Life in the Age of the Reset

The Wine Market Council report makes it clear that consumers are benefiting from lower prices for high quality wines, but can the industry support this “new normal”?

May you live in interesting times.” is an ancient Chinese proverb, one of several (“May you find what you are looking for” is another) that have an ironic edge: though they can be read as positive and benevolent, they’re also easy to see as ominous, a warning.

These are interesting times for the wine industry, to say the least.

In January I attended the presentation of the Wine Market Council report on the state of the wine industry—the numbers gathered in 2009 by the Council and the Nielsen Company to present a snapshot of consumer wine-buying trends. Interesting? Definitely. Kathleen Buckley, the author of our report on the report that appears in our May issue (see abridged online version) wrote to us as she was poring over the data: “Is wine growing or groaning? It all depends on who you are. As consumers, we are buying more wine at better price/quality than most of us ever thought possible. But as an industry, it’s a global heart attack.”

The industry talk is of a “reset,” of the “new normal,” meaning that people are generally willing to pay less for wine. American consumers did buy more wine in 2009 than in 2008, spending $10 billion; but we paid less per bottle for it. As a result, some producers at the very top are being affected. For example, sales of Champagne and Bordeaux wines in the U.S. are significantly down. The restaurant industry too: fine dining is down by as much as 10%, and experts expect that decline will continue.

One consistent bright spot is, once again, the Millennial segment. They are less affected than their elders in terms of losing their retirement savings or battered by home value loss. Despite the challenging job market, they appear to purchase at many higher price points than everybody else, and continue to buy wines and craft beer in restaurants and for home consumption.

And they are at the forefront of the social media revolution. This is not trivial; wine culture is thriving there. In terms of videos, Twitter messages, bloggers and phone apps, wine is an important subject, which bodes well for the future. (Wine Enthusiast was the first wine magazine to create an iPhone application for searching its database; I’m proud to say the version for the Blackberry is now available.)
At Wine Enthusiast, we are definitely consumer advocates, and will never stop celebrating that people can access a wider variety of higher quality wines at more palatable prices than ever before. But how can we cheer wholeheartedly when the industry that has made this possible is now facing some daunting numbers? I’m confident that with the recession easing, the entire picture of the staggering costs of producing great wine, from farm to winery to distribution to marketing, will rebalance, and that both consumers and producers will continue to thrive. America’s wine renaissance continues.

Also in our May issue issue, Joe Czerwinski, tasting director and our reviewer of New Zealand wines, proposes a provocative thesis: that although New Zealand is primarily known for its Sauvignon Blancs, it is actually Chardonnay that is their most successful wine. And Pinot Noirs are not far behind. His story, entitled “Finding Burgundy in the South Pacific” has excellent suggestions for well-priced wines.

If you’ve ever wondered how a day in a winery proceeds, what jobs people do and at what time, “A Day in the Life of a Château” (abridged online version to be posted on May 01) will be an eye opener. Chateau Lagrange is one of the premier producers in France’s Médoc. Writer Roger Morris has visited many times and offers his insider perspective.

Though its wine history is long, Cyprus’ impact on the American market has been minimal up until recently. The country is best known for Commandaria, the dessert wine made of sundried grapes, though blends of Mavro and other distinctive varieties are increasingly visible on the shelves here. You’ll find Executive Editor Susan Kostrzewa’s report on the wines, the history, the culture in the May issue on page 46 (also to appear, in an abridged format, online next month).

In our May Pairings article,  Dave McIntyre explores the foods and wines of the Chesapeake Bay. As McIntytre makes clear, this is the seafood-rich cuisine that in its purest, simplest form is very close to what our founding fathers enjoyed in the 18th century. While sophisticated chefs are creating an alternative, more elevated cuisine, the simpler fare remains popular as well, all of it paired with the regional wines of Virginia and Maryland.

It’s our mission to bring the undersung wines of the eastern seaboard to you (as we do in our May Buying Guide) as well as the more high-profile wines of California, France, Italy and elsewhere. The rich variety is what makes for interesting times.

Published on April 8, 2010
Topics: Industry TrendsWine Market