Vintage New World

Per a June 14-17, 2009 Gallup Poll:

'Despite some anecdotal reports of a surge in drinking accompanying the economic recession, Gallup's annual update on alcohol consumption finds little change in Americans' drinking habits. The percentage of U.S. adults who consume alcohol is fairly steady at 64 percent, and there has been little change in self-reported drinking volume.' (www.gallup.com on 29-June-2009)

Interesting facts from Gallup's annual update:

- 64 percent of Americans have occasion to use alcoholic beverages

- The percentage of Americans consuming alcohol hasn't changed much since 1947

- Two thirds of the drinkers surveyed (so, about 42 percent of Americans) have had at least one drink in the past seven days

- The average number of weekly drinks per drinker: 4.8

- 40 percent of drinkers prefer beer (down from 47 percent in 1992)

- 34 percent of drinkers prefer wine (up from 27 percent in 1992)

- 21 percent of drinkers prefer liquor (the same as in 1992)

- Men prefer beer over wine (58 percent vs 19 percent)

- Women prefer wine over beer (50 percent vs 20 percent)

- College graduates prefer wine over beer (44 percent vs 36 percent)

- Those 55 and older prefer wine over beer (50 percent vs 26 percent)

- Women 50 and older prefer wine over beer (60 percent vs 15%)

Again quoting Gallup: 'The impact of the economic recession on alcohol sales is difficult to discern. Consumer spending on alcohol doesn't tell the full story because, according to some reports, Americans may be opting for cheaper wines, liquors and beers. Thus, flat sales could actually mean higher volume.'

DAH's new target customer: That college educated woman over 55 who shops for bargains.

DAH is David Anthony Hance at www.VintageNewWorld.com and www.DAHplaytime.com
 

'It's official: screwcap is the best closure for the vast majority of wines, both red and white. This is the opinion of Decanter magazine's most senior contributors, from Steven Spurrier to Linda Murphy in California and Huon Hooke in Australia ...' (Adam Lechmere, Decanter Magazine, June 16, 2008)

Decanter is the world's leading wine magazine. Published in the UK and sold in 92 countries, Decanter is required reading for everyone with an interest in wine. And we agree with conclusive opinion of their senior contributors.

AD LIB wines from Larry Cherubino in Western Australia are finished with a screwcap.

BURIED CANE wines from Washington State are finished with a screwcap.

ADOBE White from California's Central Coast is finished with a screwcap, and so is the about-to-be-released 2007 vintage of ADOBE Red.

CLAYHOUSE VINEYARD wines, from Paso Robles, will all have screwcaps as new vintages are released.

We're keeping our prestige, ageworthy wines (Cadaretta and Clayhouse Estate) under cork. Natural cork is still the proven closure of choice for us, for the wines we expect to develop and change with bottle age.

But our By-The-Glass and Retail Display Feature wines, all with suggested retail prices in the mid-teens, will all have screwcaps by year's end. No cork taint, no off-odors, no special tools to get inside; just crisp, fruity, full-flavored wine every time.

It's true. When the wine retails for less than $20 a bottle, we're the screwcap wine company.

DAH is David Anthony Hance at www.VintageNewWorld.com and www.DAHplaytime.com

On Thursday we met with a potential wine broker team (a wine broker sells wine for a percentage of the selling price, to be paid as a commission). What's most interesting about this type of meeting:

1. Both sides enter the meeting with some notion or plan already in place about how the respective parties can work together;

2. Both parties enter the meeting in sales mode: Putting their best feet forward, with lots of bonhomie;

3. The respective notions or plans are quickly twisted and turned when they collide with the other side's notions or plans;

4. We succeed when we find that our notions or plans can be appropriately synchronized, or revised to synchronize with one another;

5. We fail when we are unable to fit each other's pegs into appropriate shaped holes, and can't find the tools to adjust either pegs or holes.

In yesterday's meeting there was in interesting moment (during point number 3, above). It came after we danced a bit, each side showing off its best steps. We had a projector hooked up to Rich Hanen's computer, and he lit up the wall with a list of potential small distributors. He did this because we wanted to suggest that a collection of small distributors might be a better option for our company than one big distributor.

This was clearly, clearly, clearly NOT included in the notions or plans or our prospective wine broker partners. There were almost looks of horror, and subtle facial contortions, as we stated our case. Finally, one of them said, 'You know, I find this concept pretty alarming. I'm really uncomfortable with this.'

Now, sometimes, that would be the end. No more dancing, no synchronizing, no peg-and-hole whittling-to-fit. Alarming ideas can shut down communication and cooperation.

But not in this case. We kept talking and clarifying, proposing and counter-proposing. And ideas began coming forward. Ways that might lead to meeting all party's needs.

