2009 will be testing time for the wine industry. The commodization of wine will continue and most wine producers will be price takers. Red wine prices are expected to increase substantially. Wine producers also face savage price increases for packaging, especially labels, bottles and aluminium closures.

However wine producers should be careful that this "noise" doesn’t deflect attention from the possibilities for adding value to their product. Adding value can mean a lot more than brand image or cutting prices. It’s how well you transact business with your clients, how responsive you are to inquiries and the clarity and speed of your confirmation.

Here are three trends that will influence the South African wine industry in 2009:

Not all consumers are price sensitive. Premiumization (a trend identified by Trendwatching.com) offers wine producers the opportunity to escape the commodity trap with up-market packaging for those products that offer the consumer more than what he thinks he needs, or has become used to expect.

Web savvy marketers know that over 2 billion consumers will be connected to the internet by 2009. With just a hand full of South African wine blogs available, grab the opportunity to communicate with your potential consumer if you have a good story to tell. I recently Googled "South African wines" and not one South African wine estate was listed in the top 10 search results.

Government regulators concerned about the rise of binge drinking will play a greater role in how wine is marketed, and big changes seem to be afoot for the wine industry in France. Warning labels are now reality for South African producers. Advertising of wines is also set for radical change. According to a recent Financial Mail article the South African transport department has proposed that all advertising of alcoholic products that is visible from any public road be banned.

Trendwatching.com comments that 2009 will be an excellent year for those businesses keen on showing consumers that they really care. At the same time, this is a great moment to innovate: shrinking budgets and diminishing revenues from existing offerings normally bring out the best and most creative in business professionals.

But the most important side effect of more austere times is probably that consumers start questioning what truly makes them happy, which more often than not steers them towards the realization that happiness ain’t (just) about traditional consumption. Expect pockets of consumers to switch to lower-consumption models with surprising ease, and to look for different and less costly sources of happiness and thus, ultimately, status. Any way you can help them with that will be a guaranteed winner.

By Mike Carter.

Talk to enough people at the high end of French food and wine about how to compete with “new-world” wines – how to sell the “French” brand of wines – and it sounds like a broken record: quality, quality, quality, terroir, terroir, terroir. Read the article by Joe Ray, published by brandchannel.com recently.

For a couple years now the wine industry has been moving toward more screwcaps but there are some good reasons that the pendulum may shift again. A study by The World Wildlife Fund shows that up to three quarters of the Mediterranean’s cork forests could be lost within 10 years if the trend for plastic stoppers and screw tops continues.

A BBC Natural World documentary highlights the fact that these forests also support rare species such as Iberian lynx, black storks and booted eagles which are already disappearing in some areas. Because the farmers can no longer make as much money from cork harvest they have been ripping up the trees in order to grow alternative crops that will provide more ready cash. But the land that the cork oaks are on sometimes turns into a desert when the trees are removed.

According to an article in the Telegraph, in the Algarve, Portugal, cork forests have declined by 28 per cent in the past 10 years. The cork industry in Portugal is now attempting to fight back and has introduced new methods to protect against cork taint and are trying to bring increased attention to the industry through public service announcements.

By Deidre Woollard. Source: www.luxist.com

Related articles.

Are French winemakers abandoning the cork?

Wine cork recycling gets organized.

Italy is once again the world’s largest wine producer, an honor it hasn’t had since back in 1998. This year’s big harvest is expected to give Italy the edge over France. The Coldiretti farmers lobby estimates the production of Italian wine is up eight percent over 2007 to 4.7 billion litres, compared with 4.44 billion litres in neighbouring France, where production fell five percent. The bumper crop of grapes is attributed to good weather, especially in Sicily which battled a deadly fungus last year. Production estimates by Assoenologi, an association of Italian wine producers, are slightly lower at 4.45 billion litres, or an increase of five percent which would still give Italy a squeaker of a win.

Bloomberg reports that more Italian consumers are taking another look at prosecco, the Italian sparkling wine, this season for their celebrations. For the most part prosecco is cheaper than its popular French rival, champagne.

By Deidre Woollard. Source : www.luxist.com

There is a lot of talk these days about the globalization of wine. Some wine people are up all night tossing and turning, worried about that sometime in the distant future, all wines will taste alike, assuming there could ever be such a thing as a “universal” taste.

Globalization of wine sets me off in another direction — the amazing growth of international commerce in wine in this generation. Not that international wine trade is something new. The Greeks, as in many things, did a wonderful job 2,000 years ago planting vines and spreading wine culture. The Greek trade in wine was surprisingly extensive. There was a system of appellations to ensure the origin of the best wines so that customers of Greek wines knew where the wine came from. Large stores of wine travelled wherever Greek ships travelled — and that was all over the known world. We even know from ancient records where the best wines came from. So, the Greeks developed the kind of Epicurean consciousness that is now also part of the modern wine mind.

