Canned wines are HOT right now -- we get press releases about new brands of canned wine being released every week! Are you thinking about canning your wine? Check out Bill Pregler's What's Cool column in the July issue to learn about the individual components of a new canning line installed at Free Flow Wines and their protocol for maintaining strict quality control standards as well as the compliance certification of “can-to-product” as required by Ball Beverage Packaging (the makers of aluminum cans). Visit www.winebusiness.com/wbm to access the digital issue of WBM or click here to subscribe to the print edition.
These guys have stories to tell. Most winemakers do! In our July issue, writer Lance Cutler asks several winemakers to tell the haunted tales of harvests gone wrong and their rather creative solutions to the problems. From car troubles to grower relations gone wrong, Rosé showers and equipment struggles, these winemakers have been through it all! Some of the winemakers include: Jerry Seps of Storybook Mountain Vineyards, Steve Edmunds, Jim Bundschu of Gundlach Bundschu Winery, Chuy Ordaz of Palo Alto Vineyard Management, John Batto, Zeke Neeley of Kenwood Vineyards, Charlie Tolbert, Sam Bilbro of Idlewild Wines, Lance Silver, of Tobin James Winery and others. Check out the July issue of WBM for more. For a print copy, click here to subscribe.
Wine Business Monthly's July 2017 digital edition is now available.
Inside July 2017 you will find:
WINE BUSINESS MONTHLY's 2017 WBM/SVB Tasting Room Survey Report
Three Successful Approaches to Customer Relationship Management
Checklists: Preparing the Crush Pad and Lab for Harvest
Closures: Survey Results, Trials and News
The Long, Hard Truth About Producing Spirits
More than 150 people attended the second annual Lodi Vineyard and Wines Symposium. Presentations and panel discussions included deep dives into land pricing, grape pricing, marketing, promotions and succession planning. Lodi is a major player among California wine regions - well positioned given demand for quality wine-grapes and growing awareness of the region. Here are ten takeaways from the symposium:
Revenues are Going Up, So are Bottle Prices
In a survey of wine industry professionals conducted by the Wine Industry Symposium Group in the second quarter of 2017, 75 percent of respondents from Lodi said they experienced increases in revenue last year. The strongest growth was for grapes supplying bottles priced in the $14 - $20 range, though the region generally has the lowest grape prices outside of Fresno.
More ‘Lodi’ Wine Sold in Nielsen Channels
Most grapes sourced from Lodi are blended into “California” wines but Brian Tognotti, Assistant Client Director, The Nielsen Company, said wines labeled “Lodi” were up 9 percent in value and 7 percent in volume last year and sold for $10-$11 on average in scan channels. Lodi has wider distribution in major markets than it did a year ago too, with Kroger, Albertsons/Safeway and Publixs selling the most Lodi-labeled wine among the stores Nielsen tracks.
Less Discounting Good for Lodi
Nielsen is seeing consumer response to promotions declining, with temporary discounts becoming less effective because of fragmentation of the shelf- i.e. the number of items on the shelf is going up. An industry that’s less reliant on promotions in general is probably a positive thing for Lodi.
Lodi’s Place in the World
Global production is 40 million tons a year and California is roughly 4 million tons, accounting for about 10 percent of the world’s production. Lodi produces about 800,000 tons – about 20 percent of California’s supply or about 2 percent of the world’s production. That sounds small but it’s actually pretty significant.
The Angry Grower’s Slide
Lodi wine grapes typically go into $7-$10 bottles – but increasingly go into bottles priced higher and the ‘sweet spot’ in the wine market right now is $10 - $20. If one takes the old rule of thumb that a ton of grapes should be worth about 100 times the retail bottle price, one might think Lodi growers would be getting at least $700-$1,000 per ton. Allied Grapegrowers vice president of operations Jeff Bitter said only about 100,000 tons of Lodi’s 800,000 tons of grapes crushed in 2016 sold for more than $700 a ton – with exceptions for Petit Sirah, Pinot Noir, as well as Zinfandel, which can be more expensive to farm.
