The Wine Curmudgeon

How low are wine prices these days? Awfully low

There has been a lot of news about wine prices holding steady lately, but it's been mostly economic -- studies, analysis, and so forth. That's the kind of stuff, as accurate as it is, that is sometimes painful for consumers to read. Not many of us worry too much about grape tonnage.

On the other hand, it's very easy for consumers to understand low prices, like these in a maling sent this week from Total Wine, the large regional retailer that wants to be a national chain:

•  Barefoot pinot noir for $4.97, almost 30 percent off the suggested retail price.

• The 2009 Groth Oakville cabernet sauvignon, a previous vintage, for 12 percent less than the current vintage's $57.

• Bogle chardonnay, a mainstay of the $10 Hall of Fame, for $6.97.

• A previous vintage of King Estate pinot gris, about as dependable as a $17 wine can be, for $11.97.

• Perrier-Jouet Grand Brut, a holiday Champagne staple, for $39.99 -- 20 percent off suggested retail.

Some of these, like the Barefoot and the Bogle, are likely loss leaders -- priced to lure customers to the store in the hope they'll buy other, more profitable, wines. But the prices also speak to two other trends. First, there's still a lot of unsold wine in the supply chain left over from the recession, and especially expensive wine. Until those wines are sold or disposed of (right, Treasury?) they will continue to drag down prices. The Total mailing also had previous vintages from Cakebread, Chimney Rock, and Silver Oak, each expensive and popular California producers.

Second, competition among retailers is fiercer than ever, with liquor superstores growing 15 percent since  2008, three times faster than their conventional counterparts. Total, with almost 100 stores, wants to double revenues to $2 billion by 2016, while BevMo, with 144 stores mostly in the west, wants to expand outside its base. All that competition -- which is especially brutal in Dallas, where Total opened last year -- means more discounting in an attempt to build market share. And that means more low prices.

Throw in the economy, which has been treading water for at least a year, and the idea that wine prices are going to go up anytime soon is as silly as the Wine Curmudgeon using wine scores on the blog.

For more on wine prices:
• Retailers and wine prices
• Wine prices in 2013, one final time
• The revolution in cheap pinot noir

Cupcake wine review 2013

The Wine Curmudgeon has discovered the flaw in the Cupcake Vineyards marketing juggernaut. It’s almost impossible to find the wines in a store, whether grocery or wine, that has any kind of inventory. It took me 10 minutes to locate the two bottles for this review, scuttling between aisles at my local Kroger; would a less determined consumer have done as much?

Maybe they would. Cupcake is the post-modern wine business success story, eclipsing even Barefoot and its millions and millions of cases. Three years after it started, Cupcake was named wine brand of the year, and its sales increased 67 percent in 2012, according to one market research firm.

Cupcake, as Blake Gray wrote last year, approaches wine from a different perspective. It markets its brand before it markets its products, so its customers don’t buy on varietal, like pinot noir, or region, like France, the way most of us do. Rather, its customers buy Cupcake first and worry about varietal and region later.

In this, the wine is marketed almost like women’s clothing, where Cupcake is the designer that shoppers look for before they look for a specific item like a dress or a skirt. That’s why Target has long offered designer collections, whether from Isaac Mizrahi, Jason Wu, or Phillip Lim.

None of this, of course, takes into account whether the wine offers value. That’s why I’m here – this year’s take is after the jump:

Retailers and wine prices

Wine-Searcher.com has great news for wine drinkers: “Increased transparency of wine prices worldwide means retailers are no longer able to charge excessive prices.”

So how does that jibe with what I saw yesterday – a national retailer charging $17 for a South African red blend that included pinotage? Wine prices don’t get much more excessive than that.

The Wine Curmudgeon will sort this all out after the jump:

When Blue Nun ruled the wine world

In the 1980s, the German company that produced Blue Nun exported 2 million cases of the cheap, sweetish white wine, making it the YellowTail of its day. In this, it was supposed to be the fabled gateway wine -- something that would introduce non-wine drinkers to wine. Then, they would progress from Blue Nun to dry wine wine and eventually emergeturn into smart, sophisticated, and savvy wine drinkers.

That never happened (and, as I discuss in the cheap wine book, probably never will). Blue Nun, like all potential gateway wines, whether white zinfandel or YellowTail, reached its peak and hit a plateau, and consumers moved on to something else. Blue Nun is still around and still sells millions of cases, but it’s not what it was.

How big was Blue Nun then? I had dinner at Commander’s Palace in New Orleans in 1982 in the swanky upstairs dining room, and six or eight people at the table next to us were drinking Blue Nun. That they ordered it at one of the world’s great restaurants and which had an equally great wine list speaks to how comfortable it made those diners feel. Because, of course, Blue Nun was the white wine that’s correct with any dish – a brilliant marketing slogan for U.S. wine drinkers hung up on wine and food pairings, and just as true now as then.

