Diageo’s Ray Chadwick Talks Wine
Last week at Diageo’s Investor Conference, Ray Chadwick, President, Diageo Chateau & Estate Wines, gave some insight into Diageo’s wine business and the overall industry’s performance.
Ray said Diageo is “well positioned” in the wine industry and exceeds 300 million cases. By 2010, the U.S. is projected to be the largest wine market, overtaking France and Italy.
In terms of wine trends, Ray said the premium priced category (above $10) is growing at a significantly higher rate than the overall market. Overall, he said, table wine is holding up in the current economy, but sub-premium wines have picked up and premium and super premium have slowed. Nonetheless, premium wine is still growing at the fastest rate.
Like Constellation’s Rob Sands yesterday, Ray said consumers are looking for value, experimenting less and sticking with brands they know and trust.
Thanks to Diageo’s strong route-to-market, “we are better positioned than most...our brands are well distributed and presented in the club channel,” which is outperforming, he said.
Ray reaffirmed statistics that show domestic wine, particularly California, is growing faster than imports. Italy, Chile, France and Australia have slowed somewhat, while New Zealand, Spain and Argentina are showing strong growth.
The most popular varietals in the U.S. are the trust three: Chardonnay, Merlot and Cabernet, which account for over half of the market. Zinfandel, Pinot Grigio, Pinot Noir and Riesling are all outpacing the overall segment and Diageo is well positioned across the entire spectrum, said Ray.
He said the fact that three fourths of wine is consumed at home gives Diageo an advantage because it has a strong focus on the off-premise. On-premise accounts are smaller but growing more quickly, which enhances brand image and consumer appeal. Diageo’s recent acquisition of Chalone Wine Estate was particularly helpful on-premise.
Here are some interesting facts. Diageo is the largest marketer of Napa Valley wine (including Sterling and Beaulieu Vineyards). California remains its focused portfolio. It is also the seventh largest wine company in the U.S. in terms of value, and has gained share over the past two years while competitors were flat or losing share. In the past 5 years Diageo has launched over 50 new wines, and is still “interested in participating in ongoing wine industry consolidation.”
GROCERY STORES CHUGGING ALONG
Grocery stores are one of the few in the retail category performing well despite the global recession, while furniture stores, clothes retailers and most on-premise accounts are losing share.
In last week's Commerce Department's monthly retail report, food and beverage stores saw a 4.8% increase in October sales compared with the same month last year, while sales compared with the month earlier held steady. Meanwhile, sales at auto and parts dealers, furniture dealers and department stores were all down.
It all stems from consumers shifting from the on-premise (restaurants, bars, nightclubs) to the off-premise, and holding back from “unnecessary purchases” (like a stylish new bedroom furniture set).
In an article in the San Francisco Chronicle, a retail consultant said grocery stores may be selling fewer steaks and more chicken, but they are making up for the lack of sales because families are shopping two to three times more per month instead of dining out.
Sales for the average privately held grocery store grew by 5.8% in 2008, rising on slightly above the 5.68% sales increase for grocery stores in 2007, according to market researcher Sageworks. However, the overall retail industry average sales growth decreased to 2.74% in 2008, from 3.88% in 2007. Clothing stores are seeing sales decline this year by an average of -1.22%.
Value-oriented stores like Costco and Wal-Mart are performing much better than high end retailers like Whole Foods. Several retailer analysts have attributed this growth to food and beverage sales. As a result, Target Corp., which saw earnings drop -23.8% in quarter, plans to “aggressively” test expanded food offerings in its stores.
"Definitely the nonfood part of the business is challenging right now," said Dennis Hoover, senior vice president and general manager of Costco's Bay Area region.
Here are some same-store sales for supermarkets: Costco (2%), Wal-Mart (2.4%), Whole Foods (-3.3%).
WAL-MART KILLING IT. Wal-Mart’s ceo Eduardo Castro-Wright told investors that the retailer accounted for 51.7% of all U.S. retail growth in October – excluding restaurants and auto-related sales. For the third quarter as a whole Wal-Mart accounted for almost 40% of retail growth, which is about 15% higher for the same period last year.
