XChateau Wine Podcast

With 27 years of research on the US wine consumer, the non-profit  Wine Market Council is a critical industry resource. Liz Thach MW, the new President, dives into their most recent research on which wine consumers are buying, why, and how they buy. Members can get even deeper insight and access to the industry’s most robust database on US wine consumers. Detailed Show Notes: Wine Market Council (“WMC”) - non-profit, formed in 1996Mission - provide cutting-edge research on the US wine consumer purchasing habits, trends, and attitudesMembers use WMC data for marketing and brand strategiesUS wine salesFrom 1934 - today - there have been several declines in consumptionThe last decline - 1990s - showed similar factors, increased anti-alcohol groups, large excise taxes; catalysts to growth (French Paradox, introduction of new products - e.g., White Zinfandel, wine spritzers, Merlot getting popular)Growth for 20+ years from the late 1990s, peaking during Covid2022 - decline in volume sales, 2023 - decline in volume (-9%) and $ salesWMC does a benchmark segmentation study of wine consumers every 2 yearsHas done 19 over 27 years, the largest database of wine consumer trendsBoomers - drinking less (61% cutting alcohol, faster than expected)Millennials - finally coming to wine, took until they were in their 30s (have children, bought homes, settled down, more financially stable); spend more on wine (often $20+)Gen Z (oldest is 26) - had high wine adoption initially, but in the last 3 years, it has declined (“cool to be sober”); 9% of Gen Z drinks wine, though only 33% are of legal drinking age; concerned about transparency of products (saw food scares, recalls), climate, and social equityWine drinkers are 60% married, 71% own homes, 53% live in suburbsEthnicity diversification making progressBy 2050, the majority of the US will be non-whiteToday’s wine drinkers are 66% White (vs. 77-78% in the past), 15% Hispanic, 11% Black, and 5% AsianSignificant progress with Blacks and Asians, but less with Hispanics, which are the fastest growing population in the USCeja an example of a successful Hispanic owned winery, links wine and Hispanic cuisine and been successfulOther ways to enhance diversity - ads that look like “us,” diversity in the workforce, pop up events where the consumer is (e.g., a Mexican wine importer did pop-ups at Hispanic events with taco trucks)Premiumization is still happening, people drinking less, but better$20+/bottle drinkers are now ~7-15% of the total US populationYounger people (21-30) purchasing more high-end wineBoomers dropping buying more expensive winesWhere people buy wineSupermarketsWine shopsOnline now 12% vs. 5% pre-Covid29% buy on their phone93% of wine consumers on social media#1 Facebook (Boomers)YouTube - 61% useInstagram - 55%TikTok - 40% (wineries can’t advertise, but influencers can post)X/Twitter - went from #2 to #6Wine apps - 17%2024 trendsAnti-alcohol movement Talking about the benefits of wine (illegal for alcohol brands to discuss health) - WMC launched a social campaign called “Wine is…” (e.g., wine cocktails, family dinners…)Transparency/ingredient labeling (e.g., 50% of Americans believe wine has added sugar)Low / no alcohol movement - 40% of wine drinkers drinking less (of those, 40% drink non-alc spirits/cocktails, 35% NA beer, 34% NA wine)RTDs / single serving sizes

Having gotten bitten by the wine bug young and with deep wine retail experience, Devon Magee, founder of Offshore Wines, decided to start a small wine importer. Inspired by Kermit Lynch, Offshore focuses on small, artisanal brands making high quality, yet affordable wines. Devon shares how he bootstrapped the company and is finding his way as an importer. Detailed Show Notes: Background - mostly wine retail, did harvests in France (Vieux Telegraph, Chandon de Brialles in Burgundy - 2012-2014)Inspired by Kermit Lynch, he was interested in writingOffshore Wines PortfolioChristian Knott of Chandon de Brialles started a new project, Domaine Dandelion, and asked him to import them2017 - 1st shipment - 4 cases of Domaine Dandelion, 20 cases of Champagne Charles Dufour15-20 producers nowGoal: find high-quality wines made in an artisanal way from lesser appellations that are “affordable”“Affordable” = $30-100 in US retailStarting an import businessHe did it on his own, with no lawyers~2 months to get a license, ~$1-2k in feesNeed a licensed warehouse to receive wines (uses CA Wine Transport)Self-financed 1st shipmentCash flow is challenging2-3 months for wines to land in warehouse (from