Monday, February 23, 2009

Going local

A couple of weeks ago, my old friend, Jim Trezise, President of the promotion and research office, the New York Wine and Grape Foundation (NYWGF) wrote a piece in his newsletter titled: Why Don’t New York Restaurants Feature More New York Wines?

Jim told the story of having dined in a seafood restaurant located in the state’s capitol, Albany, where he found not one New York wine on the wine list.

This is a restaurant that apparently has taken part in an annual event that NYWGF sponsors to acquaint restaurants and retailers in the state with New York wines from all appellations and AVAs.

Yet, on this regular working day, the restaurant offered Riesling from Washington State, but not one from the state that arguably does that wine best in the U.S., and the state in which the restaurant is located!

Jim wanted to know from the manager why there are no New York wines on the list. When he asked if her choice had to do with quality, the manager said no, the quality of New York wine is not a problem.

Jim pressed on. Is it pricing? No, she isn’t concerned about the pricing of New York wines.

He didn’t give up. Jim asked if she was unhappy with the promotion of the wines. No, she is glad to participate in the annual get acquainted promotion hosted by NYWGF.

One more time: Do the wines lack recommendations? Not really. In fact, the manager told Jim that the NY Restaurant Association encourages restaurants to feature local wines.

The only thing the manager did say that seemed to be nice to hear is that even though New York wines have been receiving decent magazine ratings lately, those ratings don’t really matter in a restaurant setting—good news, if you ask me.

Baffled, Jim wanted to know what the problem is.

The manager’s answer was that wholesalers bring specials to the restaurant, print the wine lists, and make her life easy.

Jim was of course incredulous. He cannot understand why the manager would forgo wines on the list that she admitted are a good match for her restaurant just because the wholesalers make her life easy, to which I ask: why not?

Why shouldn’t the manager respond to a promotional mechanism that makes her life easy? Isn’t that why the wholesalers do it? They make her life easy; she buys wine from them.

Obviously, the wholesalers don’t offer specials on New York wine, and even wholesalers who offer the wines don’t seem to readily print them on the wine list. Should we blame the manager for accepting the specials she is offered and the printed wine list?

First, let's address the specials.

The wholesaler provides the specials to the restaurant, but they are generally sponsored—and paid for—by the producer. The producer provides the wholesaler with what is called in the business a “program.”

A program can come in a number of forms, but each form is a way to reduce the wholesale price of wines while increasing the incentive to buy in large volume. Both wholesaler and producer get behind the program and help promote the wines so that they move well and the restaurant makes a profit.

A program is also designed to motivate the wholesaler’s sales team to push the wines in the marketplace.

I suspect that New York wines need more programs and they need to push the wholesalers harder--either that, or get customers to demand their wines in restaurants.

Loyalty to local wines is a fine thing for the NYWGF to promote and for a restaurant to engage in, but it’s profits that the restaurant needs in order to stay in business. The annual New York wine promotion event is proof enough that the promotion must either bring more people or better wine prices to the restaurant. If the promotion is not extended or added to throughout the year, and the hordes stop asking for local wine, the restaurant goes back into “easy profit” mode.

Now, for that wine list printed and provided by the wholesaler.

In this day of desktop publishing, there’s no excuse for a restaurant to rely on it. And by not using desktop publishing to create its own wine list, the restaurant shows that it isn’t much interested in giving its customers revolving and dynamic wine choices. To me, that’s an even worse offense than shunning local wines.

If you are reading this entry anywhere other than on the vinofictions blog, be aware that it has been lifted without my permission (and without recompense), and that’s a copyright infringement, no matter that the copyright information appears with it.

Copyright Thomas Pellechia
February 2009. All rights reserved.

Sunday, February 15, 2009

America the wine culture

While trying to catch up on my reading the other day, I came across a story from January that addressed the seeming growing wine consumption in the United States.

The direction of the brief story was to show the relationship between declining wine consumption in Europe (especially France and Italy) beside the rising consumption in the United States.

One of the statistics in the document that caught my eye also jiggled my memory.

The numbers reported in the story don’t always appear as per capita but rather as the overall consumption numbers and then they are compared to Europe and Australia, etc.

I did quick math on the overall consumption numbers and came up with a per capita wine consumption by Americans in 2008 at nearly three gallons.

Each case of wine is approximately 2.4 gallons. So, the numbers mean that for every adult of drinking age, wine consumption in the United States accounted for just over a case annually.

Juxtapose those three gallons a year over here with the per capita consumption in Italy and it presents quite a picture.

In Italy, wine consumption has been steadily dropping for a few years now. Still, the per capita consumption in Italy hovers just above nine cases annually, and that’s the wine that’s not homemade, which in Italy is surely quite a number.

All of this got me to thinking. I seemed to remember a per capita wine consumption number in the United States from 1984 that wasn’t too distant from the one posted for 2008. I did some checking and came up with the Wine Institute link below.

The reason 1984 stuck in my mind is because, that was the year I started my small winery and I was doing consumption research that year. Sure enough, as you can see in the link, in 1984 per capita wine consumption in the U.S. was just under one case annually.

What do the numbers say about the United States as a wine culture?

I’m afraid the numbers don’t say what we would like to believe about our wine culture.

Wine consumption in the U.S. has been rising for the past 15 years, and all we’ve come up with is an annual increase in per capita consumption from just under one case to just over one case!

