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Wednesday, February 14, 2018
by Cyril Penn | February 14, 2018 | 4:30 PM

Silicon Valley Bank released Rob McMillan's State of the Industry 2018 Report and it points to data indicating the growth rate of wine sales is slowing - wine sales are still growing to be sure - but the rate of growth looks to be tailing off a bit.

Some of the highlights and predictions per the report:

• Consumers continue to leave lower-price segments in favor of better-quality offerings, but total sales growth is leveling off.
• For the industry as whole, sales will rise by 2 to 4 percent, while volumes will increase up to one percent.
• Overall pricing will remain flat with price increases difficult to pass through to consumers.
• The premium wine segment – which we define as above $10 per bottle – will grow in the range of 4 to 8 percent, down from the estimate of 10 to 14 percent in 2017.
• Overall supply is balanced, with chardonnay demonstrating particularly strong demand. Cabernet is balanced with flat to downward pressure at the high end of the market.
• Increasing imports will continue in the lower premium price points.
• Acquisitions will cool somewhat from the torrid pace of the past three years. We still will see foreign purchases of US wineries and significant transactions for vineyard properties.
• North Coast grape prices, which have seen rapid growth in the past five years, should slow their growth rate.

The data is consistent with a lot of what we were hearing anecdotally from executives interviewed for the February Wine Business Monthly.

This is SVB's 17th annual state of the industry report. One of my favorite charts is the one below, because it shows actual winery performance - sales growth and profits from actual financial statements from clients and non clients. It indicates sales growth at premium wineries slowed between the third quarter of 2016 and the third quarter of 2017. 

Average Winery Visitation Declining 

While the report underscores the increasing importance of DTC revenues, it does raise a cautionary flag on  DTC as well. Data showing a decline in winery visitation made little sense two years ago because winery DTC revenues were up across the board. The negative trend was attributed to better reporting from wineries being more focussed on tracking visitation, as reported in the July 2017 Wine Business Monthly. Declining visitation does seem to be a trend, in 2018, though. "After additional research and reflection, we are convinced that there is more going on than we first suspected," McMillan writes in the report. Wineries have been doing a better job of selling to the guests they host but the number of visitors is declining. 

Changing demographics - i.e. younger consumers and retiring baby boomers are one of the factors at play.

The report says "successful wineries ten years from now will be those that adapted to a different consumer with different values."  It also notes that a changing of the guard is underway when it comes to the demographics behind premium wine.

 Rob McMillan alluded to much of this in a webcast a couple of weeks ago, here's the replay.

Monday, February 12, 2018
by Kerana Todorov | February 12, 2018 | 4:01 PM

California’s wine grape crop was about 4 million tons in 2017 – about the same as in 2016. Overall, brokers expect the market for grapes and bulk wine to remain steady as prices for wine grapes continue to climb.

The fact that the wine grape crush is nearly identical to last year’s is “no real surprise,” said Jeff Bitter, vice president at Allied Grape Growers. At 4 million tons, the 2017 wine grape crush is still slightly short of what is considered an average size crop in California, Bitter said.

Some brokers expected an even lighter crop in 2017 before federal and state officials released California’s preliminary grape crush report Friday.

Glenn Proctor, partner at Ciatti Global Wine and Grape Growers, said the 2017 crop ended up bigger than anticipated because the yield in the Fresno District was 3.5 percent higher than in 2016 and Bakersfield’s, about 11 percent higher. Altogether, this adds up to 1.6 million tons of grapes, Proctor said.

The state’s 2017 crop was the largest ever for a number of varieties, including Pinot Noir, Pinot Gris and Cabernet Sauvignon, according to Ciatti.

Chardonnay remains the leading grape variety with 14.5 percent of the total crush volume. However, it is 9.3 percent lower than in 2016, a result attributed to a series of heat spikes over the summer.

Chardonnay 2017, Interior Versus Coastal 



The 2017 Chardonnay crop is the smallest since 2011, Turrentine Brokerage president Steve Fredricks said. The crop yielded about 614,000 tons statewide – 13 percent down from the 5-year average, according to the Turrentine analysis.

Proctor, of Ciatti, noted that Chardonnay’s 2017 crop was down 17 percent in Lodi and 19 percent in the Delta/Clarksburg area in 2017 from a year ago. Lodi growers dealt with a lot of canopy and mildew pressure, he said.

“I was surprised how far down it was,” he said, referring to the smaller-size crops.

California’s Northern Interior’s overall crop was more than 5 percent down, Bitter noted.

The crop, statewide, was lighter in 2017 than in 2016 for other varieties. Zinfandel’s 2017 crop was down by 12.6 percent. Riesling was down about 9.8 percent from 2016; Syrah decreased by 7.6 percent and Petite Syrah, by 7.3 percent.