France)Restaurants/retailers get 30 days termsPayment to wineries varies - most ~60-day terms from shipment, while others want payment upon shipment or 50/50 terms (upfront and on delivery)Lifestyle is fun, traveling and visiting rural areasChoosing winery partners - a lot is timing, being at the right place, getting to know communities, and very relationship-based; most wineries are referrals from existing relationshipsOffshore differentiation - speaks the winemaker’s language (French, Spanish), worked production, and is building deep personal relationshipsWineries are exclusive to CA, and only market Offshore works, though they sell to a small distributor in COFocus on small producers precludes needing to be in all 50 statesOptimal portfolio size ~25 wineries to be able to respond and represent wineries wellGets wine out for people to taste them, prefers personal connections over social mediaShares other aspects of what people are doing (e.g., got and gave away bags of coffee from a producer experimenting w/ carbonic coffee bean ferments, giving away sweatshirts from Domaine Hausherr with an artistic word game on the back)Devon is the only salesperson now, and he would ideally like 1-2 salespeopleOther salespeople have opened doors for him to help himBuilding small brandsMany people struggle with name pronunciation He tries to share wines, stories, and pictures of brandsHe doesn’t agree with the need for scores and tasting notes; he uses email to share stories, wants to publish a newsletter eventuallyThe new style of wine writing can help small brands - e.g., Alice Feiring, Ray Isle’s new bookAdvice for others - be able to sell the wines

As part of the importer series, Yi Xin Ong, Managing Partner of KOT Selections in Singapore, provides an international perspective. From Singapore’s 2-3,000 active importers for the small island to the impact of international media, Yi Xin describes how KOT navigates the importing, distributing, and retailing of its portfolio of winegrowers.  Detailed Show Notes: Background Founded KOT in 2011 - they couldn’t get the wines they were buying in Singapore, three partnersWork w/ 57 winegrowers, mainly in Europe, 6 in the USSingapore wine market (~6M population, ~20% Muslim - don’t drink)No 3-tier system, no gov’t monopolyIt is a pretty open market, like the UKMany players are vertically integrated - import, distribute, retail - with lots of captive distributors and retailersVery low barriers to entry - founded KOT in 2 months for S$200 to get licensing and paperworkHorizontally spread - ~2-3,000 active importers (in 2011, ~700 importers, mainly focused on Australia/NZ with either big brands or high-scoring wines)Two casinos / integrated resorts provided the spark for other wines (e.g., Marina Bay Sands opened in 2011)Generally, 1-1.5 generations behind the UK and US wine marketsTook inspiration from other importers - Kermit Lynch (CA), Louis / Dressner (NY), Yapp Brothers (UK Rhone Specialists) - importing wines others were notYapp - focused on winegrowersDressner - spent a lot of wine visiting growers, good storytellingKermit Lynch - newsletters (1970s) were key to storytelling for the wine growersStorytelling is critical to standing out in a crowded marketSourcing strategy - most wineries they bought from personally (90%) were not represented in SingaporeInformal rule - 5 visits to winegrowers between the three partners before they importBroad portfolios - easier to serve clients and fulfill their needsFocused portfolios - clearer story and differentiationOptimal portfolio size - ~50-70 to give each winegrower ~1 week/year of focusKOT differentiationMarket knowledgeLinks to trade, client baseTrust of the people (have only signed one contract, mainly handshake deals, exclusive relationships) -> been burnt occasionally with generational changeBuild brands in Singapore - a very organic approachGet the right people to taste them - professionals, and influencers / Key Opinion Leaders (“KOL”)Host tastings every year, even for highly allocated wines (e.g., Pierre Gonon)KOLs can drive demandInt’l media have a strong influence - English is the primary languageMore important than local mediaOnly the top few have an impact - The Wine Advocate (Robert Parker), Jancis Robinson (less emphasis on scores, more on editorial content)Robert Parker had a big impact on the local market; a Singaporean bought the company100-point scores can drive sales spikesConsumer data/reviews can start trends, increasingly importantVivino, Wine-Searcher, CellarTracker, Instagram75% wholesale, 25% direct-to-consumer sales (mainly e-commerce)Private clients saw KOT through the pandemicTrade is vital for tourist demandSingaporean wine trendsNew regions increasing, Japanese and Chinese winesValue increasing - ~$20-30 retail, ~$5-10 FOBThe low/no alcohol trend is not a thing yetRose has never been a trend

