Charting trends in the retail wine industry can be a nightmare for even the best of marketing managers. Wineries employ high-priced MBAs to handle this vital chore, but it’s not unlike predicting the weather: sometimes the most sophisticated of formulas end up being out-done by the simple act of moistening a finger and holding it up to the breeze.
We all know that in 2001 California was so flush with wine it was being called a lake. By early 2003, a $2 wine raised its head in California retail shops and consumers, many of them hit by a declining economy, began trading down.
But the basic essentials of economics then, as expected, kicked in. Many lower-quality vineyards were abandoned, planting of new acreage declined, and before long we began hearing about an expected wine shortage, by as early as late 2005, similar to the shortage we faced in 1997 and 1998.
And what are we to think about the sort of wines that people are buying? At one point, Chardonnay led the world, with Merlot racing to the front so fast that retailers had to stock a lot more of these wines than they ever imagined.
By 2003, Sauvignon Blanc and Syrah began to pull alongside the leaders, with white Rhônes coming along on the outside.
So is Merlot standing still? Have the high prices for Napa cult Cabernets weakened the market for fine-quality red wine? And how are retailers to choose, when faced with the basic dilemma of which $5.99 wines and $10.99 wines to stock?
Moreover, getting fresh stock and moving it quickly is the key to any successful retail operation, partially because stocking a vast amount of wine that moves slowly is an economic nightmare and can pose some insurmountable problems later on. That four-inch space on the shelf is expensive real estate.
So, here’s a brief look at what retailers faced in 2004 with California wines, with a kind of mini-prediction about what strategies may be operating in 2005. Place your bets; the wine roulette wheel is spinning.
One of the hot white wines in 2004 was Pinot Gris, or Pinot Grigio, notably because this wine began to be used more prevalently in restaurants as by-the-glass pours a few years ago. Still, Italian Pinot Grigio (notably the famed Santa Margherita) came under scrutiny by savvy consumers in 2004 mainly as prices got out of hand. It’s one thing to be on the cutting edge, in 2001, by ordering a glass of Santa Margherita by name. It’s quite another when the wine rose in price so high that a glass cost double digits. Consumers soon learned that Pinot Gris from California, Oregon or Washington could offer similar (if not greater) pleasures. And at a lower price than the $23 per bottle that Santa Margherita now costs.
Pinot Gris remains a strong category as a Chardonnay alternative, a fact that was verified not long ago when E&J Gallo rolled out literally hundreds of thousands of cases of Pinot Gris under the Rancho Zabaco and MacMurray labels, both of which sold extremely well. Others of excellence include Morgan, Handley, J, Benessere, and from Oregon, King Estate, Eola Hills and Willamette Valley Vineyards.
Prediction: Oregon Pinot Gris and the California brand Pepi will be hot items in 2005.
To be sure, the name brands (Kendall-Jackson, Sonoma-Cutrer, Grgich Hills, Cakebread and a dozen others) must be maintained, but a growing list of secondary names are offering reasonably priced wines that compete at slightly lower price points.
The newcomers are not those with a California appellation, however. Savvy operators are looking for wines with the appellations of Santa Barbara County, Russian River Valley and Carneros as they refine their offerings, even if the brand name on the bottle isn’t as recognizable as one of the more prestigious names.
Chardonnay remains a tough category to buy, and brands still answer many of the questions. That means Au Bon Climat, Chteau St. Jean, Shafer and Silverado still have a following. Others that are making a true mark on the industry with quality at a fair price include Gundlach-Bundschu, Handley and Trefethen.
Some lower-priced items are also entering the market now, not with the ubiquitous “California” appellation but using smaller designations, such as Lodi, Monterey and Mendocino.
Prediction: That old stand-by Kendall-Jackson Vintners Reserve, along with Beringer’s Stone Cellar and the now-Gallo-owned Mirassou could be leaders in ’05.
This is a hot category lately, with many retailers playing off the popularity of the New Zealand style (no oak). In many ways, wineries like this variety too, since it offers slightly better profitability than with Chardonnay. (No need for oak, less handling, earlier to market.)
