going alcohol-free for the first month of the year) along with Veganuary as typical well-intended New Year resolutions on lists that might also include pledges to quit smoking, keep a daily diary, make better use of that gym membership, and spend less time fiddling with your phone.

Resolutions are an optimistic impulse. They signal that we think we still have the ability to improve, which is important. There is also an element of penance in some resolutions. Had too much food, drink, fun, etc. over the holidays (and maybe spent too much money, too). Time to settle up.

A Toast to Your Health?

But there is more to Dry January and similar impulses these days. Health has risen in the hierarchy of needs for a growing segment of the population especially, we are told, younger people, and reducing consumption of beverage alcohol (wine, beer, spirits) is part of that movement.  Young people in many countries now start drinking later than previous generations and then choose to drink less once they begin.

Slavea Chankova, health-care correspondent for the Economist newspaper, recently identified the health-driven pivot away from alcohol consumption as one of the key trends for 2020 and beyond. Drinking is going out of style, she argues. She notes that …

Big alcohol companies can see the writing on the keg. They are expanding their low- and no-alcohol offerings of beer, wine and spirits. Innovation in such drinks is booming. Many are now indistinguishable in taste from the real thing. Nearly 50 of Heineken’s brands, for example, have an alcohol-free version. In most Western countries such alternatives are still a novelty, but sales are growing fast. In Germany and the Netherlands, both early adopters, they make up about 10% of beer sales.

It’s Complicated

baxterWine’s relationship to health is complicated and can be confusing. It seems like there are new studies every week, often with contradictory conclusions. A new book, Wine and Health: making sense of the new science and what it means for wine lovers by Richard Baxter M.D. surveys and analyzes the scientific data and makes the case for moderate wine consumption as part of a healthy, happy life. It’s an interesting and useful book that I recommend highly.

If you accept the premise that wine can be part of a healthy life, there is still the question whether people actually behave this way.  An article in the Economist newspaper’s October 19, 2019 edition argues that “Alcohol firms promote moderate drinking, but it would ruin them.” The article cites research based on a study (see reference below) of British consumers in 2013 and concludes that the beverage alcohol industry in Britain is heavily dependent on unhealthy behaviors by their customers.

Drink, Drank, Drunk?

The study found that 25% of the British population consume hazardous (average 24 drink units per week) or dangerous (average 73 units per week) levels of alcohol. Together they drink 78% of total alcohol and account for 68% of revenues. Moderate drinkers (average 4 units per week within a range of 1 to 14) are 59% of the adult population, but drink just 23% of alcohol and generate 32% of revenues. (Non drinkers make up 16% of the British population according to the report.)

If all alcohol drinkers consumed at healthy moderate levels, the study concludes, the demand for beverage alcohol would fall dramatically. The data reported by the Economist does not break out wine from beer and spirits. I could be wrong, but I doubt that wine is as dependent on binge drinking and excessive consumption as beer or spirits, at least in the U.S.

Studies of the U.S. wine market, however, show that consumption is similarly concentrated in a relatively small proportion of the population. These frequent wine drinkers (who consume wine several times a month or more) are key to wine market success.

No Wine = 56% in U.S.

Wine drinkers are a minority in the U.S. A 2014 Wine Market Council study found that 35% of U.S. adults drank no alcohol and another 21% consumed alcohol, but not wine. High-frequency wine drinkers made up just 15% of the adult population. An even smaller group — 30% of the 15% of high-frequency wine drinkers — accounted for 90% of spending on $20+ wine and 40% of all purchases of $10-$20 wine.

Dry January and related health concerns are something that the U.S. wine industry needs to take seriously since its consumer base is so relatively narrow. If the small group of high-frequency wine drinkers reduces consumption for reasons of health, it will make a difference.

Obviously the point is not to promote high levels of alcohol consumption like those found in the British study, but to encourage healthy consumption patterns of wine as an element of a sustainable lifestyle, much as Wine in Moderation has done is many countries. Health is important and wine needs to address the concerns.

This isn’t the answer to the problems facing wine today, but it might be part of a strategy to make wine more relevant and appealing to today’s evolving consumer base.

>>><<<

Sources for the Economist article: “Drug harms in the UK: a multicriteria decision analysis” by D. Nutt et al., The Lancet; “How dependent is the alcohol industry on heavy drinking in England?” by A. Bhattacharya et al., Addiction; Centre for Responsive Politics; NHS.

2019 Wine Economist Top Ten

251626This is the time of the year to look back on 2019 and ahead to 2020. Here at Wine Economist world headquarters our contribution to the first part of this exercise involves probing the data provided by WordPress, our internet host, and seeing which weekly columns got the most attention. It’s one way to gauge what’s on readers’ minds.