So, why do we keep hearing about the United States wine market being coveted by Europeans and Australians?

The answer to that is in the numbers, too.

The latest census bureau report shows the adult population of the United States at 218 million (that includes 18 year olds). The over 65 group is at 36 million and the under 17 at 53 million.

I can’t find any information that gives a census of how many adults drink that one case each year, but I did find that just over 300 million cases of wine are consumed each year.

Think about it: 300-plus million cases going to a couple hundred million people, yet each person is allotted just over one case a year.

Based on my wine consumption, and the consumption of people I know, it’s clear to me that there’s a vast opportunity for selling wine to adults in the United States. Only a few of us presently do the heavy lifting.

Couple the opportunity here with the opportunity in China, where they might drink one bottle per year on a per capita basis, and you’ve got the two truly growth markets for wine in the 21st century—provided someone figures out how to speed up the growth, because at this pace, it will take a couple of centuries to make any money selling wine.

One thing is certain: the United States is NOT yet a wine culture. Not even close.

Wine Institute

Wine Market Council

If you are reading this entry anywhere other than on the vinofictions blog, be aware that it has been lifted without my permission (and without recompense), and that’s a copyright infringement, no matter that the copyright information appears with it.

Copyright Thomas Pellechia
February 2009. All rights reserved.

Sunday, February 8, 2009

wine as a grocery

Many years ago, when the New York State legislature funded the start up New York Wine and Grape Foundation, Walter S. Taylor of Bully Hill Vineyards used to warn that taking government money leads to having to bend to the whims of bureaucrats.

These days, the whims of New York bureaucrats are pointedly in the direction of trying to find money to run the government. So, in the scramble to make ends meet, Governor Paterson’s proposed budget hits the wine industry, and in a number of ways: he wants to do away with that $2.8 million a year the state puts into wine and grape promotion and research; he wants to raise excise taxes on alcohol; and he wants to open up wine licenses to the grocery industry.

I’m neither for nor against the first proposal, except to say that the NY wine industry has had 25 years of state funding for promotion and research and in that time the industry has neglected to make an effort to become self sustaining in promotion and research; I dislike the second proposal because it means higher prices; and I’m for the last proposal, which is the one I want to address.

Some of the money that the state spent on promotion and research showed that wine is a healthy food; if so, where in the world should wine show up on shelves?

At the very least, the governor’s proposal to allow wine in grocery stores is consistent with the research.

NY wine and liquor retailers are not unanimously parading the streets in support of the wine in grocery store concept, and they have a valid reason to be upset. They’ve been forced to play under rules that created special “sin” shops. It wasn’t the retailers fault that the system was set up that way since 1933.

On the other hand, the system was set up so that wine and liquor retailers are in a semi-protected business. Not just anybody can get a license to sell wine—ostensibly, anyway—and you can’t plop your wine shop a foot away from an existing wine shop. A new wine shop must be within a certain radius distance from existing retail shops, and when a retail shop application for license is submitted, the state liquor authorities ask existing shops in the vicinity if they have any objections.

Now that the state wants to change the rules, retailers are indeed in a pickle. Maybe the state can give retailers some choices.

Retailers are afraid that grocery stores will gain buying leverage that will force the wine and liquor store out of the low priced/high volume wine market and then out of business.

The state should allow cooperative buying so that small stores can make large purchases from distributors to take advantage of the same volume discounts that will be available to grocery chains. As the rules stand now, large wine retailers have that discount buying advantage over small retailers and that isn't nice.

OK, that's the retailers-what about the consumers?

Existing retailers claim that consumers will lose out because grocery stores won’t offer small producer products.

If true, that situation could be turned into an opportunity for small retailers to develop a niche, provided the state allows them to sell beer and groceries. To compete, small shops can provide small producer wines, beers, and gourmet foods and they certainly can provide more personal and educated service.

There are other concerns. My point is that there may also be solutions.

One solution, however, doesn't look like a solution at all. A group of retailers have targeted New York wineries in their attempt to prevent wine in grocery store legislation. They have met and made some sort of pact to remove from their shelves the wines of any New York producer that supports the concept.

That's a dumb solution.

The last time I checked, retailers make a living by making a profit on the sale of the items that they retail. Removing product from the shelves works against that system. It also lessens reasons for consumers to come to your store, or to support you when you need them to press their legislators.

Threatening to remove wine from the shelves brings up that old saying about cutting one’s nose to spite one’s face…

Besides, wineries don’t make alcohol policy. Their only interest is to get wine to the consumer. That’s why they sell it to wholesalers and/or direct to retailers.

Speaking of policy, I don’t think the governor has much interest in whether or not wine is food that should be sold at grocery stores. He needs money and he sees grocery chains as a way to pay big dollars for licenses to sell wine. He also knows that this subject has been kicking around in NY for decades.

Retailers need to come up with creative ideas to offer the state that would solve the governor’s financial need, the grocery industry’s desires, the wholesalers and retailers interests, and, most of all, consumers.

Hint: blackmailing wineries isn’t the answer.

To effect legislation, you lobby the legislature.

NOTE: Sorry to report to all who have been reading the Contrarian blog on that the owners of the site have decided to end the blog.

If you are reading this entry anywhere other than on the vinofictions blog, be aware that it has been lifted without my permission (and without recompense), and that’s a copyright infringement, no matter that the copyright information appears with it.

Copyright Thomas Pellechia
February 2009. All rights reserved.