Stuck in the middle in Lodi, but things are looking up
Fungibility is a buzzword in the wine business these days, with grapes being allocated across appellations for different products and programs based on price. Lodi is in the middle of the state and has been flanked by sufficient supply in higher priced coastal areas, and excess supplies in the southern interior where prices have dropped. Allied’s Jeff Bitter said that’s really the big issue for Lodi but that with coastal inventories coming into relative balance, there’s reason for cautious optimism. “Lodi has experienced a stagnant market, but that’s behind us,” he said.
Almonds are Hot!
Demand for land for almonds has been increasing, and has driven vineyard land prices in Lodi higher. John Duarte, owner of Duarte Nursery, said his nursery alone will sell about five million almond trees this year, much of it destined for Lodi, equivalent to 40,000 acres of almonds. Duarte will sell 5,000 to 6,000 acres worth of grapevines this year too, but nurseries across Califronia are basically just selling just enough planting material to replace wine-grape acreage that's being removed or replanted.
The Varietal Mix is Changing
Zinfandel prices in Lodi have been soft, which is too bad becuase it's what Lodi has long been known for. Petit Sirah acreage in Lodi doubled in a few short years with Petit Verdot increasing quickly on a small base. “Zinfandel is soft because of these red blends,” Erica Moyer of Turrentine Brokerage said.
Triple Drinking Occasions
This isn’t Lodi-specific but in a recent survey, Nielsen asked what percentage of the time people drink wine beer and spirits in the same drinking occasion: Turns out it’s somewhat common among millennial females to have a wine, a beer and a shot of liquor on the same occasion.
Pssst. Plant Sauvignon Blanc?
Sauvignon Blanc is currently the fastest-growing wine grape variety in the U.S. market. It is a leading varietal for Lake County but not so much along the Central Coast. That may make it a good variety to plant in Lodi. “I think Sauvignon Blanc lands here,” Bitter said. “It will land in the Delta and Lodi. Don’t everyone go out and plant Sauvignon Blanc and ruin the market, okay?’
|Ray Rouleau of VIP (photos by Bob McClenahan)
Daily transactional data for three-tier wine sales will soon be widely available to wineries, a breakthrough that stands to transform the way wineries track and manage an estimated $1.8 billion in annual depletion allowances.*
The sweeping change is underway at Vermont Information Processing (VIP), an industry software and information provider that has long supplied daily depletion data to the beer industry.
VIP purchased Beverage Data Network (BDN), a supplier of wholesaler depletion data to the wines and spirits industry, in July 2015. Then in January 2017, VIP quietly purchased TradePulse, a depletions data provider focused largely on California wineries.
BDN and TradePulse customers receive month-end retail and depletions summary reports but VIP has the ability to provide invoice-based data via wholesalers that’s downloaded daily, taking it to the next step. The company plans to shift all TradePulse and BDN customers to its daily Supplier Reporting Services (SRS) system within the next twenty-four months.
“Wine is on the journey to a new source of truth,” Ray Rouleau from VIP said.
Rouleau was speaking at the Wine Industry Technology Symposium in Sonoma and his presentation was followed by two sessions where winery executives delved into the details of managing data for three-tier sales.
Rouleau said daily transactional data is already available through 2200 distributors and that a significant number already provide data to TradePulse and BDN. During 2018, VIP will continue using BDN file formats while the TradePulse file formats wholesalers generate will be retired.
Depletions reporting is used by wineries to set sales targets, distribution targets, and to measure performance for depletion allowances. The data is sourced from accounts receivable and warehouse management system data.
Depletion data tells wineries how distributors, retailers, and restaurants are selling their products. Once wholesalers have wine in hand, the sale of the wine to retail accounts and to consumers – depletions – are outside the view of the winery. This was a source of frustration for years, but most wholesalers now share this data with wineries and third-parties that can help wineries manage depletion data.
Third-party services typically provide what the distributors received, i.e., winery shipments, depletions, i.e., what they sold to the trade, and remaining inventory. Then taking it down another level, depending on what one pays for, they can provide retail account data – depletions by account. Account-level data can be critical for determining where sales personnel need to focus. Account level data can then be analyzed further, giving a winery a leg up in promoting their wines or with pricing them. This data comes in in different formats and there are a number of companies that sit in the middle to digest that information and deliver it in a usable, monthly report.
Having access to account level data on a daily basis, however, is a game changer. Wineries will be able to react almost immediately to sales, pricing, and inventory trends while theoretically they’ll be on the same page as their distributors when they’re setting goals.
