A Look Back at November's Wine Performance


Dear Client:

As a collective group, domestic wines were the only ones to post growth in November, according to IRI food, drug and c-store scan data in the four weeks to Nov 29. Dollar sales of domestics grew 4.9% and volume gained 3.1%. Meanwhile, imports declined -0.5% in sales and -0.4% in volume. Where domestics gained a share point in sales, imports lost a share point.

On a domestic front, California, Oregon and Washington all did well in November. In terms of dollar sales California grew 4.9%, Oregon grew 4.8% and Washington rose 3%. In volume, Oregon grew an impressive 11.7%, Washington gained 5.4% and California rose 2.9%. California showed only slight improvement from October, but Oregon and Washington performed far better in November.

Argentina again performed way above other imports (and domestics for that matter) in November, posting dollar sales growth of 58.2% and volume growth of 49.6%. New Zealand, Spain, Chile and Germany also posted solid November growth.

Out of the big three importers, France did the best believe it or not. It seems the country is starting to pull it together in these troubled times. Dollar sales of French wine in November declined -1.2% but volume grew 2.7%. Australian wines saw sales fall -5.9% and volume declined -4.1%. Meanwhile, both dollar sales and volume of Italian wine declined -2.9%.

WHITE WINE WINS AT THANKSGIVING. Despite the colder months and Thanksgiving holiday, white wine grew faster than red. Pinot noir and red blends/meritage showed the most growth, followed by cabernet and then zinfandel. Merlot had a disappointing month with dollar sales -3% (where it lost 0.8 dollar share points) and volume -1.1%. Syrah/shiraz fared even worse, with sales down -9.5% and volume down -7.7%. Out of the white wine categories, fume/sauvignon blanc showed the most growth, followed by pinot grigio/gris and chardonnay. The only IRI-tracked white wine varietal that declined in growth was white zinfandel.

Dollar sales of chardonnay, fume/sauvignon blanc and red blends saw improvements in November compared to their year over year performance in October. Merlot, meanwhile, did far worse in November. Dollar sales of merlot declined -0.6% in October and -2.9% in November. All other varietals were relatively the same in both months.

$20 AND ABOVE LEAP AHEAD. The most popular price category in November, it seems, was wines priced above $20. Wines in the $8-$20 also grew nicely, along with wines priced $3-$5. The weakest price categories were below $3 and $5-$8. Wines priced $11 to above $20 showed the most improvement in November compared to October. It looks like consumers were either willing to spend more during the holidays and/or suppliers were dropping prices. Boxed wines above $2 continue to be on fire.

12-WEEK BRAND RANKS. The top 50 brands by dollar sales that showed some impressive dollar growth in the 12 weeks to November 29, which spans Halloween and Thanksgiving, include: Sutter Home (9.8%), Barefoot (27.5%), Franzia Box (9.1%), Beringer (7.8%), Chateau Ste Michelle (8.3%), Sterling Vintners Collection (26%), Francis Coppola (18.2%), Bogle Vineyards (12.2%), Folie a Deaux (57.7%), Inglenook Vineyard Coastal Estates (18.5%), J Lohr (13.1%), Black Box Wines (26.4%), Corbett Canyon (18%), Rex Goliath (41%), Edna Valley Vineyard (34.2%), Red Diamond (16.4%), Gnarly Head (21.2%) and Corbett Canyon Box (13.4%).


Although some politicos in Washington are throwing around the idea of privatizing the state’s spirits sales, Gov Chris Gregoire isn’t so fond of the idea. She made it clear in an interview with Seattle PI that she doesn’t believe privatizing state run stores would save the state, which has a $2.6 billion budget deficit, any money. Auditor Brian Sonntag released a report last month claiming Washington could increase revenue from spirits sales and distribution by $350 million by privatizing state-run stores, but the revenue wouldn’t come into play until 2012. In the interview she said: "When you're in a tough time like this people put that idea out there, like that will save us. Auditor) Brian Sonntag's report doesn't show one penny for this biennium. Not one." Meanwhile, if Washington continues with its current alcohol system, it’s estimated that state and local governments will get $2.36 billion between 2012 and 2016 through its 315 state and contracted stores. Most of the money goes to the state, while about 19% goes to cities and counties.