In that “New Zealand style” of SB, among the best in California are wines from Geyser Peak, St. Supery, and a new entrant from Sauvignon Republic. But there are literally dozens of other excellent versions such as Chimney Rock, Kenwood, Rancho Zabaco Reserve and Chteau St. Jean.
Prediction: Geyser Peak’s second label Canyon Road and Gallo’s Rancho Sabaco “Dancing Bull” are poised for large increases. Other lower-priced versions from J. Pedroncelli, Tin Roof and literally dozens more are giving retailers options. The wines are all very good as well as good values in the under-$10 niche.
A degree of caution is prudent in this up-and-coming varietal since so many top wines are about the same in terms of flavor and aroma. Price is one issue. The average wholesale case price of a “quality” Syrah these days is $200 to $300, yet a number of almost-there brands can be obtained at $150 to $200 and the quality is almost that of (or in some cases exceeds) better-known brands.
Best bet in reasonably priced Syrahs are wines from either Lodi (slightly lower end by price) or from California’s central coast, notably from Santa Barbara and Monterey counties. In the higher echelons, Napa versions are pretty expensive, but nearly as high in quality and often higher are better brands from Columbia Valley in Washington State.
Among the better versions that represent the best of the category for the last year are Eberele, Rosenblum, Sebastopol, Morgan and Kunde.
The secret to success with mid-priced Syrah is to find wines of moderate alcohol levels. Many retailers point out that the Syrahs in the 15.0%+ alcohol range are simply one-sale wonders. Folks seldomly purchase more of these, though in the higher-priced echelons, alcohol means less, oddly enough.
Prediction: Delicato’s $7 Syrah and wines with the name Shiraz from Bronco will be the bargain buys.
The trend for this variety is declining, and the numbers that just a few years ago were essential (two dozen Merlots on every shop shelf) no longer are applicable. A key here is that brands are more vitally important than they once were, and keeping a small number of “hot” brands seems prudent.
That said, price is an issue as well. It’s a great idea to have, for instance, an item as important as Shafer Merlot ($45). But Merlots with a more moderate price point ($20-$30) are a prudent buy as well.
Among the top Merlots are Cuvaison, Pine Ridge, Whitehall Lane, Hahn Estates, Groth, Geyser Peak and MacRostie.
Prediction: Merlot will decline in sales, in part because of a negative review of it in the film, “Sideways,” in which the lead character, played by Paul Giamatti, disses the grape variety.
Other than high-end selections, much of which must be made as a personal statement, the best bets in the mid-price range these days are some of the brands from California that are usually fairly priced, such as BV, Silverado, Hess, Chteau Souverain, Silver Oak, Beaulieu and Mondavi’s regular bottlings. Also, Sonoma producers make some excellent wines in the mid-priced range that are attractive offerings, such as B.R. Cohn, Arrowood, Geyser Peak Reserve, St. Francis, Kunde, Arrowood.
And don’t forget Paso Robles for great value wines, such as Eberle, Justin and Meridian.
Prediction: Kendall-Jackson and old stand-by Louis Martini, now under the direction of Gallo, are set to shine once more.
This is an odd category since few of the “cult” versions ever make it to stores, and some of them wouldn’t sell well anyway, given the prices they carry.
Still, a solid Zin selection should include the single-designation wines from Ridge and Ravenswood, some of the better versions from the Sierra Foothills along with Gundlach-Bundschu, Gary Farrell, Grgich Hills, Frog’s Leap, Carol Shelton, Castoro, Victor Hugo and St. Francis. One bargain effort is Earthquake from Lodi, an excellent wine that has won a number of gold medals at major fairs.
Prediction: A sleeper here is from Kenwood, which has long made stylish and reasonably priced Zinfandels. Also, Gallo’s Dancing Bull brings in the bargain buyer.
A tough category to buy for, especially since Pinot buyers tend to be finicky, and thus stocking only the highest-scoring wines would seem like a mandatory theme. But doing that means getting only one style of wine — big.
