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Thursday, December 30, 2010

2011 wine predictions

Image from Foxnews.com

Don't hold me to all of these.  You should know by now I often don't know what I'm talking about.    :)

Retail Wine Sales
Under $35 wines are selling with under $15 wines even better.  In the higher ranges the established and well-respected wines still sell.  There are much better quality wines showing up in the $10-20 range and there are still many in the pipeline so we'll see more bargains.   Plus there's still a backlog of wine so even as the economy seems to be improving the bargains should still be there though you will see prices creep up a bit.
Some seem to be asking if this is permanent or will customers eventually go back to routinely paying $40 or more for a bottle of wine.  Well, in any other downturn things have always returned so I'm guessing it will this time.  Only issue is when will this happen as not everybody can wait five years and still be in business.
Bottom line:  There will still be bargains, but many name brands won't be as steeply discounted as in 2010.

Restaurant Wine Sales
Restaurant sales continue to do poorly because most of their wines are well over $35.   For some reason restaurants don't get it. Or at least feel they can't operate in a lower price range.   Restaurant business seems to be picking up in the last half of 2010 as they are hiring so wine sales should follow.  But will it be only at the low end of the wine list?
Bottom line: Restaurant wine prices continue to be too high and sales continue to be flat.

Changing Customer Attitudes
The current segmentation of customers are: Millennials with iPhones, career- and family-oriented Gen-Xers, and aging Boomers.  Some people expect a social media presence, some want a green winery that cares about the land and energy use, while others just want a good wine at a good price and don't care who it's from.
Bottom line: Eco-wineries (organic grapes, biodynamic, solar, etc.) will be the in thing.

Things You'll See in Wine
Health concerns among many could reverse the high alcohol trend. 
Wines will come in recyclable packages, kegs, cans, and other non-glass containers.
Bottom line: More food-friendly wines coming in various containers.

Selling to the Under-30 Crowd
This gets a lot of press what with Twitter and other social media always in the news.  Only problem:  Is it smart to focus on the group that spends on average 50% of what the middle-aged and older customers spend?  This means as the economy improves and people start spending more for a bottle of wine again it won't be the younger customers. 
The good news is the under-30 people are much more enthusiastic about fine wine than any previous generation at that age.   So how will the wineries handle this (current vs. future luxury-goods customers)?   One thing it should mean is a big market for the under $15 wines for a long time to come.
Bottom line:  The social media craze continues and hopefully matures into a useful tool for wineries and their customers.

Wine Clubs
Clubs will continue to lose customers as people want to keep monthly expenses low.   Also, clubs seem to be more popular with the older folks and not so much the younger.  That's more cultural maybe.
Bottom line:  It will be another bad year for wine clubs as long as they stick with the model of requiring mandatory shipments and charges.

Corporate Wine
Most wine, by volume, is not from a small farming family, but from large private and public companies such as Gallo, Jackson, Constellation, Diageo, and Fosters.   Those last three just mentioned are corporations and they are all selling off all or part of their wine business because of poor economic conditions.    These guys are all jockeying around to survive.
Bottom line:  A bunch more wineries will change hands.  Everyone tries to hire the marketing whiz that will save their brand.

Some Wineries Will Get Hurt
As the recession drags on it will get harder to keep paying the bills for those small, independently owned wineries that are already stretched to the limit. This problem will focus with the small producers in the $50-up range. Unless these wineries are selling on allocation or sell-out on a mailing list they will have to drop prices, sell the winery, or go out of business.
Bottom line:  Unfortunately, there will be closures and sell-offs.

New Wineries Cropping Up
I don't know how the heck anyone will get a bank loan now to start up a new winery.
Bottom line:  Unless you have deep pockets and are already known in the wine world you won't be opening a winery.