Issue link: http://winesandvines.uberflip.com/i/591609
November 2015 WINES&VINES 115 PRACTICAL WINERY & VINEYARD BUSINESS " There is a consolidation of retailers and cat- egory managers by some of the larger sup- pliers that will reduce our opportunity to get wine on the shelf. They completely control the shelves. It seems that the TTB or some- body has to step in and say there is a restric- tion of trade occurring. That is the hottest issue for me: the ability to get on the shelf because of control by the major companies." " One thing that keeps me up at night is the private-label business. Total Wine's influ- ence on the industry is all about control and about selling people into their store on name brands, but trying to direct them to private labels once they are in the store." " I see a lot of loyal clientele developing. There is no indication that the millennials are going to be as brand-loyal as baby boomers and to a lesser extent gen-Xers were. There will be a quickening of trends, and brands can be hurt by trends going in different directions. That is going to keep speeding up, and you'd better be willing to move as fast as other parties. That is going to be a challenge for wine. There is going to be that focus on how do we tell our story as the ultimate craft product?" " As the population gets older, we will see continued growth in wine consumption. It is interesting, too, since everyone has done a lot of study on millennials. First off, we see pretty clearly that they are somewhat fickle consumers, jumping from one thing to an- other. But that is good, because baby boomers 25 years ago were not drinking wine. Now, based on a certain occasion, we are seeing good wine consumption—even at higher prices. This is positive, and then as they mature they will select wine more frequently. I believe they are comfortable with it, for one thing. Remember 30 years ago, the biggest topic was how to mainstream wine when it is seen as an elitist beverage only for wine snobs. There was one winery that was running a lot of advertising that wine is not for wine snobs, which actually becomes a reverse problem. Today—and to some ex- tent thanks to Starbucks, where people order complicated drinks—simply asking for a glass of Chardonnay or Pinot Grigio is a common task where it was not 30 years ago." " Declining consumption. All of these models on increasing consumption—I lived through the 1980s, when I saw declining consump- tion for a decade. Then, I keep wondering, what is to say we are not at the high? Rather than in a cycle, we need to make wine exciting again. With millennials, there is an increase in consumption of craft beer and craft cocktails, plus this whole fusion of food to wine. Now we talk about beer in wine/bourbon barrels. It used to be that you had the wine guy who was the "sophisticated" guy, and the spirits guy who was the "Vegas" sales guy, and the beer guy who was the "football" guy. Well those days are gone. These are sophisticated sales now at all three levels. That puts us in direct competition with beer and spirits in a way that we, as an in- dustry, have not seen before. We have to look at that." " More engineered wines versus naturally made wine. Where is that fine line where people are sort of manufacturing for taste profile instead of naturally moving toward a taste profile? People are going to say that there is real value in engineering these cer- tain taste profiles, and they might get the right profiles and it may not matter how they got there at a certain price point." " We are going to see a beverage alcohol business with more cross-marketing and mixing of different flavors. You can even go back to where you have beer now being put in wine barrels or bourbon barrels and being marketed together as a product. You can see some of these ciders as well. How is wine going to play in that? We are going to have to continue to cross-market. The wine industry has got to continue to look to different alternative packages. Maybe some smaller single serves, wine in cans, etc." " As more young people travel around the world, they are being exposed to wine and seem to be experimenting and trying. That trend is going to continue." " Young people are truly getting into sparkling and bubbly wine more and more. They enjoy it; it is refreshing, and once they get into it they will continue to trade up. Of course they will be moving more toward Champagne and the fine wine business, the super-premium levels—people are con- stantly craving to drink better as long as our economy can afford it." " One of the biggest threats that the Califor- nia Cabernet probably has is from Washing- ton state. It does not take the American consumer much to translate from California to Washington. As cost of goods rise here— either through water or land scarcity—we will struggle to keep our prices down and eventually they will calibrate through supply and demand." Robert Smiley, Ph.D., is the director of wine studies, management professor and dean emeritus at the Uni- versity of California, Davis. Albert Vontz IV is a graduate research assistant in the University of California, Davis, Graduate School of Management. 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