I’ve always believed that this globalization, or internationalization of wine has caused great competition, which is always good for the development of wine and our wine industry.

Let’s take as a starting point, the famous Paris tasting of 1978. What this well- publicized event demonstrated was not just that California wines topped French ones on one particular day in time. The large far-reaching picture was that given the right soil and climate, fine winemaking and good technical skills, France was not the only country that could make great wines.  This message inspired winemaking in many countries.

One notable example — the wines of Italy. Not so long ago, most United States wine consumers thought of Italian wines as the rather rough, thin inexpensive wines in straw flasks with the Chianti on the label. Now, what has happened in Italy has been phenomenal and not just in Tuscany. Today, a top level wine merchant will have well over 200 Italian red wines ranging from excellent Falesco wines under $10 to a line of highly regarded wines from Gaja, some of which command prices close to $300 a bottle.

Today, fine Italian wines are not restricted to the Northern districts. Excellent wines are being enjoyed from Sicily to Puglia, Campania and points south. Italian grape varietals that in the past “got no respect” are now flourishing stars under new and expert hands — Nero d’Avola and Sagrantino are just two examples

Two more recent examples from South America are worth noting. The United Kingdom is a great wine consumer and therefore is a good barometer when it comes to imports. In order to climb aboard the wine train, Chile and Argentina had to do a quality turn-around, which has been accomplished and continues to grow. Just a few years ago, you would be hard pressed to find any selection of wines from these countries,   Now, 40 or more wines would be the norm with fine wines at really good values.

The Australian wine industry has had a similar renaissance. In the past, the few Australian wines to hit our market were, for the most part, inexpensive. Today, wineries such as d’Arenberg, Clarendon Hills, Pennfolds, Elderton Ashmead and Henshke are producing world class red wines that the world is now enjoying.

Lastly, Spain. As the international wine expert Robert Whitley recently wrote, “From Priorat to the Penedes to Rijoa to the Ribera del Duero to Toro to the Rias Baixas, a renaissance in wine production is sweeping Spain. On a recent trip to Madrid, I tasted several wines I had never heard of made from grapes I had never heard of from regions I had never heard of.”  

Where will this all end? I am not sure, as a wine lover it may be a bit confusing at first, but it sure is deliciously interesting! Now, I may enjoy a great late harvest wine from — Canada. Oh, yes!

By Ed Schwartz.

The wine industry is making a concerted effort to adopt environmentally responsible practices but sees a need for better education among both consumers and professionals on many "green" issues, according to two surveys of wine industry professionals and executives conducted by Robert Smiley, professor and director of wine studies in the Graduate School of Management at the University of California, Davis.

"These industry leaders are very concerned that their firms authentically ‘walk-the-walk’ when it comes to environmental issues and that they not being accused of just ‘greenwashing’ their businesses," Smiley said.

He added that while survey participants reported that the high prices of gasoline and other inputs have negatively impacted their costs and revenues, they remain optimistic that the industry will ride out the current nationwide economic downturn.

As part of his 10th annual wine executives survey, Smiley gathered the opinions and projections of 28 heads of key wine operations, ranging from growers to vintners to distributors.

All of the executives interviewed said their firms were actively engaged in environmentally friendly business activities, such as package redesign, use of biodiesel fuel, wastewater reclamation and developing "green" building plans. They expressed a concern, however, over the lack of clarity in the industry and among consumers over what many environmental terms like "sustainable," "green," and "low carbon footprint" actually mean and how industry can genuinely adopt environmentally sensitive practices.

Survey respondents also said that rising prices for gas, electricity, supplies and transportation have significantly raised the cost of doing business across the industry at the same time that wine consumption has been hurt by the general economic downturn. They reported that consumers are responding to rising gas and food prices by dining out less and buying less wine, and noted that wine sales at both casual and high-end restaurants have suffered as a result.

"Despite that downturn in sales, the majority of the wine executives surveyed said that they believe the industry will survive the current economic slump on the strength of non-restaurant sales, particularly the moderately priced $10-$14 wines," Smiley said. "They are confident that the millennial generation’s love of wine provides a solid foundation for the industry."

Respondents to the executive survey also reported that:

• Consolidation of distributors is not having a significant impact on large wine producers but is making it difficult for small- to medium-sized wineries to gain a market share.
• There is, or likely will be, a grape shortage in Napa and Sonoma counties, especially of major varietals such as Cabernet Sauvignon and Pinot Noir.
• There is concern that some Central Valley growers will replace wine grape vineyards with other crops.
• Major changes in wine packaging during the next five to 10 years are anticipated, with most producers using screw caps rather than corks and less expensive wines being sold in soft-sided packages rather than bottles.

Smiley’s industry trends survey of wine professionals, now in its 17th year, included responses from 73 vineyard and winery representatives from throughout California.

"One of the biggest changes reflected in this survey was that consumers are increasingly viewing wine as an integral part of a healthy lifestyle," said Smiley. "And for the first time, these wine professionals said that they are finding consumers to be more accepting of alternative packaging."