With a portfolio of luxury wineries, including Domaine de la Romanee-Conti and Biondi Santi, Wilson Daniels has developed deep expertise in marketing luxury wines. With allocations, deep tracking of where wines go, and a heavy event schedule, Shannon Coursey, EVP of Sales & Marketing, describes how taking great care of the wines is critical. Detailed Show Notes: Wilson Daniels (“WD”) overviewFounded in 1978, they started as a domestic wine brokerage, In 1979, they were asked to represent Domaine de la Romanee-Conti (DRC) and became an importerRepresents 37 families with ~50 producers, ~⅓ France, ~⅓ Italy, ~⅓ New WorldOwns distribution in 5 states~35 sales managers, sells ~600k cases/yearImporter roleCurate portfolioDistributor management - make sure strategy is executedCreate messaging with the wineriesPricing - for WD, keep consistent around the countryEducationChannel mix - on/off premise, national accounts, chainsWork with pressKeeping wineries top of mind in trade - does a lot of eventsSourcingSources wineries with estate vineyards, some with the ability to scale (~⅓ of the portfolio), look for regions where they will not take away from existing producersAt optimal book size now, additions could be grower Champagne or 1-2 new Burgundy producersGrew portfolio a lot in recent years - ~20/37 families added in last 8 years, ~10 in last 3 years (including Gaja, Faiveley)Distributor managementWith RNDC and Breakthru in ~50% of statesCreate groups within the portfolio to help distributorsManage pricing, inventory, programming (sometimes)Does not allow wine closeouts, prefers to buy backFast Start program - incentives for new placements, not volumeWholesale Manager Bonus - for distribution managers, often trip-basedOther support methods - ask to be on focus, market work, getting the producer in marketMarketing winesCrafting messaging is critical, and some producers already know what they want (e.g., Gaja wants to be known as 4 different wineries)Does a lot of grassroots marketing - events around the country at top restaurants, visibility of on-premise placementsA lot of trips to wineriesIconic brands - taking care of the wine from start to finish, the allocation process is essential (~⅔ of brands are allocated)Lesser known brands - more about visibility, messaging is critical, can target a broader base (e.g., use more social media)Luxury - 3 key segments - sommeliers, collectors, criticsFor larger brands, does some consumer marketing: e.g., Bisol Prosecco - did 15 city tours, wrapped an Alfa Romeo car in Bisol green, did press, consumer, and trade events; went from 7k cases (2015) to 120k cases (2024)Process for building brands in the USCreate messagingEducation - WD wholesale team, WD national team, distributorsPR launch kit and sales kitIdentify channel mix, including target account listEvents (very different for each producer - e.g., vintage tastings for Biondi Santi, Faiveley; Gaja - white launch, Tuscan properties, Sicilian tasting)Re-establishing brands that had poor marketing (e.g., Biondi Santi, Dal Forno)Need to work through inventory in the gray marketDon’t lower prices to match the gray marketMake a splash on new vintage releasesDal Forno - launches in the US 6 months before the rest of the world, helps reduce gray market activityPrivate client group / direct-to-consumer~300 people by invitation onlyExperience-drivenMembers support the entire WD portfolio

In part 2 of our series with Nick Ramkowsky, Owner of Vine Connections, Nick describes how he builds brands in the US market, striving to turn “annual” brands into “perennial” ones. Partnering with distributors both directly and working independently with consistency helps create a virtuous cycle of long-term relationships. Nick also covers his interest in sake and how it overlaps with sales strategies for wine.  