Issue link: http://winesandvines.uberflip.com/i/591609
114 WINES&VINES November 2015 BUSINESS PRACTICAL WINERY & VINEYARD to try the next best thing. It is just human nature. If they try a $5 wine, they just want to know what a $10 wine tastes like, and then a $15 bottle. Nobody trades down un- less they have to." " We have talked about this over many years, and there is no question that we see growth in the high end. Growth mainly coming in wines in the $11-$20 retail price segment. We are experiencing double-digit growth there. We are pretty happy with the premi- umization category." " A little, but it has had no effect. Every time the big competitor tries to jump into my cat- egory or buy someone within my category, they destroy the brand they bought. Those brands are no longer my competitors. When corporations come in and buy upscale brands, they tend to devalue them." Q What will be the hottest issues during the next five to 10 years? " The big issue is going to be, in my opinion, the grape wars south of Modesto, south of Lodi, that are going to have alternative crops that they want more than growing grapes. You are going to see a gradual, fairly rapid to medium transformation from grapes to other crops, big crops. That is going to mean, to obtain the quality wine that you need at that price point, they will have to go to South America to import it." " In North America today, there are more im- ported products authorized in America than there are American products. The avalanche of new products and imported products continue to dilute this marketplace. Main- taining brand equity and brand strength is a concern with so many new products in the marketplace." " In the North Coast you will continue to see anti-development, a difficult environment to do business. We are by no means certain that our water woes are going to go away, but we may have El Niño this year. The whole western United States is struggling with water—and just struggling with the general political environment that climate centers on—is going to be huge." " Winery footprints: the impacts on water, traffic and the overall community. As people try to get bigger or try to add, there is going to be more pushback just to try and deter- mine the impacts of water, traffic and your neighbors. Then the evolution of DtC— I do not know what it is going to be—is going to evolve from where it is today. It is the small guys relying on the system even more be- cause they will not have another option as an outlet for their wines. As the customer evolves, they will get used to that as well. It will just be another way to buy wine. For anyone making 5,000 cases or less, it is difficult." " We are going to be scrambling for water and grape supply. The cost of growing grapes in California—and the competitive crops such as almonds—are going to make fruit really tight in (California's) Central Val- ley. Most of that is going to be imported. Regulation is also approaching out of con- trol. You have air credits now, and they do not even want to honor the air credits from when you settled in the last time." " Private label is probably one of the hottest, most daunting challenges in the wine busi- ness. We grew up in an age where we wor- ried that the manufacturers had monopoly power. Today, monopoly power is at the re- tailer. Now they are doing private labels that are disenfranchising our national brands. That, to me, is one of the greatest challenges." " I see continued trending toward private label, but also there is going to be the need for authenticity and transparency. When you look at the use of social media to find out about wines and their authenticity, that is going to increase. Therefore, private labels will have a harder time. When someone walks into a big store where all the staff is incentivized to move to the store brand, someone will look at their smartphone and say, "What is this brand?" and find out the producer and if it is an imposter. While retailers are going to make more store brands, there is going to be a counter impact through social media, which will slow the growth." Behind Every Great Winery... Is a Great Chiller System Auburn, WA Mocksville, NC Mock prochiller.com 800-845-7781 SERVING THE WINE INDUSTRY FOR OVER 20 YEARS! Contact info Ph: 201-599-0909 Fax: 201-599-9888 Web Page www.labelsolutions.net East Coast 151 W Passaic St, 2nd Fl Rochelle Park, NJ 07662 West Coast 854 18th Street #3 Santa Monica, CA 90403 We provide our customers with what they need not what we have to sell We are an independent solutions provider for pressure sensitive labels. We research your requirements and find the perfect solution. We match your design, printing process, stock, delivery schedule and manufacture to your needs. SUMMARY Water and winery footprints will continue to force producers to look to other sources for grapes and land. Private labels and consolidation will continue to threaten brands at the retailer level. Many expect DtC to grow. Consumers, while increasingly fickle, will become more knowledgeable as we con- tinue to see them trading up in price and quality. Shifting consumer tastes and the continued rise of craft spirits and beer will perhaps force wineries to shift in production and branding. For California wineries, will stronger international and non-California domestic com- petitors detract from increased consumption rates? Top issues in next five to 10 years