Wineries continue to pay more for fruit. Statewide prices increased by 1.8 percent for all varieties, according to Ciatti.

Cabernet Sauvingon 2017 Interior Versus Coastal 



Statewide, Syrah prices increased by 5.5 percent, according to Ciatti. Cabernet Sauvignon fruit increased by 4.5 percent; Sauvignon Blanc, by 4.6 percent; and Pinot Noir, by 4.2 percent.

Fruit from Sonoma cost 8.3 percent more in 2017 than in 2016. Napa Valley fruit prices continue to break records has it has over the past decade. Napa County wine grape prices overall climbed by 10.4 percent, as compared to 2016. Cabernet Sauvignon reached a record $7,421 – an 8.4-percent increase over 2016, according to Ciatti.

Fredricks said the prices are not a surprise as so much of the grapes are contracted.

With prices increasing, wineries and brands are considering various strategies to maintain profit margins, including sourcing fruit from more affordable areas, brokers have reported over the past few months.
For example, a North Coast brand may consider sourcing from Lodi or the Central Cost, Proctor said.

The California Preliminary Grape Crush Report is available at: https://www.nass.usda.gov/Statistics_by_State/California/Publications/Grape_Crush/Reports/
The final report is scheduled to be published March 9.

 

Monday, February 5, 2018
by Kerana Todorov | February 5, 2018 | 7:28 AM

A vineyard worker (right) competes Saturday in the 17th Annual Napa County Pruning Contest. Altogether, 25 women and 114 men competed in separate divisions at the Gamble Ranch near Yountville. The pruners were graded for speed and execution. The grapegrowers, who coordinated the competition, said the contest event was scheduled on a Saturday for the first time to make the competition a family event. The top pruners received a belt buckle and cash prizes.

Wednesday, January 31, 2018
January 31, 2018 | 3:32 PM
Tuesday, January 30, 2018
January 30, 2018 | 1:27 PM

I am reaching out about the story that was included in today’s Wine Business newsletter about our client, Cuvaison Estate Wines. Since the Cuvaison team wasn’t able to provide a statement before the story was printed, we would like to share with you the following statement from Dan Zepponi, the president and CEO of Cuvaison Estate Wines. 

“We are saddened by these untrue accusations. We are a company that believes deeply in fair hiring practices, and our team, including our direct-to-consumer staff, is made up of people of all ages and various backgrounds. This diversity is a valued part of our company culture, and any claims to the contrary are false. While we are unfortunately limited in what we can say due to the pending litigation, we are eager to challenge these baseless claims in court.”

Thank you, again,
Miriam Pitt
J.A.M. PR

January 30, 2018 | 11:00 AM

A news item about the settlement of John Duarte’s long-running legal battle with the Army Corp of Engineers that appeared on page 10 in the print edition of the October 2017 Wine Business Monthly contained an inaccuracy. The article reported that the case began “when a representative of the Army Corps of Engineers found him tilling land to depths of 5 to 6 feet.” The error here lies in the use of the word “found” – our editors should have used another word, such as “accused.” We also could have provided more context. While the news item still appears in our archives via the digital edition, that sentence has been deleted.

Back in the winter of 2012, when Duarte was plowing a field to plant wheat, a project manager from the local office of the U.S. Army Corps of Engineers, responsible for enforcing the Clean Water Act, was driving by as Duarte's field was being plowed. He decided that the land was being tilled too deeply and claimed to have observed "deep ripping," which is not allowed because it can destroy wetlands. The Corps then sent Duarte a cease-and-desist letter.

Duarte always contended the project manager was mistaken, and that rather than admit the mistake, the government had doubled down, leading to millions of dollars in legal costs. As reported by Wine Industry Insight, the contention “was disputed by Duarte, his contractor, expert witnesses and even by a photo on the cover of one of the government expert witness reports."

What makes the error in the October issue especially frustrating is that John Duarte was selected as one of the industry’s Top 50 Leaders in the December 2017 Wine Business Monthly because he stood up to the Army Corp of Engineers in this case, a case that many saw as an example of government overreach. Duarte was recognized, not only for his role as one of the leading providers of planting material/grapevines, but for standing up for farmer’s rights by holding firm in the legal case.

We regret the error.

Tuesday, January 23, 2018
January 23, 2018 | 5:55 AM

Every year, when Wine Business Monthly creates our annual list of Hot Brands, we look for vintners, growers, wineries and wines that are making a statement in our industry. Quality is always an important consideration, but Hot Brands is more than a list of the “best” or most interesting wines we’ve tasted during the year.