Detailed Show Notes: Two types of brandsPerennials - brands where accounts grow in value each vintage; very few become thisAnnuals - need to sell the same case to a new account each year; everything starts hereThe goal is to build brands into perennialsGetting to perennials includes having value in the bottle, packaging (VC has three designers on staff), relationships (finding the right spots/customers for brands and supporting the accounts (staff trainings, consumer events)), identifying champions on the distributor sales team, and pressCreating brand value as an importer - consumers believe in the importer’s book through consistent producers and quality across the portfolioConsistency helps develop brandsMarketing strategies to build distributor demandPress (primarily critics)Effective distributor work withs (distributors need confidence importer will support them)Creating credibility in the marketplace (trade events, work withs, samples, incentive/launch programs)Can’t outspend more prominent importers for incentives, need to create unique ones - e.g., one supplier affiliated w/ custom made shirts, created incentive around the shirtsSetting suggested retail price (“SRP”)Through tasting, looking at the competitive set, and where the winery wants to be$1 in home country becomes ~$3 at retail in USSales strategiesVC has ten salespeople across the USDo work withs with distributors, but also on their own to not overwhelm distributor repsPartner with reps, sending recaps for follow-upSake - started in 2002He went to Japan to work in a brewery to study the processHad to make more accessible - standardized back label, 1st to put English names on front labelsThey use the same distribution network as winePlace importance on education; VP of Sake Monica Samuels is a great educatorNow, 20% of the Japanese imported sake marketRecommends drinking sake from a wine glass, at cellar temp, or warmed to order for hot sakeKome website is more focused on the style of sake (e.g., fruity/floral vs. round/rustic) vs. grade now46 prefectures brew sake - lots of expression of placeGluten and sulfite-freeWine importing trends - people drinking less, but better (Gen Z - less alcohol, and non-alc drinks, believes they will look at wine more as they age; value premium products that are authentic, smaller, good stewards of land)

After falling in love with wine through a year abroad in Burgundy in high school, Nick Ramkowsky, Owner of Vine Connections, has built a premium national importer of South American wines and sake. Nick discusses the types of wine importers in the US, how he thinks about building a brand portfolio, and the keys to success as an importer in part 1 of this 2-part series.Detailed Show Notes: Vine ConnectionsA national import and marketing company based in CA and has a retail licenseFocus on regions with winemaking history but not globally recognizedStarted as a broker and distributor (when Nick was 25)Worked with Billington Imports and met Laura Catena, went to Argentina, and fell in love with winesEstablished 1st premium portfolio of Argentine wines (1999-2000) - least expensive wine was $24 retail2002 - imported sake2013 - 1st premium Chilean wine portfolioHas wholesalers in all 50 states, including RNDC (#2 in the US), Breakthru (#3), and other smaller ones30 people today, from 2 originallySplit company in 2 - Kome Collective (Japanese), GeoVino (wines)Types of wine importersAll importers are also distributors in their stateSales Geography - can be state, regional, or national; Vine Connections is national for control over brands all the way through, exclusive for all 50 states, contracts w/ producers outline the responsibilities of importer and producerPortfolio Focus - world or specialized; Vine Connections is specialized in S America and sakeRole of importerBring wines in, warehouse, sell to distributors, & work with sales teams to sell to various channels (on-premise, off-premise, chains)Work with press, do consumer events, lots of training and educationSourcing winesLooks at people first, then property, and consistency in product and pricingNew wines don’t cannibalize the current portfolioComplementary driven by a sense of place and identity, even if the same region, varietal, price pointLooking at expanding to more regions to take advantage of the distribution networkOriginally specialized to have more of an identity as an importerOptimal book size - has ~120 SKUs in portfolio vs. ~900 at some importers and ~10,000 for RNDC as a distributor; optimal size varies by business model (e.g., focused on chains vs. independent stores/restaurants)More in not better - high cost to inventory and more challenging to prioritizePricing winesIn general, SRP is fixed, but each state is different (based on freight & tax differences, distributor margins (larger tend to work on lower margins), and retailer margins (some take less margin)Selling winesUsed to self-distribute in CA, now uses wholesalers (couldn’t service all the accounts, wanted to focus on national sales)Distributor salespeople don’t have time to focus on everythingImporter needs to generate interest in brandsKey elements for successFind good partners - share the same philosophy (quality, value, consistency), support each otherVine Connections doesn’t add new wineries often (only one new Chilean winery); only one winery left in 20+ years$1M revenue/employee benchmark for successVine Connections differentiation - good communications, both in transfer and transparency (e.g., sales by state), consider Vine Connections an extension of the winery