The most-viewed column by far this year was Outlaw Wine? 19 Crimes Succeeds by Breaking All the Wine Marketing Rules, which first appeared in 2018.  19 Crimes is a phenomenon and, as I wrote in the column, it breaks convention in many ways and perhaps because of that it appeals to a wine market demographic that is otherwise hard to reach. Are there lessons to be learned from the 19 Crimes success story? Obviously a lot of people want to find out.

The Top Ten list is drawn from columns first published in 2019. Here they are from #1 to #10.  Take a look at the titles. Do you think they have anything in common (my answer follows)?

 

1.   Six Things to Do With Surplus Cabernet Sauvignon Grapes

2.  Global Rosé Market Q&A.

3.  Two Cheers for Canned Wine

4.  Anatomy of the Rising Import Threat to U.S. Wine

5.  Global Wine Market: Storm Clouds Gathering?

6.  The Beginning of the End of the Old World Appellation System?

7.  Is Sustainable Winegrowing Sustainable?

8. Which Wine? Navigating the Retail Wine Wall’s Fluid Map

9.  What’s Really in your Glass? Transparency, Accountability & Wine

10.  Global Wine’s Lost Decade

Interesting list, don’t you think? Several of the columns establish a problem — slack demand for wine in many markets and emerging over-supply, especially of Cabernet Sauvignon here in the U.S. What to do?

Most of the rest of the columns look for answers. There are some growing segments and categories even in a stagnant overall market. What’s hot? Who’s buying? What? Why? The columns on Rosé and wine in cans got extra attention because those were two growing markets in 2019.

I wonder what will be hot in 2020?

The Wine Economist will take a break for a couple of weeks and return in the new year with more analysis of global wine market trends. Sue and I wish all our readers health and happiness. See you in 2020!

>>><<<

giftsSince this column is filed under “Shameless Self-Promotion” I would be remiss if I didn’t remind readers that wine books make great gifts: Wine Wars, Extreme Wine, Money, Taste, and Wine: It’s Complicated, and Around the World in Eighty Wines.

Note: Many Wine Economist columns are republished in Italian by Civilta del Bere, a leading Italian journal of wine and culture. Grazie mille!

Air Provence: Provence Rosé Takes Flight

airp2The list of regions around the world that make good Rosé wine is very long because Rosé is a style of wine, not a wine grape variety. But the word-association game answer is easy: Rosé? Provence.

And although my friends in California and the Languedoc and other places that have nice Rosé  hate it when I say this, if you are talking Rosé here in the United States the conversation begins with Provence.

#1 Export Market: USA

The wine producers in Provence are understandably happy with this situation because they have come to depend on the U.S. market to drink up their Rosé wine exports. According to data provided by the Conseil Interprofessionnel des Vins de Provence (CIVP), the U.S. was Provence’s #1 export market in 2018, happily emptying 26.3 million bottles of Provençal wine, 98% of which was Rosé.

Rosé is one of the hot segments of the U.S. wine market and the Rosé from Provence is very strong. But it would be a mistake for the Provençal producers to become complacent about their signature wine’s position in its most important export market.

This is especially true given that the overall U.S. wine market seems to be reaching a plateau and that the current trade war environment is not friendly to Rosé wines from France that have less that 14% abv and so are subject to the recently implemented 25% tariff. And then there is the threat of more tariffs in 2020.  Yikes!

Now Boarding: Air Provence

So the Provençial producers have organized an ambitious trade event called Air Provence that is scheduled for April 6 – 7, 2020 to keep their wines on U.S. radars and deepen market penetration.  Incredibly, given their success in the U.S. market, they have even more to share. The program offers wine trade members an intense immersion in the region and its wines, with 200 producers and more than a thousand wines on offer in addition to dinners, masterclasses, and so on. The event website summarizes the program like this:

The very first edition of AIR PROVENCE, organized by the Provence Wine Council for Côtes de Provence estates, invites you to take off on a unique immersive journey at the heart of the leading rosé wines appellation. For two days, experience a business class trip to meet producers and wine merchants, discover terroirs and landscapes, and taste wines as well as Provence art de vivre.

I’m interested in Air Provence in the context of the recent discussions about generic wine promotion in the U.S. We often focus on consumer-facing strategies (the “Got Milk?” approach), but there are many places in the product chain where leverage can be applied, either as a substitute for or complement to other tactics. The Provence producers are working to get the attention of trade actors (importers, buyers, etc.) who can become active  partners in selling their wines.

Provence Rosé wines are hot, but the trade wars are creating turbulence and headwinds for the wine market generally and for French wines in particular. Provence Rosé producers are smart to be proactive, using programs like Air Provence to build on their successful market foundation at this moment of uncertainty. I wish them good fortune, but as Bette Davis said  in All About Eve, better fasten your seat belts!

