U.S. Getting Tougher for Imports
Which imports are suffering due to economic weakness? Which varietals are posting growth and which ones are dropping off?
IMPORTS SCALE BACK. After years of speedy growth, imports showed signs of slowing in the four weeks to April 5 2008, according to Nielsen scan data. Dollar sales of domestic wine grew 5.5% in April 2008, while imports were up only 2.8%, which is considerably lower than its year performance. For the 52 weeks to April 2008, growth of domestics (+5.4%) and imports (+5.2%) were only a hair apart.
In terms of volume, domestics grew 2.2% in the four weeks to April 2008 and imports declined -0.6%. In the 52 week period, domestics rose 2.2% and imports grew 2.3% (another big disparity).
As we reported earlier this week, the period to April 7, 2007 was a different story. In the four weeks to April 2007, imported wines were starting to creep up on domestics and post slightly higher growth. Domestic growth trailed imports with dollar sales growing 10.7% for domestics and 11.9% for imports. In the 52 weeks to April 2007, however, domestics grew 7.2% and imports were up 6.1%.
In terms of volume, domestics grew 6.2% in the four weeks to April 2007 and imports jumped 9.4%. In the 52 week period, domestics rose 2.5% and imports grew 4.3%.
It looks as though the weak U.S. dollar and global supply problems have made conditions in the U.S. harder for imports. After swallowing price increases for several months, importers and retailers have starting passing it on to consumers, which may drive cost-conscious buyers to lower categories or cheaper, domestic brands.
SOFTNESS IN THE BIG THREE. The big three importers, Australia (which was once thought invincible), France and Italy, are all seeing smaller growth in 2008. In the four weeks to April 2008, dollar sales of Australian imports rose only 0.6%, while volume increased 1.2%. Quite differently, Australian dollar sales in the four weeks to April 2007 grew 4.9%, while volume rose 6.1%.
Value of French wine was flat in the month of April 2008, while volume was down -3.3%. In 2007, meanwhile, dollar sales of French imports showed promise, up 5.9%, while volume grew 2%.
Lastly, Italian wine sales delivered the most growth out of the big three, rising 1.2%, in April 2008. Volume, on the other hand, was down -3.8%. In the four weeks to April 2007, Italian dollar sales grew a whopping 15.7% and volume increased 12.6%. Clearly, pricing is up for French and Italian imports, most likely stemming from the weak USD and strong euro.
Imports that showed the most dollar sales growth in the four weeks to April 2008 hail from countries such as Argentina, Germany, New Zealand, Portugal and Spain. In the same period last year, the countries posting the most dollar sales growth were South Africa, New Zealand, Spain, Portugal, Italy, Germany and Argentina.
RED & WHITES, NECK AND NECK. Another noticeable trend in April 2008 was the difference in growth between red and white wine (not to mention the pace of growth). In 2007, red wine was growing at a faster pace then white wine. Today, red and white are practically neck and neck.
Dollar sales of red wine grew 5.1% in the four weeks to April 2008, while white wine grew 4.9%. However, in the four weeks to April 2007, red wine dollar sales increased 12.4% and white wine sales jumped 11.3%. Red and white wine growth in April 2007 more than doubled growth in April 2008.
Red and white wine both posted volume growth of 2.3% in the four weeks to April 2008. In April 2007, however, red wine volume grew 9.2% and white wine rose 7%. The rate of growth for red wine is four times less in 2008 than it was in 2007. Similarly, white wine grew three times faster in April 2007 than in April 2008.
SIDEWAYS AFFECT ALL OVER AGAIN. In April 2008, Pinot Noir and Riesling are still the two fastest growing varietals. In dollar sales, Pinot Noir grew 18% in 2008 and Riesling grew 18.4%. By volume, Pinot Noir increased 21.2% and Riesling rose 16%. The only difference between 2007 and 2008 is the rate of growth.
As far as the big varietals are concerned, only Merlot showed a slight decline in growth in the four weeks to April 2008. Dollar sales of Merlot declined -0.7% and volume declined -0.8%. Dollar sales of Chardonnay grew 3% and volume rose 2.5%, while Cabernet Sauvignon rose 7.1% and 6.4%, respectively.
In April 2007, Merlot posted solid dollar sales growth (6.6%) and volume growth (7.9%). Chardonnay and Cabernet also posted solid growth, just at a faster pace.
Dollar sales of Pinot Gris/Grigio (8.5%), Fume/Sauvignon Blanc (8.1%) and Zinfandel (5.4%) all posted growth. In terms of volume, Pinot Gris/Grigio rose 6.5%, Fume/Sauvignon Blanc grew 5% and Zinfandel increased 4.4%.