While a distributor typically handles sales costs, wineries need to account for depletion allowances - promotional expenses offered to the distributors. They provide an incentive for the distributor to deplete inventory and those costs can be huge (the estimated at $1.8 billion a year).
Currently, there's no direct data connection between chargebacks and depletions; supplier pricing deals are entered into distributor systmes manually, if at all; chargebacks are generated by the distributor manually; chargebacks are reconciled to depletions manually by the supplier, and only the "tip of the iceberg" are ever actually reconciled.
“Once you have invoice-level data, its fact based. It’s exactly what’s happening and it’s going to affect your price planning,” Rouleau said.
Rouleau noted that once wineries get used to invoice level data on a daily basis and to the visibility it provides, they’ll need to align the data with planning; and will want to look at bill-backs to see if they’re close to what was forecasted. A next step, though it’s a ways away, would be to arrange for automatic reimbursement for billbacks, a practice that’s already common in the beer industry.
“The wholesalers are very excited to deal with one company, one process, and to have one source of truth to talk to their suppliers about,” Rouleau said.
WITS Expands in 2017
In its second year being produced by Wine Business Monthly, winery attendance at WITS rose 50 percent. There were more than 300 attendees including nearly two-dozen distributors. The event included a new technology tent where more than a dozen technology companies provided hands-on demos in a lab setting. The “Demo Stage” featured larger group presentations throughout the day. The symposium included three session tracks – a data track, an IT track, and a direct sales (DTC) track – as well as roundtable sessions with informal discussions on 12 topics.
Note: The June '17 Wine Business Monthly includes a technology survey – the first comprehensive survey of IT practices for wineries, focused on what software wineries are currently using, what their IT priorities are, i.e. where they’re spending their money.
• $1.8 billion based on bw166 and Wines & Vines Analytics (Gross industry revenue for 2016 of $59.9 billion) and VIP estimates
|Keynote Speaker Matthew Glickman, VP Product, Snowflake (former Managing Director & Chief Data Officer, Goldman Sachs) speaks about the future of the Cloud
|WBM Publisher Eric Jorgensen|
|Panel, Using Technology to Captivate Your Distributor
|Best Practices in Utilizing Depletions and RAD data
|Capturing consumer touch point data for a 360-degree view of the customer|
Silicon Valley Bank's Rob McMillan leads an interactive discussion on the latest growth trends in direct-to-consumer wine sales and a review of SVB's 2017 Direct-to-Consumer Wine Survey. More than 800 wineries participated in the survey.
In loving wine, you soon learn this universe has no center. Wine is this great confluence of history and innovation – a snapshot of ancient geologic moments, a bottling of a time and place, and a canvas for daring risks in the vineyard and cellar. In truth, making wine, serving it, or drinking it often leaves us with more questions than answers. Few winemakers celebrate this ineffability as gracefully as Randall Grahm.
Napa Valley vintner Dario Sattui remembers walking up the hill behind his house one morning after a sleepless night a decade ago, all the way to Castello di Amorosa, the 13th century-inspired Tuscan castle he had built near Calistoga, gargoyles, watchtower, moat and all.
As he waited for the first paying visitor by the drawbridge, Sattui wondered if anyone should show up. Did he make a fool of himself?
“I mean who does (something) ridiculous like this,” Sattui said April. “’Will anybody actually come here?’
The rest is history. On April 6, Sattui invited 70 guests to celebrate Castello di Amorosa’s 10th anniversary where an estimated 400,000 people visit a year.
European artisans who had helped create the 136,000-square foot fortress set up demonstrations of their skills in the courtyard; wine writer and educator Karen McNeil led a wine seminar in the Grand Barrel Room; and a Michelin-star chef flown from Italy, Stefano Masanti, prepared a sit-down lunch served in the Great Hall, a banquet room decorated with Italian-style frescoes.
Sattui, a devoted student of medieval architecture, who estimates about 400,000 people come every year, purchased the 171-acre property in 1993.
“The castle wasn’t any one idea. It was a composite of everything I’d seen over a period of years,” Sattui told his guests. “It was my fantasy, my invention.”
At first, Sattui wanted to replicate a monastery.
But people don’t want a monastery, he reasoned. “They want a castle, right? And I was the same way. So after two, three years we changed the plan...started building a castle.”
