The Past Wine evolution Present The•People drank wine that was •People drink wine from across theproduced close to where they worldlived• They drank what their parents • They drink what they like (and is indrank fashion)•They cared where wines came •Today they are often morefrom. interested in brand, grape and price. •Wine is bought by women•Wine was bought by men •Wine is bought from supermarkets,•Wine was bought from the or onlineproducer, or a specialist retailer•Wine was drunk with food •Wine is drunk without food, as an alternative to beer and vodka•They respected official •People no longer respect officialdesignations (DOC, DOCG etc) designations (DOC, DOCG etc)
US Five Year Category Growth Rates Over the last five years, Spirits and Wine consumption have grown much faster than Beer consumptionThe B.I.G. 2010 Liquor , Wine And Beer Handbooks 5 U.S. Drinks Conference 2010
US Wine Consumption Trend Wine consumption has grown steadily posting 0.8% growth in 2009 to reach a record level of 296,960 million 9-liter cases.The B.I.G. 2010 Wine Handbook (Thousands 9-Liter Cases) U.S. Drinks Conference 2010 6
US Wine Consumption By Type Table Wines represent over 91% of U.S. Wine consumption and they continued to show growth of almost 1% in 2009 U.S. Drinks Conference 2010 Source: Adam’s 2008 Advance. Volume Stated On A Thousands Of 2.25-gallon Cases Basis. 7 7The B.I.G. 2010 Wine Handbook (Thousands 9-Liter Cases )
This has all been to the advantage of Pinot Grigio•Fashionable•Easy to drink with and without food•Popular with women•Widely available•Easy to find (and pronounce – for non Italians) on theshelf•Uncomplicated
US Table Wine Consumption By Varietal Chardonnay, Cabernet and Merlot combine for 54% of U.S. Wine consumption by All Other Varietals represent opportunity at 24% 9 U.S. Drinks Conference 2010Source: Adam’s 2008 Advance. Volume Stated On A Thousands Of 2.25-gallon Cases Basis. The B.I.G. 2010 Wine Handbook 9
Top 25 US Import Wine Brand Trends 10 U.S. Drinks Conference 2010The B.I.G. 2010 Wine Handbook (Thousands 9-Liter Cases ) 10
UK Table Wine Consumption By Varietal 11 U.S. Drinks Conference 2010Source: Adam’s 2008 Advance. Volume Stated On A Thousands Of 2.25-gallon Cases Basis. The B.I.G. 2010 Wine Handbook 11
UK Table Wine Consumption By Varietal 12 U.S. Drinks Conference 2010Source: Adam’s 2008 Advance. Volume Stated On A Thousands Of 2.25-gallon Cases Basis. The B.I.G. 2010 Wine Handbook 12
THE SWOT ANALYSIS STRENGTHS WEAKNESSESPopular Unpopular with opinion formersEasy to understand and like Too widely available?Affordable Price droppingCritical mass Becoming a commodityStrong brands Losing links to ItalyAssociated with Italy OPPORTUNITIES THREATSNew styles (sparkling, pink etc) Other styles (Moscato,Blends Albarino, Torrontes, PinotNew Brands Bianco, Chardonnay)New markets (China etc) Boredom
Pinot Grigio found a niche in part because its more versatile and lessassertive than oaky chardonnay… Most serious wine drinkers shun PinotGrigio the way they once shunned Soave. And not entirely withoutreason… the fact is that 99% of whats called Pinot Grigio from Italy isdilute and flavor-challenged, a refreshing, lemonade-like foodlubricant/buzz-delivery system.Like many of my peers, I turned my back on Pinot Grigio early in the1990s, and I remained slightly embarrassed about my early enthusiasm,as I did about my earlier reverence for the music of the Monkees…. As itspopularity grew, its identity became more nebulous and it was planted allover Italy, far beyond its natural home in the northeast. Jay McInerney- Wall Street Journal
2010 was the year that Italy might have gone down to below a 50% share of the PinotGrigio market, at least for Middle AmericaItaly: 49% (10% increase in case sales)California: 36% (18% increase in case sales)Australia: 9% (11% decrease in case sales)Texas: 3%, which is mainly California grapes sourced but bottled in Texas (5%increase in case sales)Oregon: 2% (57% increase in case sales)All others: 1%Italy has lost about 4% since 2008. Australia has lost 1% since 2009. California value brands are soaring (most notably,Barefoot).Italian brands that are still strong, but challenged by the California surge are BellaSera (doing well in larger size), Mezzacorona and Ecco Domani.Pricier Pinot Grigio’s (over $10 retail) are relatively flat.So it’s still a hot category, but value wines still reign. Italy’s day of Pinot Grigiodominance look like they are over.America, once again has assimilated something uniquely Italian, just like their peopleand their foods.Statistics from Alfonso Cevola, / The Blend
Breakdow of Purchased Vines -2010 n •Other Whites Include •French Colombard Pinot Grigio Other White •Sauvignon Blanc 4% Cabernet Muscat Alexander 4% Sauvignon •Symphony 10% 23% Chardonnay 18% Merlot 4% Pinot Noir 7%•Other Reds Include •Malbec Other Red •Petite Verdot 9% Rubired •Petite Sirah Zinfandel 17% 4% •Ruby Cabernet •Barbera
Pinot Grigio Estimated California Pinot Grigio Acreage, 2010 •The Numbers:30,000 •21% non-bearing •8.32% AGR25,000 •The Supply Trend: 5,42020,000 •Growth at lower end15,000 •Plantings slowing •The Implication:10,000 20,000 •Growth is manageable based 5,000 on current sales •We don’t know 0 market capacity Bearing Non-Bearing •May be cannibalizing other white wines
And what if the brand becomes more important than the region or country?