When we set out to choose our Hot Brands, our goal is to always represent the American wine industry. Often, that means discovering a new winery in an established region while also paying homage to the stalwarts who continue to move the industry forward. It means we look at wineries in emerging states, that might be bucking a trend or trying new techniques. Our editors look for wines that are embodiments of national trends or have soaring sales. Sometimes we’ll choose the winemaker, not the wine.

Quite often, we end up with a couple of wines that were unexpected. During the search for a Pinot Noir, for example, we may discover a producer who is also making Tempranillo—and is doing such a good job of it, we adjust our plans to include it. We’re never quite sure how the list will turn out, but it’s a chance for us to explore new regions, varietals and winemakers.

In the end, this list is comprised of wines that we here at Wine Business Monthly would serve to winemakers. That’s exactly what we do, as representatives from each of these wineries were on-hand to serve their wines to winemakers, grape growers and industry members at our annual Bottle Bash party at the Unified Wine & Grape Symposium in January. Cheers!

Winery Sixteen 600
2016 Sixteen 600 Rosé Steel Plow Vineyard,
Sonoma, CA
Making Serious Rosé Fun

Rosé may be hot right now but don’t confuse Phil Coturri’s Steel Plow Vineyard Rosé of Grenache for a wine made to jump on the trend’s bandwagon.

Phil Coturri has spent a lifetime in wine. He made his first wine back in 1963 at the age of 11, making wine with his father. At 14, he and his father planted a vineyard, which still exists to this day. In 1979, they added a bonded winery that Coturri and his brother ran for around 30 years before philosophical differences over what wine should be helped him make the decision to start his own outfit. Winery Sixteen 600, based on Moon Mountain in Sonoma, California, is all about place: its name is quite literally its address.

The full story on Winery Sixteen 600 ~ and all our Hot Brands ~ will be available in our February 2018 issue of Wine Business Monthly. You can come by our booth (#1620) at Unified and pick up a copy or click here to subscribe to WBM.

Taste all the Hot Brands at our Annual Bottle Bash, the night before the Unified Symposium.
Click here to register

Monday, January 22, 2018
January 22, 2018 | 5:52 AM

Every year, when Wine Business Monthly creates our annual list of Hot Brands, we look for vintners, growers, wineries and wines that are making a statement in our industry. Quality is always an important consideration, but Hot Brands is more than a list of the “best” or most interesting wines we’ve tasted during the year.

When we set out to choose our Hot Brands, our goal is to always represent the American wine industry. Often, that means discovering a new winery in an established region while also paying homage to the stalwarts who continue to move the industry forward. It means we look at wineries in emerging states, that might be bucking a trend or trying new techniques. Our editors look for wines that are embodiments of national trends or have soaring sales. Sometimes we’ll choose the winemaker, not the wine.

Quite often, we end up with a couple of wines that were unexpected. During the search for a Pinot Noir, for example, we may discover a producer who is also making Tempranillo—and is doing such a good job of it, we adjust our plans to include it. We’re never quite sure how the list will turn out, but it’s a chance for us to explore new regions, varietals and winemakers.

In the end, this list is comprised of wines that we here at Wine Business Monthly would serve to winemakers. That’s exactly what we do, as representatives from each of these wineries were on-hand to serve their wines to winemakers, grape growers and industry members at our annual Bottle Bash party at the Unified Wine & Grape Symposium in January. Cheers!

Vidon Vineyard
2015 EXPLORER Tempranillo, Newburg, OR
Exploring Space and Terroir

Science meets art at Vidon Vineyard, a boutique winery just outside of Newburg, Oregon: It’s helmed by two Ph.D.s who believe in site-specific wines and true expressions of the land. Vidon was founded by Don Hagge, Ph.D. and former NASA physicist, an explorer in his own right. “I like to tinker around with stuff. I always try to find ways to make things more efficient and to have fun,” he said.

The full story on Vidon Vineyard ~ and all our Hot Brands ~ will be available in our February 2018 issue of Wine Business Monthly. You can come by our booth (#1620) at Unified and pick up a copy or click here to subscribe to WBM.

Taste all the Hot Brands at our Annual Bottle Bash, the night before the Unified Symposium.
Click here to register

Friday, January 19, 2018
January 19, 2018 | 5:49 AM

Every year, when Wine Business Monthly creates our annual list of Hot Brands, we look for vintners, growers, wineries and wines that are making a statement in our industry. Quality is always an important consideration, but Hot Brands is more than a list of the “best” or most interesting wines we’ve tasted during the year.

When we set out to choose our Hot Brands, our goal is to always represent the American wine industry. Often, that means discovering a new winery in an established region while also paying homage to the stalwarts who continue to move the industry forward. It means we look at wineries in emerging states, that might be bucking a trend or trying new techniques. Our editors look for wines that are embodiments of national trends or have soaring sales. Sometimes we’ll choose the winemaker, not the wine.