The best versions of Pinot Noir for food are from Russian River Valley (such as Dutton-Goldfield, Gary Farrell, Pellegrini, Williams-Selyem and Sebastopol Vineyards); Carneros (Buena Vista, Cuvaison, Gundlach-Bundschu, MacRostie, Artesa); Santa Rita Hills (Sanford, Clos Pepe), and Santa Lucia Highlands (Morgan, Arcadian). From Mendocino, try Handley, Husch and Goldeneye.
Prediction: Lower-priced Pinot Noirs exist, but do not represent a significant force in the market.
Here is where handling California wines can get creative and interesting. It is, however, best for retailers with an enthusiastic and knowledgeable staff and a clientele that is open to buying creative choices. This would include some varietal wines that would be a hard sell to those who are shy about buying the odd varietals.
Here are some suggestions for wines that can turn a humdrum retail establishment into one that shows creativity and panache and which can energize some marginal wine drinkers. These are not just wines from the nether world. They are popular items with a growing coterie of upscale California establishments and usually sell far better than skeptics predict.
Pink wine is making a big comeback in major cities, especially where it is sold as the wine that can go with either fish or meat. Literally dozens of California wineries are now making a rosé wine and they can be perfectly balanced offerings that work with a wide array of different styles of food.
Among the better bets are Pedroncelli’s Zinfandel Rosé (slightly sweet version with loads of strawberry fruit), and Iron Horse’s Pinot Noir Rosé, a dry wine with the structure of Chardonnay. From the Central Coast, a stunner is from Robert Hall.
Many consumers shy away from this wine since it is often thought of as sweet. But many are being made these days with appropriate balance to work with lighter foods, and as an aperitif, little can match the off-dry Riesling for its versatility.
Most California versions are slightly sweet with about 1% of residual sugar, and in this style the following wines show brilliantly from year to year: Firestone, Smith-Madrone, Pacific Rim (Bonny Doon), Jekel, Fetzer and Greenwood Ridge.
In the dry Riesling category, the brilliant Trefethen heads a shorter list that also includes Stag’s Leap, Claiborne and Churchill, and Stony Hill.
For spiced foods, there is little like this spicy grape and the nice thing is that the few producers left who are making it into wine are doing a splendid job. Leading the pack over the last two years is Handley, Gundlach-Bundschu, Claiborne and Churchill, Louis Martini, Thomas Fogarty and Firestone.
Not much of this wine is being produced any more, but what is left is a dry or very slightly off-dry wine that can be a perfect aperitif wine and goes with appetizers. Two of the best are from Chappellet and from Dry Creek.
This dark red wine is always a sleeper for barbecue season and char-grilled steaks. Many consumers know how well a Petite Sirah works with beef, and Petite Sirah is often a wine that wine lovers will see as a great alternative to today’s bigger-is-better Cabernets.
Among the best bets in this category are Victor Hugo, Jeff Runquist, Foppiano, Vincent Arroyo Trentadue, Deux Amis.
Two styles here are the classic Bordeaux style and the graceful, easy-to-drink style. In the former, there is the classy, structured wine from Raymond Burr in Dry Creek. The wine called Lang and Reed from Napa Valley is the silkier of the two, and each has a place in a fine wine shop. Ironstone of Lodi makes a stylish bargain-priced version.
For desserts, little compares with this delightful light white wine, and one of the best each year is from St. Supery, called simply Moscato.
As for bubbly, among the leaders these days are wines from Gloria Ferrer, Schramsberg, Domaine Carneros, J, Mumm Napa, and old standby Domaine Chandon. Surprisingly, one of the best turnarounds in the game is Korbel, which has won a flood of medals for its Blanc de Noirs, Blanc de Blancs and other sparklers.
California is still turning out dozens of superb world-class wines that will capture the hearts of wine lovers. The key underlying principle to stocking a creative wine selection is staff education. Wine need not be an esoteric Malbec from Mendoza or a Tokay Pinot Gris from Alsace to offer great taste and good value.