"This would indicate that the gap between Wal-Mart and the rest of the market is widening quite considerably," said Eduardo, noting that in October "more than 50 cents of each dollar of growth was captured by Wal-Mart US,” reports the Financial Times.
He also said the recent drop in gas prices will encourage rural consumers to engage in more shopping drips and increase store traffic.
WHEN WILL AMAZON START SELLING WINE?
We get a lot of emails from subscribers wondering when Amazon is going to start selling wine on its website. Initial reports claimed they would be ready last month, but October has come and gone and still no word. Could it be that Amazon is having problems with their wine sales model or getting around state shipping laws? Emails were not immediately returned, but sources tell us Amazon is not releasing a timeline at the moment. The company is still test marketing its wine shipping model, which it plans to launch based on consumers’ responses. If you have any information or commentary, email us at megan@beernet.com. All names and information will be kept anonymous.
WSD BRIEFS:
OLD BRIDGE CELLARS IS NOW IMPORTING Plantagenet wine brand, hailing from Western Australia’s Great Southern region. Beginning January 1, 2009, Old Bridge Cellars will undertake all US sales, marketing and PR activities on behalf of Plantagenet.
X-RATED FUSION LIQUEUR, distributed by Skyy Spirits, is launching a “Naughty Meets Nice” promotional campaign this Valentine’s Day. The brand will offer on-premise promotional material, including posters “depicting a romantic tone.”
BROWN-FORMAN’S CAMPBELL BROWN, vice president and director of its Southern Comfort Americas division, has been elected to the Republic Bank & Trust Co. board of directors.
Until tomorrow, Megan
“I base my fashion taste on what doesn't itch.”
Gilda Radner
--------- Sell Day Calendar ----------
Today's Sell Day: 13
Sell days this month: 19
Sell days this month last year: 21
This month ends on a: Fri.
This month last year ended on a: Fri.
YTD sell days Over/Under: +1
BEER SUMMIT 2009 - The Four Seasons, Austin, Texas - Join us for great speakers, intelligent discourse, good food, and of course great beer at the next Beer Summit on March 1 - 2, 2009. Click here: http://tinyurl.com/beersummit
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.
Ray said Diageo is “well positioned” in the wine industry and exceeds 300 million cases. By 2010, the U.S. is projected to be the largest wine market, overtaking France and Italy.
In terms of wine trends, Ray said the premium priced category (above $10) is growing at a significantly higher rate than the overall market. Overall, he said, table wine is holding up in the current economy, but sub-premium wines have picked up and premium and super premium have slowed. Nonetheless, premium wine is still growing at the fastest rate.
Like Constellation’s Rob Sands yesterday, Ray said consumers are looking for value, experimenting less and sticking with brands they know and trust.
Thanks to Diageo’s strong route-to-market, “we are better positioned than most...our brands are well distributed and presented in the club channel,” which is outperforming, he said.
Ray reaffirmed statistics that show domestic wine, particularly California, is growing faster than imports. Italy, Chile, France and Australia have slowed somewhat, while New Zealand, Spain and Argentina are showing strong growth.
The most popular varietals in the U.S. are the trust three: Chardonnay, Merlot and Cabernet, which account for over half of the market. Zinfandel, Pinot Grigio, Pinot Noir and Riesling are all outpacing the overall segment and Diageo is well positioned across the entire spectrum, said Ray.
He said the fact that three fourths of wine is consumed at home gives Diageo an advantage because it has a strong focus on the off-premise. On-premise accounts are smaller but growing more quickly, which enhances brand image and consumer appeal. Diageo’s recent acquisition of Chalone Wine Estate was particularly helpful on-premise.
Here are some interesting facts. Diageo is the largest marketer of Napa Valley wine (including Sterling and Beaulieu Vineyards). California remains its focused portfolio. It is also the seventh largest wine company in the U.S. in terms of value, and has gained share over the past two years while competitors were flat or losing share. In the past 5 years Diageo has launched over 50 new wines, and is still “interested in participating in ongoing wine industry consolidation.”
