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The Fall Season Shapes Up

Outlook Seems Upbeat as the Market Heads into the Final Stretch
by Liza B. Zimmerman
November 10, 2009

Feedback from retailers, restaurateurs and wholesalers has grown increasingly positive as we move into the last part of the fourth quarter. Many seem to believe that this year is finally turning out to be more dynamic than last. According to data from a Nielsen presentation earlier this month wine was the No. 5-ranked category of the top 15 of the major 125 segments that Nielsen tracks with a 5.1 percent volume growth in the period ending September 5, 2009 over the previous year.

“Our volumes are up in total wines, about three to four percent in all states,” said Bill Cascio, the San Francisco Bay Area-based vice president and director of winery relations for the Dallas-based Glazer’s Family of Companies, which is active in 12 states. “It is shaping up to be a little bit better than last year,” he concluded.
 
Wilfred Wong, cellar master for the 100-store, Concord-California based Beverages and more!, said that this year is drastically different from the previous. “Last year this time business really dropped off,” concurred Brahm Callahan, wine director at Post 390, a gastropub that is part of the three-restaurant Himmel Hospitality Group which opened in Boston early this month [ed: Oct]. Callahan has a long track record in the Boston restaurant business. “We are starting to see people want to spend more money but they want to see perceived value.” Post 390’s 5,000-bottle list, priced $25 to $600, features two thirds of its selections in the $20 to $80 price range.
 
At the Fifth Floor, a contemporary American restaurant in the 200-room Hotel Palomar in San Francisco, wine director for Kimpton Hotels and Restaurants Emily Wines said wine sales are picking up. “We are experiencing more convention and business entertaining which always helps wine sales.” The restaurant features 1,100 wines, priced from $20 to $5,000 a bottle.
 
Action on the Low End
 
The premium category of wines retail priced up to $10 a bottle at retail is where the bulk of sales remain concentrated. Glazer’s Cascio pinpointed the sales movement he was seeing specifically in the $5.99 to $8.99 retail range. He added that “established brands with brand equity under $20 are also showing single-digit growth this year.”
 
The market, Wong agreed, is “obviously value driven. People are looking for the biggest bang for the buck.” He added that, “People are looking for sales and deals more than ever before…..I don’t think we are going to go back to where we were. This is a very severe change.”
 
“On the upper-end, for wines priced over $20 and $40, there’s an amazing amount of pressure in the system, especially on-premise,” said Cascio. “Unknown brands in [higher] price points will go away and are not going to be restocked.” He added that on the wholesaler side “luxury inventories have been reduced.” He also noted that he doesn’t “see being back in a normal cycle in that category for 18 to 24 months from now for [wine that] retails for $50 or more.”
 
One of the trickle-down effects of slowed bottle sales is a healthy by-the-glass market. “We are moving through 15 cased of Pinot Grigio in five days by the glass,” noted Post 390’s Callahan. The Fifth Floor’s Wines added that “small plates and half bottle and by-the-glass sales are way up because people don’t think they are splurging as much. In truth they just order more and spend the same.”
 
Deals Galore
 
There are a few positive notes to the current wine buying climate, especially for consumers. Cascio noted that there are some fantastic deals out there. “The next three months are going to be an attractive time to buy wine.” For the time being he suggested that producers focus on more affordable second labels.
 
Callahan added that he thinks the slowdown is also being gradually phased out. “We are slowly moving out of it. I don’t know when we’ll go back to where we were in 2006 or 2007.”
 
Matthew Scott, director of operations for of Abacus restaurant, a global restaurant that is part of the five-location Kent Rathbun Group in Dallas said that he didn’t know “if things will ever be the same as ‘knew them’ but we hope to see a change in the third quarter of 2011.” Abacus carries 600 bottles, priced from $30 to $1,900.

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