Quite often, we end up with a couple of wines that were unexpected. During the search for a Pinot Noir, for example, we may discover a producer who is also making Tempranillo—and is doing such a good job of it, we adjust our plans to include it. We’re never quite sure how the list will turn out, but it’s a chance for us to explore new regions, varietals and winemakers.

In the end, this list is comprised of wines that we here at Wine Business Monthly would serve to winemakers. That’s exactly what we do, as representatives from each of these wineries were on-hand to serve their wines to winemakers, grape growers and industry members at our annual Bottle Bash party at the Unified Wine & Grape Symposium in January. Cheers!

Syncline Winery
2016 Picpoul, Boushey Vineyard, Yakima Valley, WA
Unique Topography Meets Unique Grape

There’s a geology term for the downward fold or valley created in a trough of stratified rock in which the beds dip toward each other from either side: the syncline. These rock formations can be found the world over, though some have become well-known in their own right, like The Catlins in New Zealand or the Powder River Basin in Wyoming.
In Washington’s Columbia Gorge, a series of eruptions created the Columbia River Basalt Group, which formed a series of synclines and anticlines (ridges) in the Columbia Basin. One such series is known by geologists as the “Bingen Syncline” and by locals as the “Coyote Wall,” named for the steep, 1,800-foot basalt cliffs that reach up and out of the Columbia River. The formation provides a breathtaking backdrop for a vineyard and winery sitting in the syncline.

These features provide the name for Syncline Wine Cellars, based in Lyle, Washington on the eastern edge of the Columbia Gorge AVA. The winery was founded by James and Poppie Mantone, a husband and wife team who met while working the cellar at LaVelle Vineyards in Oregon’s Willamette Valley.

The full story on Syncline Winery ~ and all our Hot Brands ~ will be available in our February 2018 issue of Wine Business Monthly. You can come by our booth (#1620) at Unified and pick up a copy or click here to subscribe to WBM.

Taste all the Hot Brands at our Annual Bottle Bash, the night before the Unified Symposium.
Click here to register
 

Thursday, January 18, 2018
by Erin Kirschenmann | January 18, 2018 | 5:23 PM

1. 2017 was a year of shipping enforcement

Steve Gross, vice president of state relations for the Wine Institute, is a fixture at the Direct to Consumer Wine Symposium. In his annual State of the States address, he reviewed all the bills, new legislation and lawsuits that changed the DTC shipping landscape in 2017.

Pushed by wholesalers, state legislators are paying attention to the common carriers—FedEx and UPS—as a measure of compliance. For now, most of the attention has been focused on retailers. While wineries can ship directly into 44 states, retailers can ship into a handful.—and even some states are challenging those rules. Michigan, Arizona, Illinois and New York are leading that wave.

Cease and desist letters continue to be sent in vast numbers to retailers and wineries who aren’t following procedure, have the correct permits or do not pay adequate taxes. Gross emphasized that now is the right time to assess any and all shipping policies, and check in with third-party providers, such as fulfillment houses, who are assisting in your shipping efforts.

“Being in compliance with state rules is going to be a big part of direct shipping going forward,” he said.

2. It’s not enough to have a website—it must be optimized

In the “Home Sweet Homepage” breakout session, panelists Taylor Eason of Cork and Fork Digital Media and Martial Chaput of Newtimer Marketing led attendees through free and easy tools to use to make winery websites search engine and user friendly. Keywords, re-targeted ads and an integrated web strategy are key to an effective online DTC strategy.

Perhaps the greatest takeaway from the session was that a beautiful website means nothing if it doesn’t appear “above the fold” on a Google Search. Understand your customer, understand how they search for new wines, understand your winery’s top goal for its website and build the site around those three factors.

3. Branding and brand messaging must remain authentic

Whether building a brand from scratch or re-invigorating an existing company, it’s important to understand the core values on which it was founded and what the winery stands for—and acknowledge it. Nate Belden led attendees through the creation of his brand, Belden Barns, and how he maintains the family farm, old barnyard tasting feel, even when holding a dinner in New York City. Steve Tamburelli of Clos du Val Winery in Stag’s Leap spoke to the challenges and frustrations of trying to bring a decades-old brand back to its roots after drifting rather far from its original intention and business plan. Clay Gregory of Visit Napa Valley detailed the struggles of maintaining the Napa Valley Brand after two natural disasters in three years, while still remaining respectful of those who lost lives, homes and businesses. And acknowledging the 5,000-pound gorilla in the room, Claudia Vecchio discussed how the Nevada Tourism Board created a brand story and marketed the state—outside of Las Vegas.

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