And that's the kind of partnership you want (this one seems promising): When alarming ideas lead on to recognizing opportunities.

DAH is David Anthony Hance at www.VintageNewWorld.com and www.DAHplaytime.com

The July 31 issue of the Wine Spectator includes an article by Harvey Steiman titled 'Exploring The Pacific Northwest.' It's a six day 'road trip' through Washington and Oregon wine country.

Beginning in Walla Walla, it continues through the Yakima Valley and Red Mountain AVAs, then on through the Horse Heaven Hills to Newberg at the northern edge of the Willamette Valley. Then through the Willamette Valley, the Eola-Amity Hills to Eugene, and finally (on Day 6) tackling Southern Oregon.

I've been through all these wine regions, but not on a single road trip. I was envious, because even Mr. Steiman's travelogue summoned to my mind the senses and sensibilities of these several remarkable wine districts. I miss them all, and yearn to hit the road through wine country.

Part of working so much of my life as a winery insider has meant that I spend little time really experiencing wine, wineries and wine country. Too busy, and too much a busman's holiday, I suppose (why would the bus driver be interested in taking a bus tour vacation?).

But I miss the vines and the wines and the passion for place expressed by the wine country ambassadors. My wine experience is primarily online these days, with occasional tastings, and opening a bottle of wine after work, of course.

There's something time-honored about Mr. Steiman's 6-Day travelogue and its ilk. This format is a proven and practical way to share the essence of a place. When I worked in regional destination tourism, we worked to create programs built around '24 Hours in Mendocino' and '48 Hours in Redwood Country.'

Our hope was to tempt travel writers to spend a day or a weekend with us catching the highlights or our special place. More often, however, we found that these travelogues inspired interests in particular aspects and smaller places, by placing them in context within the flavor of the larger region.

This needs, I think, to be part of our wine education programs. We should focus on the vineyards and the winemaking, and the sensory aspects of wine, of course. But add that road trip travelogue, with other sites and scenery, lodging and dining, to inspire both the actual and armchair wine lover.

DAH is David Anthony Hance at www.VintageNewWorld.com and www.DAHplaytime.com

Allison Peck, our Cadaretta direct sales manager, is in Paso Robles this week. That's great on several levels. Not only do we get to see one another (which only happens a couple of times a year), but we get some real face-to-face planning time with Kari Kittinger, our Clayhouse direct sales manager, and we'll introduce Allison to some of our Anderson & Middleton team members whom she might not otherwise ever see in person: Clayhouse winemaker David Frick, and our compliance expert Kaylee Baxley.

We've got a full plan for the week. Here's what's on:

Allison gets hands-on experience in the Clayhouse tasting room, shadowing Kari Kittinger. She'll get a sense of our basic operations policies, and some working time with the VinBalance sales and inventory system. So when she has a tasting room to operate in Walla Walla, one day, she'll have a real sense of how we operate such things (and won't be starting over from scratch).

Allison and Kari meet with Rusty Eddy and Steve Burns, to brainstorm and plan how our Public Relations team can help build contacts and traffic for our Direct Sales team. More sales contacts (or touches) with qualified potential customers will build our sales more quickly.

Allison will see David Frick's Clayhouse wine operations in San Miguel, and visit Red Cedar Vineyard east of Paso Robles. All our storytelling about these places will begin to make sense!

Allison and Kari will meet with DAH to build the Direct Sales plan for 2010. If we work it out together, we can understand where our needs overlap, and where they are quite different, for the respective wineries.

We'll have some social time at dinners, with small groups and large (as many as sixteen on Wednesday night at the Hance house in San Luis Obispo). We're planning dinners in homes and restaurants, for a richer and more varied experience.

And, perhaps best of all, Allison and Kari will visit a few wineries together, mostly as 'secret shoppers,' to see for themselves what others are doing, and learn a few lessons for our side.

DAH is David Anthony Hance at www.VintageNewWorld.com and www.DAHplaytime.com

On our Prestige Portfolio playing field, here's what I think we need to sell Cadaretta and Clayhouse Estate wines:

1. An awesome amount of winery and wine knowledge. We (and by 'we' I mean everyone involved in making, marketing and selling these wines) need to confidently know every detail that relates to the creation of these special wines. Detailed knowledge is essential, otherwise how can we possibly inspire purchasing confidence in potential customers? Knowing the details, and sharing the details, is a key part of any top quality story about anything.

2. Passion and enthusiasm, for the winery and the wines. Ho-hum can barely sell inexpensive products. To sell something rare and precious and special, we need to be lit from within, on a 'mission from God' (to steal from the Blues Brothers), able to sweep away the tedium and worries of the day so that our potential customer wants to cry out, 'Yes! I need this wine, and everything it represents!'