She points out it would cost a lot of money just to make the switch, and also believes it would put an end to all the mom and pop liquor stores. And finally, there’s always the issue of underage drinking. “You look at our minor consumption sales - we're well below any state that has it privatized, by like 10 percent....Number two, does it really get you any money in the long haul, and number three what are the social policy issues that are implicated here and is that the right direction?"

VIRGINIA GOV-ELECT Bob McDonnell is ready to take his state’s spirits sales into private territory. He believes selling off Virginia’s ABC stores would generate $300-$400 million, which he plans on putting towards transportation costs. Former Gov Doug Wilder also called for privatizing spirits sales but it never came to fruition. Opponents fear the initiative would simply result in a quick injection of cash but would lose money for the state in the long term (similar to what Gov Gregoire said). Then there is the social responsibility standpoint. Some of the money from state-run liquor stores goes towards alcohol abuse related programs and law enforcement. There are also concerns that privatization would lead to an influx of liquor stores and fuel over-drinking, although McDonnell says regulations would be put in place to prevent that scenario. Now it comes down to the general assembly to determine whether Virginia will become a private-owned state.


The latest unemployment figures are in and it’s not pretty. Employers shed 85,000 jobs in December although the unemployment rate was steady at 10%. This means that an increasing number of unemployed people are giving up – once people stop looking for jobs, they’re no longer counted as unemployed.

The industry as a whole and especially the on-premise won’t see much of a boost until unemployment improves and Americans gain back some confidence. Credit Suisse economist Jonathan Basile told the AP that the latest unemployment figures “tells me that Main Street doesn't believe there's a recovery yet, because they're not out looking for jobs yet." Another troubling statistic says few Americans who are laid off will regain their standard of living.

New jobs are slowly trickling in but it’s not significant enough to make a large scale difference. If you count the discouraged workers and part-time employees who would like a full-time job, the “underemployment” rate in December rose to 17.3%, up 0.1% from November. The average work week remains at 33.2 hours. A total of 4.2 million jobs were lost in 2009 and the unemployment rate averaged at 9.3% or 15.3 million people. The unemployment is expected to remain above 9% throughout 2010 and remain as high as 7.5% through 2012.


Jeff Becker, ceo of the Beer Institute, lost his battle with cancer yesterday. Jeff is an extremely well respected and well liked figure in the industry and will be greatly missed. Our thoughts and prayers go out to his friends and family. Jeff is survived by his wife Brenda and children Max and Megan. He was 52.

Discus president Peter Cressy issued the following statement: “The Distilled Spirits Council and the entire spirits industry mourns the passing of Beer Institute President Jeff Becker and extends our sincere condolences to his family, friends and colleagues. Jeff was an outstanding leader, reliable ally and a dear friend. An articulate spokesperson for the entire beverage alcohol industry, his passionate voice and forceful presence will be sorely missed. Our deepest condolences to all who knew and loved him.”


CASUAL CHAINS TAP INTO HAPPY HOUR. Good news for the industry – casual chains such as PF Chang’s, Ruby Tuesday, TGI Friday’s and others are looking to the bar for a much needed boost with new happy hour promotions, revamped bar areas, signature cocktails and free appetizers. Their goal is to grow traffic during a traditionally dead time, 3-5pm, and then hope customers stay for dinner.

THE NEW JERSEY LEGISLATURE today passed a bill allowing consumers to sample spirits at liquor stores, Discus announced this morning. SB 2098 gives adult consumers the opportunity to sample up to three separate one-half ounce servings of spirits in any one calendar day at a pre-planned tasting event. Once signed by Gov Corzine, it will take effect May 1.

Until Monday, Megan

A bird does not sing because it has an answer. It sings because it has a song.
Chinese Proverb

--------- Sell Day Calendar ----------
Today's Sell Day: 6
Sell days this month: 20
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YTD sell days Over/Under: 0

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