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The Changing Landscape of Wine

Columnist: Tim Carl
October, 2019 Issue
Columnist

Tim Carl
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The world of wine growing, production and consumption is changing. Whereas varietals such as Cabernet Sauvignon, Chardonnay and Pinot Noir have been the dominant go-to wines in the past, consumers are now looking toward alternative varieties, blended options and lower-alcohol wines. Beyond these changes, younger generations are turning their attention from wine and moving toward spirits, cannabis products and even non-intoxicating options such as no-alcohol cocktails—often referred to as “mocktails.”

The origins of the shifting wine landscape

A few of the key drivers of the changing landscape within the world of wine include shifting demographics, health concerns, the sheer mind-numbing number of alternative wine brands available, and the continued consolidation of power within the top producers. Another growing influence is the increasingly wobbly global economy that is having a tempering effect on those thinking about planting new vineyards, increasing wine production or purchasing an expensive bottle of wine when a cheaper alternative is present.

Shifting demographics

The baby boom generation (born from 1946 to 1964) is slowing consumption of wine in what’s being referred to as the I-already-have-more-wine-in-my-cellar-than-I-can-possibly-drink phenomenon. The Gen Xers (born between 1965 and 1979) are taking up some of the slack by drinking more wine, but their relatively small numbers cannot make up the difference unless the millennial generational cohort (born between 1980 and 1994) kicks in, which they are not as of yet. Another large demographic group, Generation Z (born between 1995 and 2014), will take over the most prominent wine-drinking position in the American population by about 2030, but they appear to have less interest in wine altogether. According to research, the still very young Gen Zers report they expect to drink considerably less alcohol than older Americans.

Wait, isn’t wine good for us?

When I was growing up in the 1960s and ’70s, the general belief (and a lot of “scientific” reports) supported the idea that modest wine consumption was healthy. In recent years, some are questioning the validity of those assumptions. New studies (some of which are based on questionable scientific rigor) are shifting the idea that wine is beneficial from a health and wellbeing standpoint, claiming instead that wine is at best benign and at worst linked to disease. Some in the wine industry advocate for a concentrated response to refute or discredit these “anti-wine” reports, but that strategy runs the risk of being construed as some sort of smear campaign that might end up backfiring.

How many wine brands exist?

Today, there are more than 12,000 bonded wineries in the United States, and nearly 90 percent of the wine sold in the U.S. is made by the 30 top producers, including the big three: E&J Gallo, The Wine Group and Constellation Brands. Each producer exists as a single winery but often has many different wine brands. On its website, for example, E&J Gallo lists nearly 70 different main brands, each with associated sub-brands. Beyond these American-based companies thousands of wineries from around the globe export their wines into the U.S. The U.S. accounts for nearly 20 percent (roughly $6.5 billion) of global wine imports—now at nearly $40 billion. So how many brands are actually in the marketplace? Some estimates are in the hundreds of thousands.

Who has the power?

A common mistaken belief is that wine distributors have all the power when it comes to making (or breaking) a wine brand. And although it is true that distributors such as Southern Glazer's Wine & Spirits (roughly 1,200 U.S wineries represented), Republic National Distributing Co. (about 750 U.S wineries) and in California Young's Market Co. (nearly 700 wineries) wield massive power over which wines get distributed, it is often the big three wine producers that have more control on what gets sold and where.

Beyond these challenges, there are also global trade concerns, increasing tariffs on wine and general worries of a slowing world economy that have many in the wine industry scratching their heads. But for those who worry less about what might happen and focus more on just making a fine wine, at least one thing is for certain: They will always have a nice bottle to enjoy.

 

 

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