| The global state of the wine industry: A sector steeped in tradition and reliant on the delicate balance of nature, is currently facing a crisis. A multitude of challenges, ranging from shifting consumer preferences and economic pressures to the escalating impacts of climate change and evolving trade dynamics are creating a turbulent environment for producers, distributors, and retailers alike. Our goal in today’s newsletter is to identify these headwinds, bring awareness to the challenges faced and present ideas on how to aide this ailing industry we love so dearly. |
Six headwinds affecting the wine industry today
| 1. Shifting Consumer Preferences & Demographics: Younger generations (Millennials and Gen Z) are drinking less wine than previous cohorts. In particular, Gen Z is drinking less and having less fun period (but that’s a different tangent). Their preferences are shifting towards a wider array of alcoholic beverages including ready-to-drink (RTD) options, craft spirits, cannabis-infused specialities, hard seltzers and beer. Furthermore, the rise of non-alcoholic beverages and the “sober curious” movement present another layer of competition. 2. Health and Wellness Trends: Growing health consciousness among consumers is leading to a moderation in alcohol consumption. There’s a rising demand for low-alcohol, lower-calorie, and “better-for-you” wine options. The anti-alcohol messaging, impact of articles like this from the surgeon general and popular weight-loss drugs are also contributing to dampened demand. 3. Economic Pressures & Inflation: Rising inflation and increased cost of living are squeezing consumer discretionary spending. This leads to consumers “trading down” to more affordable options or reducing their overall wine consumption. Why spend $45 on a bottle of wine when for the same price, you can get 3x the standard # of drinks in a bottle of tequila? On the production side, costs for wineries have also risen across every stage, from grapes and packaging to labor, land and energy. Winery needs a loan? Good luck with today’s interest rates. 4. Climate Change Impacts: Rising temperatures, extreme weather events (frosts, droughts, wildfires, hail), and changing precipitation patterns are significantly affecting grape yields, fruit quality, and the long-term viability of traditional wine-growing regions. This forces expensive adaptation strategies. Vignerons are increasingly ripping out old vines to plant varieties that can withstand and perform better in higher temperatures (ex. Viognier instead of Chardonnay, Grenache instead of Cabernet Sauvignon). The fiscal impact here is multifaceted:Upfront costs of replanting.Initial low quantity and quality yields.4+ years before revenue from newly planted vines.Decreased supply may necessitate raising prices on existing inventory.Risk of customer alienation due to discontinuation of favorite varietals. Think the dream is to own a vineyard in wine country? You may want to reconsider given the fire insurance alone. Per the NYT, insurance premiums in Napa County are expected to keep climbing, making home and vineyard ownership increasingly unaffordable. Once envied, these vineyard owners are now faced with a difficult decision of forking over a king’s ransom for fire insurance, or be left uninsured. Furthermore, per the article, property values are also projected to remain flat or decline as buyers factor in rising insurance costs. |
So what’s the solution?
Despite the abundant headwinds in the wine industry, we are optimistic about the future. Wine is our passion and we’re always thinking of ways to help other small producers improve their chances of success. Here are our thoughts on how the wine industry can bounce back: 1. Get rid of the bullshit: While we love the wine business, there is sadly, a lot of bullshit. Exhibit A: The Disneylandification of popular regions like Napa Valley and Sonoma: $150 tastings and $500+ bottles. But hey, if you act fast, one tasting fee is waived with a 20-case purchase and the forfeiture of your first born. Look, wine already has a stigma of serving only the affluent and snobby; these kind of cash-grab pricing models reinforce this stereotype while alienating a huge population of potential customers. Visiting a producer to hear their story, learning about their terroir, winemaking philosophy and tasting their work is an amazing experience that everyone should have access to.. not just the top earners. 2. Toss out the rules: If the wine industry wants to encourage more demand, it will need to increase its TAM (total addressable market). So, let’s make it less intimidating and more inviting. Throw away the rules. Want to drink a zippy Rosé at night and a meaty Syrah in the afternoon? Have at it. Stags Leap Artemis paired with Omakase? Sure, why not. We firmly believe that like art, wine should largely be subjective. The industry collectively needs to take itself less seriously when it comes to these things. Let’s welcome a variety of opinions with open arms and encourage dialogue. You say the Tempranillo isn’t good–that’s fine. But why? What is it making you feel? Have you tried it with this bite of Manchego? 3. Wine pairs with food: The alternative beverages like pre-mixed cocktails and hard seltzers don’t hold a candle to pairing with food in the way that wine can. We need to emphasize this product differentiation. This may seem obvious to the wine veteran but to the novice oenophile, it’s novel. We recently attended an amazing course pairing paring dinner at the Ruby June Inn and there were so many “first timers” who had never grasped the depth of how wine and food can play together. We’re not suggesting Dorsia-caliber 15 course menu’s at every tasting room, but why not light bites or tapas which each flight? Guests may learn a thing or two. Education is a form of experience and experience is.. 4. Experience is what they care about: It’s a fact that Millennials and GenZ’ers don’t care much for material items–they prefer experiences. So give it to them! Vineyard walks, ATV tours, fireside winemaker chats, aforementioned food pairings, vineyard camping, live music etc.. these are just a few ways to turn a normal “tasting” into an experience that encourages repeat visits, wine club subscriptions, word of mouth invites and shoutouts on social media. |
