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Archive for the ‘Wine’ Category

Wine Wars

July 16th, 2019 by Jon Stein

Filed under: Skolnik Newsletter, Wine

In the escalating trade war that threatens the world economy, wine is a minor skirmish at most. But it has its own list of casualties — especially vineyards in the U.S., and drinkers in China with a taste for their product. Writing in the Bloomberg newsletter, “Terms of Trade”, Ryan Haar writes: “U.S. President Donald Trump has raged at Europeans for taxing American wine out of their markets. Chinese tariffs have sent the price of a Californian red soaring in Beijing. Even the apparently unrelated question of Boeing’s competition with Airbus could have fallout for wine-drinkers who, in various parts of the world, have had to get used to higher prices.” Here’s a roundup of wine-trade news:

China

China has slapped three rounds of tariffs on American wine in little more than a year, with the latest one coming into effect at the start of June, according to the Wine Institute, an advocacy group for Californian producers. That’s having a sharp impact on prices in what’s become the fastest-growing major wine market in the world. Honig Vineyard & Winery, based in Napa, California, has been exporting to China since 2007. Before the trade war escalated in 2018, “a bottle of the Cabernet would cost around $50 in our tasting room and about $70 in China,” says Stephanie Honig, director of communications and exports. Three rounds of tariffs later, the Beijing price has gone up to $170 — assuming you can find it. Honig, which exported 1,000 cases to China in 2016, says the number fell to zero last year. The wine industry in California has taken “terrific hits,” Mike Thompson, a congressman from the state, told U.S. Trade Representative Robert Lighthizer in a House hearing this month. “We are at a disadvantage when competitors are paying zero percent.”

Europe

Ryan Haar goes on to write that: “Trump isn’t at all happy about the terms of American wine trade with Europe, where the world’s biggest exporters are found — and he’s been stepping up his complaints since November. Trump’s threat to retaliate with matching U.S. tariffs also forms part of a much bigger trade argument: the one involving plane-makers Boeing and Airbus. As the dispute escalates, both the U.S. and Europe have drawn up lists of goods that they’ll target with tariffs, and wine is on the American version.” “The only linkage alcohol has with planes is that it’s served on planes,” said Robert Tobiassen, President of the National Association of Beverage Importers. “This injures consumers.”

Here at Skolnik Industries, we buy domestic carbon and stainless steel, and carefully monitor the growing impact of the tariffs. Note that our stainless steel wine barrels are reusable, easy to clean, and recyclable at the end of their service life. Check out the full line of our Stainless Steel Wine Drums here.

Selling Wine in the “Delivery Economy”

June 11th, 2019 by Jon Stein

Filed under: Skolnik Newsletter, Wine

Instacart. UberEats. Grubhub. Zifty. Postmates, Amazon Fresh….

Apps like these have added convenience to everyday retail experiences, outsourcing third-party delivery beyond pizza and Chinese takeout, to grocery stores and local restaurants. Meanwhile, ready-to-cook meal delivery companies including Blue Apron and Hello Fresh are thriving as customers become more accustomed to ordering products of every type remotely. Larry Cormier, general manager, of ShipCompliant by Sovos writes about this trend in the “Wine Industry Advisor”: “The “delivery economy” has upended consumer expectations for seamless at-home consumption. Younger buyers, particularly Millennials, now anticipate that businesses will cater to their desire for on-demand delivery options – and that trend is being felt by the wine industry, too.

In 2018, wine drinkers overall spent a record $3 billion on direct shipments from wineries, a 50 percent increase since 2015, according to the 2019 Direct-to-Consumer Wine Shipping Report from Sovos and Wines Vines Analytics.” Larry goes on to observe that: “All of this increased demand for home wine delivery has introduced new competitive threats. In many states, wineries face new pressure from independent wine clubs, meal delivery companies, grocery stores and online liquor stores all seeking to uncork this growing trend. And with a Supreme Court decision expected this summer that could loosen regulations restricting interstate wine shipments, the competitive landscape for direct wine sales could soon get a lot more crowded.” Larry urges wineries to invest in the digital experience: “Whereas older generations may have looked to a particular critic or publication for recommendations on wine, Millennials want to hear directly from the label. They want the story behind the vineyard, the founders, the wine-making process, and the type of grape in front of them. They want to hear from producers and sommeliers about what makes their soon-to-be-favorite bottle of wine special. The good news is most wineries are already experienced in telling their stories.”

In the past, tasting rooms and wine clubs, often tied to smaller wineries, were responsible for much of the direct-to-consumer channel’s organic growth. The challenge is simply translating that experience to a wider audience who might not have the time or money to visit Napa Valley, for example. Larry notes that: “Social media, notably Instagram, is the most obvious way wineries can extend the tasting room experience online. It is a direct line of communication with consumers to tell the sort of behind-the-scenes story that can forge a lasting, personal connection.” With a strong economy, 2018 saw the largest average price-per-bottle increase since 2011 for the direct-to-consumer channel. Customers were also more willing to open their wallets for wines priced at $100 or more, which increased by 18 percent in volume compared to 2017.

In summary, Larry writes that: “The “delivery economy” is pushing up consumer expectations for what they’re buying, especially for high-end purchases, and that extends to packaging and labeling decisions. To stand out not just against other vineyards but also wine clubs and meal delivery companies, producers need to get creative with the stories they are telling from cart to home. Last year, 10 percent of all domestic off-premise retail wine sales were shipped directly to consumers. As this channel continues to grow, another way wineries can stand out and create personalized experiences is by changing up their product offerings to direct customers. By investing now to cater to their buying preferences for convenience and personalized experiences, wine producers can capture a larger share of the Millennial market and the growing direct-to-consumer market.”