Sattui, who has 29 acres planted, pursued his plans overcoming logistics, financial obstacle and self-doubt during the 15 years it took to build the castle, which features 107 rooms, including torture chamber, an armory and a chapel. Workers hand chiseled 8,000 tons of stones from two quarries in Napa County. About 70 percent of the building is underground.
In 2006, Sattui was running out of money. But in 2007, Napa County issued a temporary occupancy permit, allowing the first paying visitors to the castle and enabling Sattui to finish the project.
During the celebrations, MacNeil, author of The Wine Bible, led a vertical tasting featuring 10 years of Castello di Amorosa’s Il Barone Cabernet Sauvignon, beginning with the 2003 vintage.
Sattui spoke on his philosophy on winemaking, including his determination not to follow the latest trends.
“We’re striving to make flavor full, elegant, balanced, memorable wines, wines that aren’t over-oaked, wines that don’t have extra high alcohol,” he said.
MacNeil said the wines are “very European” in style. “It’s very masculine,” she also said. They are “more intriguing than I anticipated, actually,” she said later during the two-hour plus luncheon, which featured hand-made hen ravioli, roasted strip loin of beef, accompanied Il Barone Cabernet Sauvignon from the Napa Valley from 2013 and 2014 and other wines.
U.S. Rep. Mike Thompson, D-St. Helena, sent his congratulations by video. Sattui also received a framed a resolution from California Sen. Bill Dodd.
As guests headed to lunch in the Great Hall, singers with Opera D’Amore sang pieces by Verdi, Rossini, Mozart and Puccini.
Among those watching the scene was visitor Mihai Ungureanu, He said he and his wife, Cristina, found the castle’s authenticity impressive. They expected kitsch, said Ungureanu, a Romanian who is moving with his wife from South Carolina to Palo Alto.
Instead he and his wife were really surprised. “(It) brings a lot of memories of home…unexpectedly,” Ungureanu said.
To mark the 10th anniversary, Sattui has written a book, “Castello di Amorosa A Labor of Love,” detailing the project’s history. As he signed copies of his book, Sattui said he had no idea the Castello would be the success it has been. Exactly what led him to build it? “It’s something inside of me (that) made me do it,” he said, before presenting a signed copy of his book to a guest.
This is Rooted, wine in a reusable container featuring a plant kit within the lid created in the name of charity, specifically Growing Power, a non-profit organization and land trust that seeks “to grow food, minds, and community” through training, community food systems and a network of farms. Available in a white, red and Rosé, Rooted is targeted to consumers interested in sustainability, being outdoors and doing a small part to help create a better community—not in supporting corporations. Sales will start in the off-premise market, notably at Kroger and some other independent grocers, with some online, DTC sales as well.
Or at least, that would be the case if the brand existed.
Rooted was the winning creation in a competition amongst wine industry executives, marketers, educators and media to see who could build the best brand for a charity. While some focused on real charities and movements, others took the challenge in a more light-hearted way, creating a limited-edition scotch (sealed with a golf ball) for the golfer who just had too many problems in his rather entitled day.
Rooted's creators, the winning team of the brand development competition.
The competition was the newest installment in Nomacorc and Vinventions’ annual “A Model Wine” seminar. After spending the morning listening to experts in sustainability, sales and marketing, the off-premise market and branding, attendees were asked to put their new knowledge to the test by creating a brand complete with a package, path to market, social media strategy and charity to support. It was a fitting end to a day spent discovering new ways to be a better marketer.
Topics covered leading up to the competition included:
Wine Clubs continue to flourish and have by no means reached a saturation point. In fact, wine clubs operated by U.S. wineries have been growing at double digits - they tripled over three years.
How do we know this?
It’s just one of the data points that emerged in last year’s Direct to Consumer Survey, conducted by Silicon Valley Bank and Wine Business Monthly.
As the chart below illustrates, for most small wineries, which means most wineries, DTC sales are everything.
So how does a winery benchmark itself to see how it’s doing while getting a handle on industry best practices?
By taking the 2017 DTC Survey, of course.
While topline data from the 2017 survey will be published in the July Wine Business Monthly, more detailed results will only be available to those who take the 10-15 minutes to complete the survey - time well spent. Take the DTC Survey Here