GROCERY STORES CHUGGING ALONG
Grocery stores are one of the few in the retail category performing well despite the global recession, while furniture stores, clothes retailers and most on-premise accounts are losing share.
In last week's Commerce Department's monthly retail report, food and beverage stores saw a 4.8% increase in October sales compared with the same month last year, while sales compared with the month earlier held steady. Meanwhile, sales at auto and parts dealers, furniture dealers and department stores were all down.
It all stems from consumers shifting from the on-premise (restaurants, bars, nightclubs) to the off-premise, and holding back from “unnecessary purchases” (like a stylish new bedroom furniture set).
In an article in the San Francisco Chronicle, a retail consultant said grocery stores may be selling fewer steaks and more chicken, but they are making up for the lack of sales because families are shopping two to three times more per month instead of dining out.
Sales for the average privately held grocery store grew by 5.8% in 2008, rising on slightly above the 5.68% sales increase for grocery stores in 2007, according to market researcher Sageworks. However, the overall retail industry average sales growth decreased to 2.74% in 2008, from 3.88% in 2007. Clothing stores are seeing sales decline this year by an average of -1.22%.
Value-oriented stores like Costco and Wal-Mart are performing much better than high end retailers like Whole Foods. Several retailer analysts have attributed this growth to food and beverage sales. As a result, Target Corp., which saw earnings drop -23.8% in quarter, plans to “aggressively” test expanded food offerings in its stores.
"Definitely the nonfood part of the business is challenging right now," said Dennis Hoover, senior vice president and general manager of Costco's Bay Area region.
Here are some same-store sales for supermarkets: Costco (2%), Wal-Mart (2.4%), Whole Foods (-3.3%).
WAL-MART KILLING IT. Wal-Mart’s ceo Eduardo Castro-Wright told investors that the retailer accounted for 51.7% of all U.S. retail growth in October – excluding restaurants and auto-related sales. For the third quarter as a whole Wal-Mart accounted for almost 40% of retail growth, which is about 15% higher for the same period last year.
"This would indicate that the gap between Wal-Mart and the rest of the market is widening quite considerably," said Eduardo, noting that in October "more than 50 cents of each dollar of growth was captured by Wal-Mart US,” reports the Financial Times.
He also said the recent drop in gas prices will encourage rural consumers to engage in more shopping drips and increase store traffic.
WHEN WILL AMAZON START SELLING WINE?
We get a lot of emails from subscribers wondering when Amazon is going to start selling wine on its website. Initial reports claimed they would be ready last month, but October has come and gone and still no word. Could it be that Amazon is having problems with their wine sales model or getting around state shipping laws? Emails were not immediately returned, but sources tell us Amazon is not releasing a timeline at the moment. The company is still test marketing its wine shipping model, which it plans to launch based on consumers’ responses. If you have any information or commentary, email us at megan@beernet.com. All names and information will be kept anonymous.
WSD BRIEFS:
OLD BRIDGE CELLARS IS NOW IMPORTING Plantagenet wine brand, hailing from Western Australia’s Great Southern region. Beginning January 1, 2009, Old Bridge Cellars will undertake all US sales, marketing and PR activities on behalf of Plantagenet.
X-RATED FUSION LIQUEUR, distributed by Skyy Spirits, is launching a “Naughty Meets Nice” promotional campaign this Valentine’s Day. The brand will offer on-premise promotional material, including posters “depicting a romantic tone.”
BROWN-FORMAN’S CAMPBELL BROWN, vice president and director of its Southern Comfort Americas division, has been elected to the Republic Bank & Trust Co. board of directors.
Until tomorrow, Megan
“I base my fashion taste on what doesn't itch.”
Gilda Radner
--------- Sell Day Calendar ----------
Today's Sell Day: 13
Sell days this month: 19
Sell days this month last year: 21
This month ends on a: Fri.
This month last year ended on a: Fri.
YTD sell days Over/Under: +1
BEER SUMMIT 2009 - The Four Seasons, Austin, Texas - Join us for great speakers, intelligent discourse, good food, and of course great beer at the next Beer Summit on March 1 - 2, 2009. Click here: http://tinyurl.com/beersummit
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 2:05 PM
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