Facts from the Fine Wine Trade Monitor Report, Part I

Barbara Insel

The sweet spot for wine in restaurants has increased to $65-$85; wine by the glass priced at $15-$18 "really moves;" and consumers are more willing to experiment with red wines than whites.

These are just a few of the observations I drew from the Fine Wine Trade Monitor Report from Stonebridge Research Group. Stonebridge charges $995 for the report, which is compiled from 55 interviews nationwide with key wine buyers. I've interviewed Stonebridge CEO Barbara Insel a lot of times, starting from when she was managing director at MKF Research, so I managed to get a copy for free and peered through it looking for fun facts.

I found many, and called Insel to discuss some of the observations in detail. I'll list below some highlights from the report, and what she says to elaborate on them. Every one of these facts is worthy of a blog post of its own -- heck, the report costs more than a bottle of first-growth Bordeaux (or 100 bottles of Big House White) -- so I decided to split it into two blog posts, so you have some fun facts to look forward to tomorrow.

From the report: "Australia is dead. Never seen such a mass exodus. Price points keep dropping. Market has completely changed and is not coming back."


Insel elaborates:

"Last year there was one person out of 50 or 60 people who said, Australia is OK. Now every single one said, it's not going anywhere. Remember, we're not talking to the grocery store market or people selling $8 or $10 wine. People are tired of the style. They define Australia as this highly extracted, high-alcohol Shiraz and they've been there, done that. They're just not aware that there is anything else. Once a country or a region or a brand gets labeled as one thing, it's very hard to change that definition.
If you look at Australia's exports to the US, they are overwhelmingly Yellow Tail. If you take Yellow Tail out of that number, everything else falls away.
Wine in the US is an aspirational product. Once you've defined yourself as a low-end wine it's very hard to escape that trap.
We did a consumer survey several years ago and several men said Australian wine is something to get drunk with the guys with. You'd never take it to your mother-in-law's for dinner."

From the report: "Argentina Malbec super-hot under $12. Tough to sell more expensive wines."

My question to Insel: Will Argentina in 5 years be where Australia is now?

Insel: "When I was in Mendoza, I had that conversation. The producers to their credit are worried about that. People say that the problem with Chile is it doesn't have a defining grape like Malbec.
But the danger is that you define yourself like Australia has with Shiraz.
The Argentines aren't doing the cute labels Australia did. That seemed to be a problem for Australia, that it's not a serious wine.
It's not a single brand with a single style of Malbec. It's an advantage to have Malbec as a way to open the door. But that's a risk, that you get too defined, too narrowly."

From the report: "Consumers are 'off oak' in most regions"

Insel elaborates:

"Barrel sales are way down in the US. They're down by close to 50%. Partly because people (at wineries) under cost pressures are looking at oak alternatives. But there's been a significant decline in the use of new barrels.
The non-oak and lesser oak wines are doing well.
There's a little boomlet in Chardonnay, on top of its usual lead. A lot more lesser-oaked Chardonnays are out there. The real mainstays that we know are deeply oaked wines are still doing well, and they have their following. For other wines, there seems to be a gradual reduction in oak intensity."

The report: "Some on-premise accounts strongly support Oregon Pinot Noir but others say no market for Oregon at $40 but a strong market at $20 to $25. They are in danger of pricing themselves out of the market."

Insel elaborates:
"When we did the first of these (reports) we were still intensely in the recession. There was very little Oregon Pinot below $40. It comes down to their scale (of production) and the cost of what they do. But it made it hard for people to put them on the shelves when consumers were kicking back at anything over $20.
Sales of more expensive wines have come back but they've only come back for very strong brands.
There's a lot of wines from Oregon that are at high price points but there's a lot of good wine out there. You have to have a really strong case to sell anything over $30 now.
A lot of people's second labels (from Oregon) have done well at $20-$30.
I had a client who made $40-$60 Sonoma Pinots. He was saying in 2010 that when he went to tastings around the country he was still selling some things but the Oregon people seemed to have very little attention at their booths. It's been tough. It's an expensive product and they didn't do a great job of marketing it."

Read part II here.

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