Wine’s Crisis On-Premise and How to Resolve It – Part 1

August 15, 2016 § 3 Comments

Winemetrics is halfway through its 2016 on-premise wine list surveys, and to be frank, there is very little good news to report. Wine lists are not only decreasing in size but also in variety. Selections are increasingly based on brands controlled by the top 10 suppliers. Since the start of 2015 we have seen many iconic independent wineries ‘absorbed’ by the largest suppliers. Benziger, B.R. Cohn, J. Winery, Orin Swift, Patz & Hall, Siduri, Talbott, The Prisoner to name just the ones that come to mind.  But this decline of wine on-premise is just half of the bad news for wine. The meteoric, unstoppable rise of craft beer and craft cocktails may spell the end of wine on-premise as we know it. The key, and most damning piece of evidence is the admission (in confidence) from wine professionals themselves. When not at company functions or on the corporate  expense account, they are drinking beer and cocktails, simply because there is more variety, flavor and value in the average beer and cocktail list. This is especially true in casual restaurants where the same wine products appear with monotonous regularity. For the record, I am not a proponent of the ‘small is beautiful’ school of wine marketing. Major national brands are extremely important to a segment of wine consumers that seek the comfort of a consistent, well-known producer. However, when these brands or their line extensions dominate wine lists to the exclusion of any innovative or more esoteric products, it is at that point that any wine consumer with a slightly more adventurous palate closes the wine list and orders a beer.  And, I confess, that’s what I do now.

If you believe my observations aren’t supported by facts please click on the link below to Lewis Perdue’s Wine Industry Insights where he features a recent Gallup survey.

From Winemetrics’ observations of hundreds of chains and independent restaurants, it does not appear that the wine industry is taking this threat seriously. As a 35 year veteran of this industry, I have seen trends, brands and fads come and go. I remember vividly a distributor presentation by a wine cooler executive in the 1980’s who extrapolated his brand’s 2 year growth curve a decade into the future, promising his audience of a massive windfall in profits. According to the executive, this was ‘guaranteed’.  It didn’t quite work out that way – has anyone seen a wine cooler recently?

Of course, we cannot lay the blame solely on the wine industry, as the restaurant industry is also complicit in this process. Possibly persuaded by off-premise sales figures and incentives of the larger suppliers, restaurateurs have yielded too much control of their wine lists to big corporate interests. In Part 2, I’ll discuss steps restaurants can take to not only invigorate interest in the wine segment, but actually take ownership of innovation for their wine selections.

 

 

 

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