DIAGEO’S ORGANIC NET SALES RISE 7%
Diageo’s statement for the nine months ended March 31, 2008 was rather brief. Organic net sales grew 7% and were “in line with the performance seen in the first half of the year ending June 30, 2008.”
Said Paul Walsh, Diageo ceo:
“Trading in the third quarter continued in line with the first half and we are therefore maintaining our guidance for 9% organic operating profit growth for the current fiscal year.
We continue to believe that the diversity and strength of our brands, the success of our marketing campaigns, our superior routes to market and our global reach will be key in delivering our performance.”
No acknowledgement of the economic slowdown here boys and girls. CFO Nick Rose has said in the past that Diageo is “very optimistic” about sales in the U.S. Paul Walsh has also stated that consumers view spirits as an “affordable luxury” and that premiumization will continue in the U.S. amidst a slowdown.
“Everyone is focused on subprime, monoline, $400bn write-offs ... to a lot of people it's a total irrelevance. They don't understand it, and they don't want to understand it," said Paul Walsh during Diageo’s first half earnings report in February.
WSD BRIEFS:
LITTLE BLACK DRESS WINES, owned by Brown-Forman, is adding a 2006 Pinot Noir sourced from France, and will introduce Chardonnay in a traditional Burgundy package with the 2007 vintage release. LBD also plans to test an Italian-sourced Pinot Grigio version, one of the most popular varietals in the line. With the addition of Pinot Noir, Little Black Dress Wines current varietals will now include Chardonnay, Pinot Grigio, Syrah Rose, and Merlot. The wines are line priced nationally at $9.99 suggested retail, with Syrah Rose available in limited markets.
ILLINOIS OPENS DIRECT SHIPPING. Beginning June 1, wineries holding an Illinois Winery Shipper's License may ship up to 12 cases of wine annually to adult residents. The act, signed this week by Governor Rod Blagojevich, permits wineries producing under 25,000 gallons per year to self-distribute up to 5,000 gallons annually directly to Illinois retailers. This includes both in-state and out-of-state wineries that have a Wine Shipper's License, according to Wines & Vines.
Until tomorrow, Megan
“I believe in looking reality straight in the eye and denying it.”
Garrison Keillor
--------- Sell Day Calendar ----------
Today's Sell Day: 6
Sell days this month: 22
Sell days this month last year: 23
This month ends on a: Fri.
This month last year ended on a: Thurs.
YTD sell days Over/Under: 0
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
IMPORTS SCALE BACK. After years of speedy growth, imports showed signs of slowing in the four weeks to April 5 2008, according to Nielsen scan data. Dollar sales of domestic wine grew 5.5% in April 2008, while imports were up only 2.8%, which is considerably lower than its year performance. For the 52 weeks to April 2008, growth of domestics (+5.4%) and imports (+5.2%) were only a hair apart.
In terms of volume, domestics grew 2.2% in the four weeks to April 2008 and imports declined -0.6%. In the 52 week period, domestics rose 2.2% and imports grew 2.3% (another big disparity).
As we reported earlier this week, the period to April 7, 2007 was a different story. In the four weeks to April 2007, imported wines were starting to creep up on domestics and post slightly higher growth. Domestic growth trailed imports with dollar sales growing 10.7% for domestics and 11.9% for imports. In the 52 weeks to April 2007, however, domestics grew 7.2% and imports were up 6.1%.
In terms of volume, domestics grew 6.2% in the four weeks to April 2007 and imports jumped 9.4%. In the 52 week period, domestics rose 2.5% and imports grew 4.3%.
It looks as though the weak U.S. dollar and global supply problems have made conditions in the U.S. harder for imports. After swallowing price increases for several months, importers and retailers have starting passing it on to consumers, which may drive cost-conscious buyers to lower categories or cheaper, domestic brands.
SOFTNESS IN THE BIG THREE. The big three importers, Australia (which was once thought invincible), France and Italy, are all seeing smaller growth in 2008. In the four weeks to April 2008, dollar sales of Australian imports rose only 0.6%, while volume increased 1.2%. Quite differently, Australian dollar sales in the four weeks to April 2007 grew 4.9%, while volume rose 6.1%.
Value of French wine was flat in the month of April 2008, while volume was down -3.3%. In 2007, meanwhile, dollar sales of French imports showed promise, up 5.9%, while volume grew 2%.
Lastly, Italian wine sales delivered the most growth out of the big three, rising 1.2%, in April 2008. Volume, on the other hand, was down -3.8%. In the four weeks to April 2007, Italian dollar sales grew a whopping 15.7% and volume increased 12.6%. Clearly, pricing is up for French and Italian imports, most likely stemming from the weak USD and strong euro.