What Can We Learn from the Wine in Moderation Movement?

paul-giamatti-drinking-a-001Some say that it is time for the wine industry to take the initiative to change perceptions through a generic promotion program.  The “Got Milk?” campaign made people think about milk a bit differently. Maybe a similar initiative could shift the needle on wine?

One concern, as I wrote last week, is that as memorable as “Got Milk?” was, it didn’t prevent milk’s ultimate marketplace decline. Maybe “Got Wine?” isn’t the answer. But what would a better approach look like?

Wine in Moderation

I think there are lessons to be learned by studying the Wine in Moderation movement  that began in Europe a decade ago and has now spread to many corners of the wine world.

new_branding_slideshowWine in Moderation was founded in 2008 at a time when the European wine industry faced a growing threat. It wasn’t just that wine demand was falling — that had been going on for a couple of decades. And it wasn’t just the global financial crisis, either, although that didn’t help. It was rising anti-alcohol sentiments and policies that threatened wine both as an economic activity and also as an integral part of European culture.

I asked George Sandeman, President of the Wine in Moderation Association, to explain WiM’s objectives and the lessons they have learned.

Although a message of “moderation” seemed to be well aligned with the way wines are presented on a day to day basis, focusing quality rather than quantity, we encountered difficulty in waking up the wine sector to the cold wind blowing from Geneva.

Initially there was no recognition of the social responsibility attributed to the “wine sector” (“leave it to beer and spirits!”). At best it was a reluctance to accept the fact that wine needed to be part of the social responsibility which the category required, and at worst we were sleepwalking into the same treatment as tobacco.

The traditional culture of wine was frequently overridden by need to compete in new market environments … Add to this a powerful health lobby working to demonize wine …

So the first two lessons are that the wine industry needs to wake up to sector-wide issues. And the positive story of wine doesn’t tell itself. Someone has to do it.

What wine needed, the group’s founders proposed, was an organization that would help its members tell the counter-story of wine’s benefits when consumed in moderation, and would lean against the wind of damaging anti-alcohol regulations. This was no easy task, Sandeman notes. “The concept of ‘moderation’ is not a simple concept to communicate, varies with different cultures and viewpoints, and is difficult to translate for non-English speaking countries …”

Strength in Numbers 

Wine in Moderation has evolved in the 10+ years since it was founded (you can read about its progress here). As its efforts have gained traction, it has moved from a tight European policy focus to an approach that is broader in both geography and strategy. The map of Wine in Moderation activities is now global and its focus is shifting to education of professionals. Although there are Wine in Moderation activities in the U.S. I suspect that the impact is somewhat limited by the lack of a national coordinating organization,  a role played, for example, by Vinos de Chile, Unioni Italiani Vini, ACIBEV, and FEV in Chile, Italy, Portugal, and Spain respectively.

Seventeen national organization plus several global wine companies (Pernod Ricard, Möet Hennesy, Sogrape), and a host of other groups including WSET and the Institute of the Masters of Wine now support and implement Wine in Moderation programs around the world.

So the third lesson is that there is strength in numbers. It is important to work together on several levels to address important issues.

I first learned about Wine in Moderation from George Sandeman and Susana Garcia Dolla when I was speaking at ACIBEV meetings in Porto a few years ago. Since then I have noted the group’s participation at national and international meetings, always presenting a message of wine in a cultural context.

Wine in Moderation announced a major rebranding in November 2019 with the theme of Choose – Share – Care, which the leaders hope will carry the organization forward into even more ambitious professional and consumer programs in its next decade.

  • CHOOSE to make informed choices; choose the best wine for you to enjoy, choose whether or not to drink.
  • SHARE wine with friends & family, pair with good food and water. Drink slowly and take the time to fully appreciate.
  • CARE about the wine you serve, care about yourself and about others. Avoid excess and enjoy your wine in moderation!

Increased focus on wine tourism is another element of future work. Wine in Moderation’s association with the United Nations World Tourism Organization is one step along the path to providing wineries and regional groups with more tools to shape perceptions and develop the wine tourism experience.

Strike the Right Chord

Two things about Wine in Moderation are especially relevant to the current U.S. concerns. First, while I will admit that Choose-Share-Care does not have that “Got Milk?” punch, the message is one that I think might strike a chord with some of the groups that wine is currently failing to engage.  Health, community, and culture is a strong positive message and one that resonates with young the old alike.

And the way of getting the message out is relevant too. One thing that impresses me about Wine in Moderation (another lesson?) is its multi-layer approach. Here’s how it works:

  • The international coordination is provided by a not-for-profit international association, the WiM Association.
  • In each country, there are one or more WiM national coordinators that support the planning, coordination, implementation and accountability of the programme in their respective countries.
  • WiM supporters join the programme at national level. They actively support a wine culture that inspires well-being and healthy lifestyles and contributes in the prevention and reduction of alcohol related harm.
  • Leading wine companies further support the efforts made at international and national level setting the example with their leadership in social responsibility and high contributions. These leading companies are the Wine in Moderation Ambassadors.