5. Build a digital presence: That pesky hard-to-reach younger demographic we’ve been mentioning? Well it’s not a secret where to find them. GenZ and Millennials live on social media platforms. Truth be told, most of the wine influencer (or vinfluencers *woof*) scene is cringe at best. That said, establishing a website, Instagram (and the like), newsletters, written, audio and video content are all key ways to build brand awareness, marketing value and most importantly, connect with the target audience. BTW – if you’re a wine industry professional who is looking to start or beef up your digital presence, drop us a line. We’d love to help. 6. Regulation on additives This one is huge. The TTB is the primary federal agency for wine industry oversight. While the amount of regulation in many areas is cumbersome, it is oddly lacking in what’s required to be printed on labels, i.e. what’s in the bottle. Yes, micro sulphur additions, grape varietal type, ABV% and region need to be printed. But not a lot more than that. Except there is more that ends up in your glass. A lot more. Bianca Bosker encapsulates this perfectly in one of our all-time favorite wine books, Cork Dork: There is no fault that can’t be corrected with one powder or another…Wine too tannic? Fine it with Ovo-Pure (powdered egg whites), isinglass (granulate from fish bladders), gelatin (often derived from cow bones and pigskins), or if it’s a white, strip out pesky proteins that cause haziness with Puri-Bent (bentonite clay, the ingredient in kitty litter). Not tannic enough? Replace $1,000 barrels with a bag of oak chips…oak dust…or a few drops of liquid oak tannin (pick between “mocha” and “vanilla”)….Wine too thin? Build fullness in the mouth with gum arabic (an ingredient also found in frosting and watercolor paint). Too frothy? Add a few drops of antifoaming agent (food-grade silicone oil). Cut acidity with potassium carbonate (a white salt) or calcium carbonate (chalk). Crank it up again with a bag of tartaric acid (aka cream of tartar)… When it’s all over, if you still don’t like the wine, just add a few drops of Mega Purple—thick grape-juice concentrate that’s been called a “magical potion.” It can plump up a wine, make it sweeter on the finish, add richer color, cover up greenness, mask the horsey stink of Brett, and make fruit flavors pop. No one will admit to using it, but it ends up in an estimated 25 million bottles of red each year. None of these additives, if used, would be required to include on the label. Why is this? Anything off the shelf at the grocery store is mandated by law to include all ingredients used; it should be the same for wine. Changes in these regulations could help skew demand from large-batch behemouths to small producers, appeal to the health-conscious younger generation who care about what goes in their bodies and emphasize the difference of wine vs. alternate “soda-like” beverages. 7. Wine is unique: Wine is unlike any other beverage in the world. If done right (not like a megapurple-fanken-wine mentioned above), vino a beautiful, living, always-changing entity. Opening up a wine on one day will taste different than if you open it on any other day. Your favorite producer’s wine should taste different with every vintage depending on factors like temperature, rainfall, harvest date, winemaking decisions–that makes it the most unique beverage in the world; this point is so crucial for educating those adjacent to and outside the wine community. Seltzers, beers, canned cocktails, mass produced franken-wine.. they all follow a recipe. They taste the exact same year over year, like soda. Wine is not like soda. Wine is dynamic. Wine is fluid. Wine incorporates chemistry, meteorology, geology, viticulture, religion and history; a tradition going back over 8,000 years. Wine is the analog-slow-walk-paperback-book-pen-and-paper antithesis to the digital-screen-dopamine-frappa-canned-aspertine-concoction that’s peddled by the latest trending account. And sadly, the latter is winning with the younger generation. If this trend isn’t stopped, we’ll likely see a flywheel effect play out where more and more boutique wineries continue closing, reducing the supply of great wine, reducing the amount of would-be wine lovers, which in turn reduces the pool of would-be great small winemakers from entering the market. Well, we’d hate to see that. And we’re trying our best to educate the wine community, both experts and newbies alike. We hope you join us in educating those around you to the wonders of this incredible beverage we all love. |
| If you’re still reading this, thank you. Seriously. We appreciate all of our ‘Scribers out there: Closing in on 10,000 for our newsletter and over 25k on Instagram! As far as personal updates go, the third vintage of our Vespera Cellars label for single vineyard Pinot Noir is coming along nicely, aging in french oak barrels. Thank you to all that have signed up for the allocation list — we’ll update you separately when production is ready (we’re not rushing things if you couldn’t tell). For our Portugal project, we’re getting close to bottling our 2023 vintage and would be happy to add to our inventory sheet once we can make the import numbers work. For now, you can barrel taste for free by staying at our property (book on Airbnb). |
| Until next time, -Cassie and Jesse |