Gallo’s link withfashion supports the“female-friendly”quality of Pinot Grigio.
Cupcake is Italian. Little Black Dress is Californian. But they could switch.And the blogger writing about Flipflop wasn’t interested in where it came from.
DoILikeIt? research into UK Champagne drinkers“Very” or “Quite” importantSomething you know and previously liked 97.5%Price 97.5%Critical recommendation 64%Brand Name 62.5% Wilson Report research. Main reason to buyWine Intelligence WineConsumer research. Mainreason to buyPrice promotions 70%Grape variety 69%Brand awareness 65%Friend/familyRecommendation 60%Country of origin 59%Region of origin 50%
Ogio – every brand owner’s nightmare. Created in a fewhours exclusively for a UK supermarket (Tesco) and now UKno 18 best seller without any marketing.Originally Ogio was created for Italian wine, now the brandcovers French and Californian wine. And the Pinot Grigiodoes not have to be Italian...
Top US selling Pinot Grigio – by volume by volume by valueECCO DOMANI SANTA MARGHERITASANTA MARGHERITA ECCO DOMANIROBERT MONDAVI PRIVATE SELECTON ROBERT MONDAVI PRIVATE SELECTNCLOS DU BOIS CLASSICS CLOS DU BOIS CLASSICSESTANCIA ESTANCIACHATEAU STE MICHELLE MID TIER CHATEAU STE MICHELLE MID TIERRUFFINO RUFFINOKRIS KRISVOGA DA VINCISTERLING VINTNERS COLLECTION KING ESTATEDA VINCI VOGAKING ESTATE STERLING VINTNERS COLLECTIONA TO Z ECCO DOMANI MASO CANALIERATH ERATHGNARLY HEAD A TO ZLITTLE BLACK DRESS SAN GIUSEPPEMIDDLE SISTER FRANCIS COPPOLA DIAMONDECCO DOMANI MASO CANALI LITTLE BLACK DRESSDUCK POND GNARLY HEADSAN GIUSEPPE DUCK PONDFRANCIS COPPOLA DIAMOND CASTELLO BANFIEOLA HILLS CANDONICANDONI DANZANTEDANZANTE MIDDLE SISTERCASTELLO BANFI EOLA HILLS
Pinot Grigio – Average US retail priceSANTA MARGHERITA $20-25ECCO DOMANI MASO CANALI $15-20 Big sellers areCASTELLO BANFIKING ESTATE $15-20 $10-15 still ItalianSAN GIUSEPPE $10-15 $15-20, butDA VINCI $10-15KRIS $10-15 CaliforniaFRANCIS COPPOLA DIAMONDA TO Z $10-15 $10-15 <$10 areERATH $10-15 growing fast.CANDONI $10-15ESTANCIA $10-15MIDDLE SISTERDANZANTE $10-15 $10-15 Will peopleCLOS DU BOIS CLASSICS <$10 Grow used toDUCK POND <$10VOGA <$10 these prices?CHATEAU STE MICHELLE MID TIER <$10STERLING VINTNERS COLLECTION <$10ECCO DOMANI <$10RUFFINO <$10LITTLE BLACK DRESS <$10EOLA HILLS <$10GNARLY HEAD <$10ROBERT MONDAVI PRIVATE SELECTN <$10
In the UK, Ogio,(and Dino andothers) are either£9 or half price.85-95% of thesewines are boughtat £4.49, just overthe UK averageretail price of£4.45.
What about the threats?Beware of Chardonnay in a more neutral style.
Chardonnay Estimated California Chardonnay Acreage, 2010 •The Numbers:120,000 •10% non-bearing 11,890 •3.64% AGR100,000 •The Supply Trend: 80,000 •Growth at lower end 60,000 •Minimal pullouts 105,000 •The Implication: 40,000 •Growth is manageable 20,000 •Large crops could be problematic 0 •Annual Bearing Non-Bearing displacement by imports is possible
Muscat Alexander Estimated California Muscat Alex Acreage, 2010 •The Numbers:7,000 •25% Non-Bearing6,000 •The Supply Trend: 1,713 •Short thru 20125,000 •2010 planting4,000 explosion begins bearing in 20133,000 •The Implication: 5,000 •Big shift in supply2,000 coming1,000 •Limited use, but hot! 0 •We don’t know Bearing Non-Bearing market capacity •If it’s a fad, we’re in trouble
So does Torrontés have Pinot Grigio-like consumer potential? ImporterDes Cross says the Torrontés consumer is "overwhelmingly female, with aslight tendency to younger women."
Other possible contenders: Pinot Bianco(Possibly attractive because of the Pinot connection) Albarino(Possibly attractive because of the Pinot connection) Riesling Always a possibility, but a long time in coming
Emerging Markets•Asia •China – Prefers French red (Bordeaux) at the moment but will hopefully develop thanks to female tastes •Korea – High potential, following Japan •India – Not yet a market as such. But has long term potential and not married to red wine•Brazil •High potential. 200m population. Young population. Increasingly prosperous. Likes wine. Likes to try new things.
Conclusions•Italian Pinot Grigio IS a style with a future•Italian Pinot Grigio IS at risk from cheaperversions from other countries•Italian Brand owners ARE at risk fromSupermarket own brands – and others(which can change nationality)
Advice•Italian Pinot Grigio producers (and/orregional producers) should design andprotect their own bottle and/or label whichcannot be used by Pinot Grigios fromanywhere else.•Wines in this packaging should meetagreed quality and style criteria.•A budget should be devoted to thepromotion of the packaging•It should be incorporated into sales