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.

This Changes Everything?

Everyone would like to find a silver bullet that would change everything for wine — in a positive way. But silver bullets are hard to come by and they show up in unexpected places. Do you remember the impact of the 60 Minutes “French Paradox” broadcast? Or the Sideways boost for Pinot Noir? (BTW Miles’ “dump bucket” scene from Sideways is definitely not an example of moderate wine consumption!)

Wine in Moderation has moved the needle in its target regions according to its most recent report. Worth further study, don’t think?

Got Wine? Is It Time for a Generic Wine Promotion Campaign?

 

I’ve had several conversations recently that circled back to the idea that the wine industry should invest in a generic promotion campaign. You know what I mean. Not “Got Milk?” (maybe the most celebrated generic promotion of all time), but something along the lines of “Got Wine?” or “Got California Wine?” depending on who’s talking.

“Got Wine?” is too copy-cat to work, of course. You can come up with something better if you give it some thought. But you get the idea.

Subsidy Wars?

One argument for generic promotion of wine is based on the realization that wine isn’t connecting with new, younger consumers the way we hoped or expected. If we want consumers to have a particular image of wine (or of the wine-drinker identity), maybe we should be more proactive in shaping perceptions.  Laissez-faire isn’t working so well. Let’s do something.

A second argument, which would support “Got California Wine?” or “Got American Wine?” is provoked by the  subsidies the European Union is giving to its member states to promote their wines in the U.S. market.

Years ago the EU used to support prices and winegrower incomes directly, but buying up surplus grapes and wine (we called the result the European Wine Lake). Now the EU has changed tactics and supports the modernization of wine production and the promotion of exports. Basically, they want the wines to be marketable and if the EU market won’t buy it all (and it won’t), then exports are promoted to avoid re-filling the dreaded lake.

This is a better approach from an economic standpoint, but you cannot blame American producers for thinking that it creates an uneven playing field. It might be better, many argue, to get the EU to stop subsidizing wine export promotion. But that would be complicated and take time. In the short run, the argument goes, generic promotion of U.S. wines might even things up a little.

Milk is All Over

Talking about wine promotion got me thinking about milk. That “Got Milk?” promotion ran for 25 years and attracted lots of attention. All sorts of celebrities posed with milk mustaches (aka moo-staches) to draw attention to milk and its broad appeal.  Everyone enjoys milk — that was the message. The Whoopi Goldberg ad was my favorite.

But, memorable as these advertisements are, they were fighting a losing battle. Increasingly, American consumers don’t follow the “Got Milk?” path.

milkI first realized this a few years ago when I heard wine economics guru Karl Storchmann talk about trends in various consumer beverages. He examined Google data about searches for wine, tea, coffee, milk, and water and concluded that  while water was rocking it, milk was fading fast. “Milk is all over,” Karl said at the time (here is a pdf of his study).

Karl wasn’t wrong. Dean Foods, America’s largest milk producer, filed for bankruptcy in November 2019.  Milk sales fell for 4 years in a row as Americans shifted to plant-based cow-milk alternatives, including oat milk and especially almond milk.

Wine vs Milk?

Got Milk? Yes. Always. But increasingly it doesn’t come from a cow.

When you think about it, what happened to milk is a little bit like what seems to be happening to wine. There are lots of new products available that compete with wine including craft beer, craft spirits, and alcoholic sparkling water.  Some of these products are popular in part because they have less alcohol than wine, addressing a health concern  in the same way that almond milk avoids a health problem for some dairy-intolerant consumers.

Is wine all over? I don’t think so. But the industry is obviously not as healthy as we’d like it to be.

So what should wine do? A generic campaign is fine, but it matters a lot who it is aimed at, what it says, and how it is organized. And someone has to pay for it. A “Got Wine?” style consumer-focused campaign isn’t the only option.

Sue and I recently attended a promotional event for Italian wine that was aimed at trade — importers, distributors, sommeliers, journalists, and various “influencers” — but not consumers themselves (there was no consumer tasting).  The product chain for wine is long and complex and there are several points where promotion can be effective.

Come back next week for thoughts on some of the issues that a “Got Wine?” push needs to take into account. In the meantime, I have discovered that there already is a GOT Wine — GOT stands for Game of Thrones!

>>><<<

The chart comparing Google search term data for wine, milk, etc. is taken from Karl Storchmann, “Wine Economics.” Journal of Wine Economics 7:1 (2012), p. 3.

The video above is the very first “Got Milk?” commercial.