I just looked at the bevmo site to suggest to a friend which wines might be worth the 5¢.
I know this isn’t news but… of 340 eligible wines, I think I’ve HEARD OF maybe forty.
Where are all these labels coming from? Sincere question! How does this sector of the wine business work?
For the last three or four days, I have been thinking about starting EXACTLY this thread.
What I am seeing in the local grocery stores is a [rather sudden] disappearance of most of what we might call “domaine” wines - wines made by wineries which own actual, physical soil that has grapes planted on it - coupled with the [rather sudden] emergence of what you might call “middleman” or “marketeer” wines.
I am guessing that there must be so much surplus juice in CA/OR/WA right now that it’s a buyer’s market, and so everyone and their brother is now marketing some sort of a cut-rate “Two Buck Chuck” marketeer’s blend under their own labels.
It could even be that the supermarkets are getting in on the action themselves, with some of these labels actually being their own in-house bottlings [of surplus juice].
What I had wanted to ask [if I had started the thread] was whether folks ITB - and especially folks at the “domaine” wineries - were feeling the pinch.
Is all this surplus juice threatening to alter the business model forever?
Or is this just temporary?
Can the old “domaine winery” model survive this onslaught?
Or do the “negociants” [the middlemen/marketeers] now own the future of the industry?
I’d guess that 99% of BevMo wine customers aren’t people who are passionate about wine, read magazines, reviews, blogs and message boards, and wouldn’t know Rhys, Carlisle, Betz, Faiveley, Leoville Barton or Fattoria Felsina from no-name mediocre producers. There is probably a decent percentage who respond to a nominal score from Parker or WS (“Hey, this Kim Crawford got 91 points from WS and is only $12”), but that’s probably as far as it goes.
So, if you’re BevMo, you probably do better selling (what you and I would consider) no-name owines over (what you and I would consider) reputable brand names, particularly once the great Wilfred Wong can slap a 90 point score on the no-name wine for you to help paper over the difference.
I guess that all sounds a bit snotty, but I don’t actually have any problem at all with someone going to BevMo, buying average quality that seems a bit special to them, and thinking they got a great deal because of the 5 cent sale arrangement.
[Just read Nathan’s post as I was about to submit, and he makes a great point that many of these no-name wines are probably negociants, bulked out grapes, etc. Nonetheless, with the availability of decent quality grapes out there in the bulk market, they probably fill a certain demand that approximately fits your BevMo customer, who is looking for something that seems more special and distinctive than Gallo or Charles Shaw, but doesn’t want to spend the money or make the effort to get into the kind of wines we on boards like this would care about.]
For giggles I went to bevmo.com and started browsing. There are some fun comments on there, for example:
“90 points?? no way!
90 points??? This wine is absolutely disgusting. It smells and tastes like burnt wire insulation. Wilfred really missed the mark on this one. I’m slowly loosing faith in him”
The world is full of slow learners it seems.
Got to love the disillusioned BevMo customer slowly losing faith in Wilfred Wong. “I don’t know what’s the matter with Wilfred these days – it’s almost as if he has some ulterior motive for assigning high scores to bad wines being sold by BevMo. But Wilfred wouldn’t do that, would he?”
Ive heard that both BevMo and Total Wine have alot of private label wines/
Buy this Chianti (and its 89 point Wilfred Wong rating!) at BevMo for $15.95
http://www.bevmo.com/Shop/ProductDetail.aspx?N=39+322&area=wine&No=80&ProductID=36430&Ns=Name%7c0
Or get it for $8.98 at Hi Time
http://www.hitimewine.net/product.php?productid=36522&cat=&page=1
You can buy 2005 Sociando Mallet for $75.99 at BevMo
Or buy it for $46.79 at Ultimate Wine Shop
http://www.ultimatewineshop.com/items/detail?itemid=176551
Not hard to see how BevMo can run out the “buy the second one for $.5” sale once a year.
As I’ve posted before on various sites, there are at least one million different wines bottled for sale every year. I actually now guesstimate it’s more like 1.2 - 1.5 million.
Not hard to find a label nobody knows. Some may be good, some may be not so good. There is a huge business worldwide in creating specific blends and labels for specific customers. Every retailer wants to sell wines at a higher rather than lower margin (every retailer in every business in the world, ditto). If you have your very own label that nobody else in your town (or your state, or your country, or your planet) has, it is much easier to sell the wine for a higher margin. That’s a way to make more money which, according to reliable, just made-up statistics, at least 98.74% of all adult Americans want to do.
Dan Kravitz
Hey, even I’m a buyer of Kim Crawford at $12 bucks…haven’t seen it at that price in years!
Total Wine does for sure.