Imports that showed the most dollar sales growth in the four weeks to April 2008 hail from countries such as Argentina, Germany, New Zealand, Portugal and Spain. In the same period last year, the countries posting the most dollar sales growth were South Africa, New Zealand, Spain, Portugal, Italy, Germany and Argentina.
RED & WHITES, NECK AND NECK. Another noticeable trend in April 2008 was the difference in growth between red and white wine (not to mention the pace of growth). In 2007, red wine was growing at a faster pace then white wine. Today, red and white are practically neck and neck.
Dollar sales of red wine grew 5.1% in the four weeks to April 2008, while white wine grew 4.9%. However, in the four weeks to April 2007, red wine dollar sales increased 12.4% and white wine sales jumped 11.3%. Red and white wine growth in April 2007 more than doubled growth in April 2008.
Red and white wine both posted volume growth of 2.3% in the four weeks to April 2008. In April 2007, however, red wine volume grew 9.2% and white wine rose 7%. The rate of growth for red wine is four times less in 2008 than it was in 2007. Similarly, white wine grew three times faster in April 2007 than in April 2008.
SIDEWAYS AFFECT ALL OVER AGAIN. In April 2008, Pinot Noir and Riesling are still the two fastest growing varietals. In dollar sales, Pinot Noir grew 18% in 2008 and Riesling grew 18.4%. By volume, Pinot Noir increased 21.2% and Riesling rose 16%. The only difference between 2007 and 2008 is the rate of growth.
As far as the big varietals are concerned, only Merlot showed a slight decline in growth in the four weeks to April 2008. Dollar sales of Merlot declined -0.7% and volume declined -0.8%. Dollar sales of Chardonnay grew 3% and volume rose 2.5%, while Cabernet Sauvignon rose 7.1% and 6.4%, respectively.
In April 2007, Merlot posted solid dollar sales growth (6.6%) and volume growth (7.9%). Chardonnay and Cabernet also posted solid growth, just at a faster pace.
Dollar sales of Pinot Gris/Grigio (8.5%), Fume/Sauvignon Blanc (8.1%) and Zinfandel (5.4%) all posted growth. In terms of volume, Pinot Gris/Grigio rose 6.5%, Fume/Sauvignon Blanc grew 5% and Zinfandel increased 4.4%.
DIAGEO’S ORGANIC NET SALES RISE 7%
Diageo’s statement for the nine months ended March 31, 2008 was rather brief. Organic net sales grew 7% and were “in line with the performance seen in the first half of the year ending June 30, 2008.”
Said Paul Walsh, Diageo ceo:
“Trading in the third quarter continued in line with the first half and we are therefore maintaining our guidance for 9% organic operating profit growth for the current fiscal year.
We continue to believe that the diversity and strength of our brands, the success of our marketing campaigns, our superior routes to market and our global reach will be key in delivering our performance.”
No acknowledgement of the economic slowdown here boys and girls. CFO Nick Rose has said in the past that Diageo is “very optimistic” about sales in the U.S. Paul Walsh has also stated that consumers view spirits as an “affordable luxury” and that premiumization will continue in the U.S. amidst a slowdown.
“Everyone is focused on subprime, monoline, $400bn write-offs ... to a lot of people it's a total irrelevance. They don't understand it, and they don't want to understand it," said Paul Walsh during Diageo’s first half earnings report in February.
WSD BRIEFS:
LITTLE BLACK DRESS WINES, owned by Brown-Forman, is adding a 2006 Pinot Noir sourced from France, and will introduce Chardonnay in a traditional Burgundy package with the 2007 vintage release. LBD also plans to test an Italian-sourced Pinot Grigio version, one of the most popular varietals in the line. With the addition of Pinot Noir, Little Black Dress Wines current varietals will now include Chardonnay, Pinot Grigio, Syrah Rose, and Merlot. The wines are line priced nationally at $9.99 suggested retail, with Syrah Rose available in limited markets.
ILLINOIS OPENS DIRECT SHIPPING. Beginning June 1, wineries holding an Illinois Winery Shipper's License may ship up to 12 cases of wine annually to adult residents. The act, signed this week by Governor Rod Blagojevich, permits wineries producing under 25,000 gallons per year to self-distribute up to 5,000 gallons annually directly to Illinois retailers. This includes both in-state and out-of-state wineries that have a Wine Shipper's License, according to Wines & Vines.
Until tomorrow, Megan
“I believe in looking reality straight in the eye and denying it.”
Garrison Keillor
--------- Sell Day Calendar ----------
Today's Sell Day: 6
Sell days this month: 22
Sell days this month last year: 23
This month ends on a: Fri.
This month last year ended on a: Thurs.
YTD sell days Over/Under: 0
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
posted at 2:36 PM
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