Here at Skolnik Industries, we believe that making and delivering the right wine barrel should be easy. Our stainless steel wine barrels are reusable, easy to clean, and recyclable at the end of their service life. check out the full line of our Stainless Steel Wine Drums here.

Who Moved My Wine?

May 14th, 2019 by Jon Stein

Filed under: Skolnik Newsletter, Wine

Writing in the “Wine Economist”, Mike Veseth discusses the varying approaches to selling wine in a retail environment. Mike asks: “What’s the best way to organize supermarket products to facilitate consumer purchases?” He goes on to observe that “Over in the canned vegetable aisle, the system is pretty simple. All the canned green beans there. All the canned corn here. Easy to find what you want. Easy to compare. Over in the breakfast cereal aisle an entirely different geography applies. The corn flakes are found here, there, and elsewhere, not all in one spot. That’s because most of the products are organized by producer. All the Post cereals here, all the Chex products over there”.

I travel a lot, and am struck by how much variety there is in how wine stores and supermarkets display their wines. Even my favorite hometown supermarket often moves an entire section, for no apparent reason, prompting my exasperation: who moved my wine? Mike has some interesting thoughts: “I have been trying to figure out what works best for wine for quite some time, but I am still a bit stumped. The wine wall, the name I have given to the space where wines are put on display, probably has the greatest number of SKUs of any single section of an upscale grocery store. You will find 1000-2000 in many stores today and the big box alcohol superstores like Total Wine have about 5000 wine choices at any given time.”

In a book that Mike wrote in 2011, “Wine Wars”, he makes the following observation about “wine walls”: “The domestic wines are often arranged like the canned veg aisle — all the Zinfandel here, all the Pinot Noir there. Imports are mapped like the United Nations. France, Italy, Germany, and so on. Sometimes groups of countries get lumped together (Spain + Portugal, Chile + Argentina). I have seen the entire southern hemisphere reduced to a couple of shelves. There is often a sort of Siberia over in the corner for “other” wines, sweet, fortified, alcohol-free, kosher, organic, and so on. Sparkling wines from wherever are all collected together in one place, something that is often true of Rosé wines, too. Alternative packaging rates its own section with box wine and now also canned wines holding forth. You will also find smaller wine displays here and there in the store — near the cheese, meat, fish, and deli counters, for example. Wine, wine, everywhere. Organized chaos!”

And maybe it is no surprise either that some of the stores that sell the most wine are the ones that keep it simple like Trader Joe’s and Costco. Costco, which sells more wine than any other U.S. retailer, intentionally limits the number of wines available at any moment, changes stock frequently, keeps prices low, and uses a very simple system. There are more expensive wines and less expensive wines. There are red, white, pink, and sparkling wines. It’s the Rolling Stones system, really. You can’t always get what you want at Costco, in terms of a particular wine, but you can usually get what you need. The wine flies out the door.”

Here at Skolnik Industries, we believe that selecting the right wine barrel should be easy. Our stainless steel wine barrels are reusable, easy to clean, and recyclable at the end of their service life. check out the full line of our Stainless Steel Wine Drums here.

Thinking “Outside the Bottle“, the Growth of Boxed Wines

April 9th, 2019 by Jon Stein

Filed under: Skolnik Newsletter, Wine

Writing in “Shanken News Daily”, Danny Sullivan reports that “Premium boxed wines have become an increasingly potent force in the U.S. market, with multiple boxed brands earning Impact “Hot Brand” awards this year. The two largest players in the category—Constellation-owned Black Box and Bota Box from Delicato Family Wines—combined to sell nearly 14 million cases last year, according to Impact Databank.” The growth in boxed wines is driven by their ease of use, ability to keep wine longer once opened, and a growing environmental concern about the use of glass bottles.

Black Box, a fixture on the Hot Brands list, delivered over 7 million cases last year, up from 6.6 million cases in 2017. The brand, which features 12 expressions, has grown by 2.6 million cases over the past three years. “Consumers are increasingly aware and accepting of alternative pack formats,” says Jim Sabia, Constellation’s CMO. “As a result, we’re seeing growth on 3-liter and 500-ml. packs. We’ve also expanded our offerings with the recent launches of Black Box Rosé and Black Box Sangria.”

Competitor Bota Box has also been on a long-term growth curve, earning its 11th consecutive Hot Brand award. The brand has expanded by nearly 3 million cases since 2015 and looks set to blow past the 7-million-case mark this year. Bota Box currently counts 15 wines in its arsenal. Bota’s Dry Rosé leads the 3-liter rosé category, according to Jon Guggino, executive Vice President of marketing at Delicato. “The 3-liter and alternative packaging categories continue to grow and gain acceptance, and our marketing efforts will focus on our quality and leadership position in the category.”

Another domestic wine, Washington-sourced House Wine, also has been making gains in the boxed segment. Owned by Seattle-based Precept Wine, House Wine’s 3-liter boxed format was up 5% to 181,000 cases in 2018, accounting for just over half of the brand’s total volume. Retailing in line with Bota Box and Black Box at around $20 a 3-liter, House Wine’s boxed portfolio includes a Chardonnay, Moscato, Pinot Grigio, Riesling, Sauvignon Blanc, Rosé, Pinot Noir, Red Blend, Malbec, Merlot, Cabernet Sauvignon, and Dark Sauvignon. Overall, House Wine has expanded by more than 50% since 2015, reaching 341,000 cases last year.

Using bottles or boxes to package your wine? Here at Skolnik Industries, our stainless steel wine barrels are reusable, easy to clean, and recyclable at the end of their service life. Check out the full line of our Stainless Steel Wine Drums here.