This survey, like the wine executives survey, also reflected a marked increase in businesses using sustainable practices. Eighty percent of the vineyard representatives participating in the survey said they have used sustainable farming practices on at least part of their acreage during 2008. And 46 percent of the respondents said they have been, or plan to be, marketing their grapes as "sustainable" or "organic" during the current or upcoming year.

Survey participants from vineyard operations also reported that they are reducing their use of vineyard chemicals and mechanized equipment to deal with the rising cost of inputs.

They predicted that the growing consumer perception of wine as an everyday beverage and the rising quality of California wines relative to their prices are the top factors that will impact California wine sales during the next three years. Growing recognition of the health benefits of wine, as well as the deregulation of direct shipping of wine, will likely also provide short-term boosts for the industry, they projected.

And for the first time, survey participants from the winery side of the industry noted that their firms are planning to introduce new, lighter-weight packaging for their wines.

Results of both the wine executives and wine professionals surveys are available online at http://www.gsm.ucdavis.edu/2008winestudy.

Boxed wine has always been looked down on as the cheap way to consume the most elegant of alcoholic beverages. However, an opinion article from the New York Times says that this image should change considering the carbon footprint created by trucking around glass bottles.

The vast majority (90% +) of American wine is produced on the West Coast, but then shipped to the East Coast where the majority of wine consumers live. This trucking process generates a tremendous amount of carbon-dioxide emissions. It is estimated that switching to lighter boxed wine for the 97% of wines that are made to be consumed within a year would reduce greenhouse gases by roughly 2 million tons or the equivalent of 400,000 cars.

Along with environmental advantages of boxed wine, it is also more economical from a cost per-glass perspective because of volume and preservation. It will be interesting to see if higher-quality wine producers jump on the boxed wine bandwagon and if consumers voice their sustainability demands on the wine producers.

By Sean Leow.

In partnership with the Winemakers’ Federation of Australia, Deloitte conducts an annual financial benchmarking survey which provides the wine industry with data  which to benchmark performance.

The results can assist winemakers to make more informed decisions about their relative strengths and weaknesses compared with others in the industry. The study also provides winemakers with an insight into he relative efficiency and financial performance of their business – information which is vital for those looking to attract venture capital, expand and sustain growth.

Survey questionnaires were sent to approximately 2,200 wineries across Australia. Surprisingly the response rate was poor, and only 54 wineries responded. However Deloitte points out that these 54 represent approximately 60% of the revenues of the Australian wine industry.

Download the 2007 Deloitte Benchmarking Survey.

I’ve been a fan of Crushpad since 2005 and since then they’ve grown by leaps and bounds, bringing in $6.7 million in revenue last year. But unlike some other growing young companies, San Francisco-based Crushpad isn’t funding their growth through venture capitalists but instead has raised $9 million from 120 loyal customers. Venture Beat checks in with Michael Brill who started Crushpad in 2004. Brill states that the company was originally going for $5 million but raised it to $9 million and found that the deal was still oversubscribed. Now that’s customer loyalty!

Crushpad helps users create their own wine online or come to Crushpad’s headquarters to participate hands-on in the process. Making your own wine is relatively expensive (the minimum order for Crushpad is a barrel, which ranges in price from $5,000 to $9,600) and so Crushpad’s customers are generally wealthy. The months-long process of creating the wine has helped the customers become passionate not just about wine but about Crushpad too. Their investment will help grow the company and some of the investors will join the board of directors. Crushpad is planning to use the money to enhance the long-distance experience on the web site and possibly open more locations including one in France.

By Deidre Woollard.

For the last few years wine has been steadily gaining on beer but it looks like that trend has ended. A recent Gallup poll revealed that U.S. adults now prefer beer by a double-digit margin over wine.

As you can see from the chart above, wine briefly surged above beer in 2005 but has since slipped further from favor. Beer still is not as widely preferred today as it was in the early 1990s but wine’s popularity is now at 31% down from a high of 39%.The poll revealed that it’s mostly among Americans between the ages of 30 and 49 that have switched back to referring beer. The drinking preferences of younger adults have remained stable in recent years, with 18- to 29-year-olds still showing a wide preference for beer and drinking liquor more often than wine.

The survey doesn’t ask where the people drink but I suspect the younger drinkers are indulging in their cocktails out in bars more than the more mature drinkers.
Wine remains the preferred beverage of older drinkers. Sixty-two percent of Americans say they drink alcohol and the average drinker reports having consumed 3.8 alcoholic drinks in the past week.

Daily drinking is more common among Americans of higher socioeconomic status: 41% of drinkers with incomes of $75,000 or greater say they have had a drink in the past 24 hours, compared with 36% of middle-income respondents (those with household incomes between $30,000 and $74,999) and just 23% of those residing in lower-income households (with incomes of less than $30,000).

By Deidre Woollard.