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

  • Tim Jones says:

    Great article, Charles. The wine industry needs to hear this. I rarely dine at chains, but see craft beer and cocktails the focus on most high image independent restaurants as well. While the wines featured at these establishments may be more esoteric and interesting than the chains options, beer and cocktails are still gaining momentum and capturing the hearts of both servers and consumers alike. I believe wine suppliers need to take their products and stories to the trade and execute better in the on-premise. Human resources are required. Can’t rely on distributors to do this work. Your thoughts?

  • VaughnRmnE says:

    Hi Charles,
    I always enjoy your insightful articles. There is a restaurant chain here in Florida (likely, elsewhere too, not sure) called BurgerFi. They tout the quality of the meat in their Burgers – and HOT DOGS, even (all beef), hand-cut fries from real potatoes, they offer local sodas, root beer etc. A great selection of craft beer, but the cheapest, crappiest selection of wine!
    I asked the local manager why they take such care with everything they offer – except wine. He agreed the choices sucked, but could offer no explanation for the disconnect when it came to wine. I don’t get it….

    • Charles Gill says:

      Hello Vaughn,

      I can’t explain this decline wine list quality either. Perhaps these chains let their distributors create their wine lists, who have incentives to push the brands of the largest suppliers. If the chain is worried about image however, it would behoove them to focus more on the wine list. Wine drinkers tend to spend more than other customers since they come to dine, not just drink. Turning off such a valuable customer with a sub-par wine list to save a few dollars on inventory is not a sound business decision. Thanks for your input!

      Charles

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