3. Receptive, appropriate prospects - we need to know our prospective customers, and really understand why our Prestige Portfolio wines can work for them. We need to be able to show them why they MUST consider these wines. And we have to taste them. Respectfully, out of good crystal, to set the stage for top quality.

Aside from samples and stemware, what gear do we need, if we have awesome product knowledge, passionate enthusiasm, and customer understanding? Not much, I would argue. Really detailed tasting notes and tech sheets, I think. Probably a comprehensive vineyard profile, and a winemaking protocol (so we can learn EXACTLY how the wine was made). Video tasting notes with the winemaker (I just think that would be so cool). Something to leave behind that looks really nice, but not too nice (our money should be going into wine quality, not brochures!). Good acclaim. And we're done! Less stuff, more knowledge (and passion, and customer understanding ... ).

DAH is David Anthony Hance at www.VintageNewWorld.com and www.DAHplaytime.com

Generally speaking, there are three major playing fields in the U.S. bottled wine market. Our company plays on two of those fields.

The field upon which we don't play: 'Budget Bottles' (I'm making up my own names for these three playing fields, so don't look for information on them elsewhere). This is the very large playing field of wines that retail below $10 a bottle. Usually well below $10 a bottle. This is a very large playing field with some really large players battling in a game with pretty tight margins. You have to be big to win on the Budget Bottles field.

The largest playing field for our company is 'BTG & Retail Feature.' These are wines that generally sell in the mid-teens, but could be anywhere from about $12 to $18 a bottle. These are well-made wines with distinctive regional and winemaking character, and margins that make them viable for smaller and mid-sized wineries. Often seen by-the-glass in better restaurants, and as retail features in fine wine shops. On this field, our players include Adobe (by Clayhouse), Clayhouse Vineyard, Buried Cane, and Ad Lib.

The smallest field (but it's oh-so-important, because of the halo effect I've mentioned in past posts) is 'Prestige.' This is the game that includes wines that retail for more than $20 a bottle, and can quickly move up into the rarefied air of $30, $40, $50 and higher. These are the special bottlings that build prestigious reputations. They represent our best vineyard blocks, raised into wine with special winemaking care. On this playing field we have Cadaretta and Clayhouse Estate.

A curious feature of these three playing fields is that the Budget Bottles game requires the most 'gear' - advertising and displays and t-shirts and the like. Less gear is required to play in the BTG & Retail Feature game, but you still need some display materials and corkscrews. And in the Prestige game, many take the field with nothing but wine in a bottle. More on this tomorrow.

DAH is David Anthony Hance at www.VintageNewWorld.com and www.DAHplaytime.com

The challenges for the Australian wine business in the United States continue. Bronco Wine Company, creator and producer of Charles Shaw wines (Two Buck Chuck) is rolling out an Australian brand called 'Down Under, by Crane Lake.' The first wine is a South Eastern Australia Chardonnay priced to undercut yellowtail, the best selling Australian wine in the United States. Read the Wine Business story here.

Excerpts from the Wine Business story:

Bronco chief executive Fred Franzia said the new offering is priced so retailers can offer it at roughly half of yellowtail's price. Yellowtail, of course, is the leading Australian brand in America, and typically sells for about $6 per 750ml bottle.

Asked if Down Under would compete with Charles Shaw Wines (Two Buck Chuck), Franzia quipped, "Everything competes with Two Buck Chuck."

'This is targeted against Australian wines, showing that the consumer has been charged too much money for Australian wines all these years,' he said. 'If we can sell it at that price, the Australians can too.'

The market for Australian wines is currently very soft in the U.S. After a decade of rapid expansion in this market, the Australians are now experiencing trade resistance, especially to higher priced wines. And the Australians must export to sustain their wine business, since their domestic market isn't large enough to consume the quantity of wine now in production.

One way to respond to marketplace resistance is to drop prices. But that's a short-term solution. For the long-term, every wine region of the world needs to be able to sell its wines for prices that sustain their wine businesses. If the profits aren't there to justify high quality production, satisfy investors and retain key employees, no business will last long.

Bronco Wine Company, so far as I know, doesn't have any long-term investment in the Australian wine business. This new brand is a classic undercut. Taking advantage of the inventory and production pressures in Australia, and working on very slim margins (as with Two Buck Chuck), Bronco is opportunistically making a play to take market share from a category leader, yellowtail, by undercutting its prices.

Good for Bronco for seizing an opportunity. And bad for the Australian wine business, which really needs some focus on building acceptance, interest and demand for better wines at higher prices in the U.S. Without a consumer-perceived path up in quality, Down Under and yellowtail could drag Australia's wine reputation and profit potential down below economic sustainability.

DAH is David Anthony Hance at www.VintageNewWorld.com and www.DAHplaytime.com