Another Unified has come and gone. This year’s talks were excellent and I found myself torn on several occasions trying to decide which to attend. The Keynote speaker luncheon was extremely interesting from Kendall-Jackson Family President, Rick Tigner, who gave us all insight into how that company views it’s place in the wine world; “A Real Estate company who has wineries and makes wine to buy more real estate.” His talk was a nice review of my past few years studying for the MW exam. It was good to know that my observations were shared in the industry.
I ended up going to the Alcohol in Balance seminar although I also really wanted to go to the Marketing talk on “Content is King” at the same time. As a winemaker, I felt I should attend at least one winemaking talk, right? This talk covered the reasons behind the push towards lower alcohol wines including social responsibility, lower calories, and lower alcohol in general for serving size purposes. While certain critics who have given high marks to high alcohol wines were mentioned (no names being named of course), I found it interesting that the panelists avoided talking about the critics who praise the wineries that lean towards lower alcohol. Some of the panelists were driven by market demand and others by philosophy to produce wines of more restraint and “freshness” as Steve Matthiasson, a Napa grower and winemaker, put it. There was quite a discussion around vineyard yields and how they are not directly correlated to quality. There also seemed to be a very vocal segment of the panel and audience that believe that Napa is currently undercropped as a whole, leading to vine imbalance, leading to needing increased sugars year after year to reach “ripe” flavors.
The State of the Industry was enlightening as always. There was lots of speculation as to what the strengthening dollar will do to the industry as this makes American wines more expensive to purchase in other countries. Mike Veseth pointed out the interesting correlation of “Gold, Black Gold, and Bordeaux” explaining that the Gold, Oil, and Bordeaux markets are very similar to each other and all three seem to be up or down together. Being “Green” is still something to strive for and is becoming more important according to Veseth. The global wine market was discussed including the implosion of the UK “Monopsony” due to the rise in UK import duties on wines. In the US, if your wine is above $12.00/ 750mL you are probably doing ok but below that times are tough. It is the market of volume and small margins which is not doing very well and slowly losing market share to the upper tier wines. Prosecco and Portugal have had good years in the US both showing excellent growth.
Jeff Bitter gave us an overview of the California grape supply which echoed what Veseth had highlighted with the price points. If you are selling to wineries who sell above $12/750 you are probably ok, unless you are growing Merlot which is still having a tough time. If you are selling to wineries making wines below $12 you are probably hurting, potentially thinking about pulling your vineyard, and eyeing alternative crops unless you are selling to Gallo’s Barefoot. Bitter highlighted this by saying nearly 2/3 of all vineyards pulled in California’s central valley are wine grapes and over the past 4 months over 22,000 acres have been pulled. It is a trend he does not see slowing down anytime soon. On vineyards being planted, the nurseries report that nearly 1/3 of all vineyards going in the ground are Cabernet Sauvignon. Cabernet glut in the making anyone?? Pinot Gris is also making a run with projected increases in acres of up to 23% over the next three years.
Jon Fredrikson then came up to cover the US wine market. He also preached the “tale of two markets” however his split was at $9.00; above is ok, below is hurting. He also stated that 75% of wine by volume is in the “below $9” range in the US market. He said everyday wines are getting stiff competition from non-wine products and are suffering from changing demographics in the marketplace. Craft beers sales surpassed sales of sub-$10 wines in 2012 and do not show any signs of slowing down according to Fredrikson. The rise of “Craft” beers and spirits in addition to the lower domestic wine production due to the short 2010 and 2011 vintages have caused the sales of wines to flatten out in 2012 and 2013. More and more restaurant beverage lists branch out to include beer pairings and specialty cocktails put together by “rockstar mixologists” and Cider is also skyrocketing, both of which are eating into the wine marketshare. This talk finished with the announcement of DFV Wines being named Winery of the Year. Congrats to them!
One of the more off the radar talks I attended was one covering Regulatory issues facing wineries from DTC, Social Media, and 3rd party sales channels. I know, I know, not the most exciting stuff but the talk proved very enlightening. The panel, made up of lawyers John Trinidad and Kristen Techel, TTB representative Theresa McCarthy, and Jeff Carroll of Ship Compliant, covered a wide range of legal issues, most of which I had never really contemplated. The largest warning I can give from the information in this talk is to those of us personally involved in the wine industry. MAKE SURE YOU HAVE A LEGAL DISCLAIMER ON ALL SOCIAL MEDIA AND/OR BLOGS DIFERINTIATING YOUR PERSONAL SITES FROM YOUR COMPANY. Did I type that loud enough?? Mine is located on my “About Me” site if you need an example. If you don’t have this protecting you and your company affiliation is listed or talked about in your profile, the TTB could treat your personal site as a company site which means it would fall under the TTB regulations for industry advertisements, tied house laws, and other issues. Yes, its a stretch, and yes, likely small producers and obscure employees of even large wineries would be ok but do you really want to take that chance? I don’t! There was tons of good info in this talk and I highly recommend trying to get a recording of it if you didn’t attend. It was definitely the least attended of all the talks I went to however, it was eye-opening.
This year was fantastic and I can’t wait for next year!