When I first saw this, and then the post about grocery store domaine wines disappearing and a bunch of middlemen wine showing up I immediately thought to a great Beer documentary about the pressures by big-beer to cut into craft beers’ market share. Made me wonder if the same thing is happening in grocery stores with wine.
If I’m Kendall Jackson, I think I keep the Kendall Jackson named lines, and then off-shoot about 20 other labels for various regions, varieties, even climates or wine styles. New label for each one. Then, I’d leverage grocery stores and places like Bevmo to sell all of my products. That would clear out a huge amount of shelf space, thereby nuking in-store competition. It’s “evil capitalism,” but makes perfect business sense.
Next time you look in your grocery store’s beer section, take note of how many products are actually budweiser related, from the super cheap to the “craft brew.”
Michelob Ultra, Bud, Bud light, Stella Artois, Shock Top, landshark, Goose Island, Hoegaarden, Leffe, Bass, Boddingtons, Lowenbrau, Kirin, Wild Blue, Ziegenbock, and on and on. In total, it’s probably near 40 or so beers, most of which are fairly common names.
The structure of the beer and wine industries are somewhat different, however. While Gallo has 60% of the US market, and Wine Group, Constellation and Bronco have large shares, the remainder is highly fragmented, and globally there is no one with anywhere near that kind of dominance. By contrast, in beer, AB InBev and SABMiller overwhelming dominate the U.S. market, where there are few smaller producers, and those two giants along with Heineken, Carlsberg and a couple of others dominate the market globally.
I think that what we’re all worried about [those of us who have noticed this sudden trend in the grocery stores] is precisely that the wine industry is starting to look an awful lot like the beer industry.
Have you been to a grocery store lately?
It’s scary how few “domaine” wines are still getting shelf space.
And even those - Mondavi, Ch St Michelle, Columbia Crest - are truly massive enterprises.
As recently as five or six years ago, a label like “Marquis Philips” had an actual winemaker [either Sparky or Chris Ringland] who oversaw vinification.
But now suddenly it’s all just these bland “Oprah/Lifetime Network” marketing labels fronting industrial swill from massive stainless-steel tank complexes out west somewhere.
It’s like wine for Stepford Wives or Pod People or something.
Working for Total Wine for a time (August to December 2009), the model they work, and I believe that Bevmo works, is pretty simple. Sell “name” wines, such as Kendall Jackson, at cost to put forth an image of a discount store, then have a private label to compete with those brands where the mark up is about double or triple traditional mark up. Also, employees at Total Wine are instructed that the only wines they can recommend are the private label wines, which helps sales of the higher margin wines. The private label wines are basically any wine with a talker, including the “Winery Direct”. The model is great for the company, but definitely colors the “recommendations”. It does help that the majority of the employees at Total Wine are relative novices and do not know or care to know a lot about wine.
Nathan – You’re right, there is a lot of consolidation and heavy market concentration in the mass market products. But at least there are still thousands of smaller, non-corporate producers… unlike the beer industry (except maybe in Germany).
I may be wrong, but I thought with the lower yields of the past couple of vintages the surplus in Cali/OR /Wash is over, and in fact the opposite is becoming true. I had read this in conjunction with the change in business model for the flash sites that had also capitalized on this surplus in recent years?
Very informative post, Jonathan, thanks. The one sentence above I didn’t quite understand, though – could you explain for me? Thanks.
Gallo has 25% market share in the US.
That’s actually a gross misunderstanding of the craft brew industry…largely created by the artificial shelf-space related competition issues I mentioned above. The ARE thousands of smaller, non-corporate producers IN the beer industry. In fact, more and more are coming to fame, and that market is exploding.
Even if you are not a big beer drinker, I STRONGLY recommend going to the Great American Beer Fest in Denver in late September. First, you’ll have the opportunity to taste about a thousand beers over a two day period. Second, you might find that you like beer a helluva lot more than you thought. It’s frankly amazing what brewers are doing with beer right now. It is becoming so much more like wine every year. ABVs are going up, the number of beer varieties is increasing, and there are quickly developing schools of thought much like BAWLers v. AFWE. It’s amazing. You have the high abv imperial drinkers that like thick, glycerin laced beers with noticeable alcohol and rich bodies, and then you have hard core IPA drinkers with crisp grapefruit and citrus notes mixed with pine resin. Anywa, I’m getting brutally side tracked, but keep an eye out for craft brews. American craft breweries seem to be procreating like rabbits.
You also have the classic Geuze, Bitter and Hefe drinkers who like beers more focussed on malt (or wheat in the case of the Hefe) and less on how much hops can you put in it. If I could only have ONE beer forever it would be something like Belhaven Scottish Ale, NOT Arrogant Bastard or something with even more IBU.