Beverage Dynamics is the largest national business magazine devoted exclusively to the needs of off-premise beverage alcohol retailers, from single liquor stores to big box chains, through coverage of the latest trends in wine, beer and spirits.
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American Made 42 Beverage Dynamics • September/October 2016 www.beveragedynamics.com under $7 have declined by 10 percent, with the biggest losses coming for the under-$3 category. "People have been trading up and spending slightly more," says Jon Moramarco, managing partner of BW166, a consultant to the beverage alcohol industry and the co-owner since March of Gomberg Fredrikson. He says there was "a bit of a speed bump" at the start of the recession, with some consumers trad- ing down to less expensive wines. "Wine fl attened out for about 18 months, then resumed growth," he says. And the top, "cult" wines were largely untouched. There are waiting lists to buy such wines; if someone stops buying, another customer will step up. Terlato's Fletcher says, "If you can spend a hundred bucks for a bottle or 300 bucks in a restaurant, you didn't have too much trouble in 2008." Moramarco adds that the top 15 wine companies, which ac- count for about 80 percent of the volume, haven't shown much growth in the past three to four years. But the rest of the win- eries, which account for the remaining 20 percent, have grown about 7 percent. He notes another trend affecting the big wine companies: In many cases, they're trading up by buying more expensive brands. E&J Gallo, for example, bought Monterey County's Tal- bott Vineyards in 2015 and, more recently, acquired Orin Swift Cellars. The Wine Group purchased Benziger Family Winery in Sonoma County in 2015. Constellation Brands paid a reported $285 million this year for the Prisoner Wine Co., which includes the Prisoner red blend and four other brands. The big compa- nies also continually create new brands. So far, increased sales and trading up by consumers haven't translated into much in the way of higher prices. Moramarco says that some smaller wineries, especially those with a lot of direct-to-consumer business, are "raising prices a little. Larger companies with large brands are still having a tough time getting retailers to accept price increases on existing SKUs." He adds that the big companies are raising prices on new SKUs or new brands where possible. Winemakers interviewed for this article were split on the question of higher prices. Sass, at Halter Ranch, says that business, especially di- rect-to-consumer, has been booming. He doesn't know whether to attribute that to the winery's new tasting room, the strong growth in Paso Robles wines generally, or the economy. But he adds that direct-to-consumer has been so strong that the winery is limiting some shipments to wholesalers. Still, the winery is mostly holding the line on prices. In Lodi, St. Amant's Spencer says, the wine business is on the upswing. His sales have been strong, but he's not planning to raise prices. "We're continuing to grow our brand," he says. "We're comfortable with where we are on prices." Qupé's Lindquist says that up till now, the winery has mostly decreased discounts to wholesalers, rather than technically rais- ing prices. But Qupé is looking at small price increases next year on its two biggest-production wines, the Central Coast Syrah and the Y Block Chardonnay. Looking ahead, Moramarco says, beverage alcohol is "well-positioned to ride out bumps in the economy. Honestly, wine isn't really recession-proof," he adds, "but it rides out ups and downs in the economy better than other products." BD A Northern California resident, LAURIE DANIEL has written about wine for more than 20 years. Her wine column appears in several California newspapers, and her articles have appeared in magazines such as Wines & Vines, Food & Wine, Wine Country Living, Drinks and the Wine Enthusiast. "I LOVE THE '11S. THEY WERE SO INTENSE AND HAD SUCH GREAT ACIDITY. THEY WERE MY KIND OF WINES." — BOB LINDQUIST, QUPÉ'S FOUNDER AND WINEMAKER St Amant Bob Lundquist PHOTO COURTESY OF DALE GOFF