Issue link: http://read.dmtmag.com/i/197178
EDITOR'S DESK Ending 2013a High Note on Each year at the Wine Industry Financial Symposium (WIFS), Professor Robert Smiley of the UC Davis Graduate School of Management presents the results of his survey of winery CEOs. Through phone interviews, he asks 28 heavy hitters for their opinions on a variety of timely topics, from international sales strategies to the competitiveness of established brands. During the last few years, as the economy has slowly improved, survey respondents have become increasingly optimistic about the future of the U.S. wine industry. Indeed, Smiley declared at WIFS 2013 that this year's responses were the most positive he's seen in years. Having witnessed his previous presentations, I know this to be true, but I thought it would be interesting to revisit the 2008 CEO survey and accompanying Industry Trends Survey, conducted in the midst of the economic downturn. Five years ago, trading down was the order of the day, as U.S. consumers turned to lower price-point wines to get them through tough times. People were eating out less often, resulting in a worrisome decline in on-premise sales. Understandably, industry optimism also took a dip. In Smiley's 2008 trends survey of wineries, growers and trade members, the percentage of respondents predicting an upswing in the California wine industry dropped from 75.2% in 2007 to 55% in 2008. As Smiley pointed out at WIFS, the outlook today is much rosier. Although the economy has been slow to recover, consumer confidence is up, restaurant sales are back in the black and people are finally venturing back 10 V I N E YA R D & WIN E RY MANAGEM ENT | Nov - Dec 2013 up the price scale in their wine purchases. Nearly 80% of trends survey respondents predicted an increase in profitability for 2014. When asked about targets for international sales, CEOs were cautiously optimistic about China, citing instability issues and consumer distrust in the authenticity of products as potential roadblocks. Japan, Germany and Canada were also named as areas of opportunity for California wines. The explosion of new wine brands and "consumer promiscuity" – an increasing willingness to explore new varieties and labels – was viewed by CEOs as a challenge for established brands. The upside, some reported, is that consumers' increasing desire for authenticity in the products they buy will likely lead them away from "contrived" brands and into the arms of established producers. While "sustainability" was the industry buzzword in 2008, the hot issues for 2013 included grape supplies, climate change and the strength of the U.S. dollar. CEOs cited water supplies, input costs, increases in shipping rates for direct-to-consumer purchases and nutrition labeling as concerns for 2014. But mostly, respondents saw opportunities – to increase profitability in the coming year, to better connect with customers through technology and social media, to sell more wine than ever through direct-to-consumer channels. Salute! Comments? Please e-mail us at feedback@vwmmedia.com. w w w. v wm m e d i a . c o m