April 24 2006
Jens from Cincinnati Wine Warehouse has a blog post on Wine Sediments today on why he blogs ...and, in short, its valid. Like other wine bloggers, it’s something he wants to do; recreation, really, to write about something that so many of us enjoy and in his paraphrased words: "if he enjoys a wine, why not share that information with like-minded people?"
Amen.
I enjoy that aspect as well, but, for reasons that I cannot explain, I also really have a fascination with the intersection of wine as business and its growth in our popular culture. For that reason, I spend a lot of time thinking about the growth trajectory of wine and its impact from beverage for the few to beverage for the masses.
I’ve posited several pet theories for its growth, how it will grow, how it won’t grow, etc., etc.
But, what’s really interesting is I think that its growth is going to reach its nadir as it moves from a beverage packaged for the masses to its packaging as a beverage for the socially well-adjusted. Almost the anti-Wal-Mart capitalism notion.
In a recent San Francisco Chronicle article, editor Cyril Penn (also an editor at Wine Business Monthly magazine) highlights the fact that wines priced under $6 a bottle are still the most popular sellers—by a long shot.
More expensive wines get most of the attention, but an analysis of sales in food and drug stores tracked by ACNielsen shows varietal wines priced under $6 are still most popular.
At the same time, sales of wines $6 and above are seeing the strongest growth rates.
Between July 2003 and February 2006, overall wine sales rose 22.6 percent.
The largest growth was in wines priced $15 and above, which gained 123 percent. However, those wines only account for about 2 percent of the market.
By far the largest volume of wine sold in food stores is priced below $6 per 750 ml, a category that includes jug and 5-liter boxed wines. However, the category’s market share is declining.
Between July 2003 and July 2004, this category was responsible for 71 percent of the sales volume. Between February 2005 and February 2006, that market share fell 6 percent.
So, if you’re ever at the grocery story looking at the bottom shelf of jugs of Almaden or bottles of Lancer’s and wondering who drinks that look around for a while longer, because, you my friend are a wine loving minority lumped into the 2% category.
The last paragraph is really key—jug wine represented 71% of the ENTIRE category in July ‘03 - July ‘04, but fell to 65% in ‘04 - ‘05. This is happening at the same time that sales of $6 and above are seeing the strongest growth.
The real Tipping Point in wine, from a cultural perspective, will occur when premium priced wines outsell jug wine. And, at this pace of growth, it might be in the next two years—probably not 2006 -2007, but shortly thereafter.
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