Not all of the wine's marketing was that good, as this TV commercial from 1985 – when it was on its downhill slide -- demonstrates (courtesy of xntryk1 at YouTube):

The myth of wine and food pairings

The ancient Greeks, who didn’t understand gravity or the Bell curve, attributed the mysteries of the universe to the gods, and it served them well. Need a victory in battle? Pray to Zeus. Not sure about the future? Visit Apollo’s oracle at Delphi.

Wine and food pairings are wine’s version of Greek mythology. It’s the solution to all of the wine industry’s problems, even though – like Apollo’s oracle – pairings don’t mean all that much to the vast majority of wine drinkers.

This is not to say that wine and food pairings are legitimate, because certain food tastes better with certain wine, and there is scientific evidence to support that. What it does mean is that, for most consumers, they aren’t important. You can see more about this here. And here.

This has made such an impression on me that I’ve pretty much given up on wine and food pairings (though I’ll still suggest them). The cheap wine book goes into detail, but what it comes down to is this: If I tell people it’s OK to drink what they want, then why I am telling them what to drink it with? All I ask is that wine drinkers be open to the concept of pairings and give them a try. If they don’t like them, that’s fine, too. As my brother says, “I like big red wine. Why can’t I drink it when I want?”

Nevertheless, many in the wine business see wine and food pairings as the key to increasing wine consumption in the U.S. (this being one of the most important exceptions). This approach shows up regularly in studies and white papers, and most recently in what was an otherwise outstanding effort to help the industry figure out how to get Hispanics to drink more wine.

But the report, issued by Rabobank, has this line: “What support will be given for pairing wine with Hispanic food?" Forget the practicalities – what exactly is Hispanic food, given that Hispanics come from dozens of countries and they even eat non-Hispanic food? More importantly, it also ignores the point that most consumers don’t care about pairings and that pairings are especially intimidating to new wine drinkers. So how will that help lure Hispanics into wine?

Sometimes I wonder if anyone is really paying attention when they write these things.

The revolution in cheap pinot noir

The moscato and sweet red wine trends have received more attention, but the revolution in cheap pinot noir may eventually be just as important to the wine business and to consumers.

That’s the gist of a story I wrote for the Beverage Media trade magazine. Pinot, traditionally the province of oenophiles with deep pockets, has long been considered fine wine more than mass wine for two reasons: The grape was always difficult to grow and difficult to turn into wine. Neither is especially true any more, and these changes have allowed winemakers to produce millions of cases of pinot that costs less than $15 a bottle and is clean and professional – if sometimes not very pinot-ish in taste.

In addition, the popularity of these wines is another indication that U.S. wine drinkers are looking for fruitier, less tannic, and less alcoholic options than merlot and cabernet sauvignon, and this ties into the moscato and sweet red trends. The tremendous growth in the popularity of these three wines hints at larger changes in what wine drinkers want, though it’s probably too soon to know more than that.

The story’s highlights and a few other thoughts, after the jump:

The Postal Service's plan to get into the wine business

I can deliver wine. Really.

Which ultimately may make about as much as sense as the Postal Service’s sponsorship of a professional cycling team.

 Nevertheless, a top postal official floated the idea last week that the agency, facing a gazillion dollar deficit and not having any other real ideas, should get into the booze delivery business. “There's a lot of money to be made in shipping beer, wine, and spirits,” said the official, who estimated it could be worth $50 million a year to the agency.

This was big news, given that it’s currently illegal to ship alcohol via the mail. A Dallas TV station was so enamored of the idea that it ran the story, complete with video of drunken college students. One regular blog visitor asked, hopefully, if this was the beginning of the end of the three-tier system.

Of course not. It may not even be especially lucrative. First, very little in the way of spirits is shipped in the U.S. each year, says Jeff Carroll of Ship Compliant in Denver, which helps wineries automate the compliance process. That's because spirits can't be shipped to consumers across state lines -- laws that  eliminate one part of the Postal Service’s potential market. Beer, apparently, is still trying to figure out direct shipping, and is hampered by even higher shipping charges than wine. So that eliminates the second potential part of the market.

Which leaves wine. And, according to my calculations, the Postal Service would have to capture one-third of the wine direct shipping market to make that $50 million – an ambitious target for a startup competing with UPS and FedEx. That number is based on the Postal Service charging $4 a bottle (a standard price) and that 38 million bottles of wine were sold via direct shipping in 2012.

More worrisome is that the Postal Service doesn’t seem to understand the legal niceties involved. Why would someone be quoted as saying they would ship spirits and beer when there was no market for it? It's also not clear from the stories I saw whether the anyone at the Postal Service understands the three-tier system and its restrictions -- that 10 states don't allow direct shipping and that licences and approvals would be needed in most of the other 40 for the Postal Service to get legal status as a shipper.

And finally, given that gazillion dollar deficit, what difference is $50 million going to make? Better to sit down with Congress to figure out its future in the Internet Age than waste time and money on something that seems so hit and miss.