To give their customers the ability to trade up and a broader selection than what’s inside their 1,900+ grocery stores, Albertsons Companies have launched Vine & Cellar. Curtis Mann, MW, Group VP of Alcohol, discusses the greater selection, wine description and storytelling, and flexibility Albertsons has with Vine & Cellar to complement their in-store offerings. Detailed Show Notes: Curtis’ backgroundWorked at IRI / Circana (database of retail scan data)Worked in retail wine stores and restaurantsWas head of beverages at Raley’s (grocery) before AlbertsonsAlbertsons Companies1,900 stores that sell wineA lot of value wine, some specialty stores (e.g., Pavilions, Hagens) sell fine wineWest Coast - more domestic (~40% import, 60% domestic), East Coast - more importsVine & Cellar (“V&C”) online wine storeWine only now, no beer & spirits yetCA only now will expand to others (e.g., WA, IL)Extension on top of the grocery store websiteHas a larger selection of wines (2,300 items vs. average 800-1,000 at typical stores, up to 1,500 at some stores) - e.g., Super 2nd Bordeaux, allocated CA Pinot NoirWines are only available to ship via UPS (vs. in-store pickup or delivery)Can use the same checkout process for groceries and V&CBenefits for consumers of V&CCurated wine selections that are representative of their regionsBuy groceries and V&C wines and checkout togetherMore flexibility - can do wine dinners, in-store tastings, wine clubsGoals of V&CLet customers continue to explore and trade up on wines and not trade out of AlbertsonsDon’t cannibalize in-store, but more add-on, incremental purchasesCapture a portion of the wine DTC marketOnline vs. in-store buyingMore imported wines onlineBroader selections vs more volume of the same wines in-storeAvg bottle price is $10 higher on V&C than highest in-store~½ V&C customers buying iconic wines (e.g., Silver Oak), ~½ exploring (e.g., Burgundies in the $50-100 range)V&C customer is both existing Albertsons and some new customersYou can put a lot more details/descriptors of wines onlineOnline buys in 6 or 12 packs to economize on shippingMarketing V&CQR codes inside storesVinecellar.comSome ads on the website, V&C wines come up during a search for wines if they are not offered in-storeEvents / PRNapa Safeway has V&C featured wines in-storeSome paid search, Wine-SearcherLoyalty programs - now Albertsons customers get promo codes for V&CWine trends - less high-end wines, people focused on value / high QPR

2023 wrap-up for the wine businessTopics we covered in 2023Sustainability (8-part series that had Drew Bledsoe to CEO of Silver Oak David Duncan and across the world from the US to Spain to Bordeaux)State of the Wine Collector (LA, Dallas)Leveraging non-gov’t organizations (VDP, Grand Pagos) to promote wineRevenge travel Post-Covid move back to in-person / offices -> delivery of wine -> reduced visitors to wine country and people buying wine to stock and drink at homeAmericans Took Record-Setting Vacations In Summer Of ‘Revenge Travel’ - 32.8% of households went on vacation (a record since data kept in 2015)Online retailer issues - Underground Cellar (April 2023), SommSelect (July 2022), Winc (Nov 2022, 1 year after going public) all went bankrupt, others struggling back to 2019 or even lower levelsMore missing bottles w/ Sherry Lehman (~Mar - Aug 2023), Chelsea wine storageInflation / economic slowdown globally and impact on wine marketBleak outlook for 2024 as fine wine buyers narrow their focus - Liv-Ex indexes down double digits year to date; “flight to quality” - Bordeaux benefiting, Burgundy, Champagne downInflation is used as the “reason” many wineries increase wine pricesBBC article on wine pricing increasing - glass, labor, fruit - all getting more expensive and wineries increasing price; and burgundy/napa/champagne got very expensive, consumers starting to pull backMany napa wines taking prices up to $300+ (Memento Mori - $225 -> $300)Chinese consumption is as low as 1996 levels, - the peak of 19.6M HL in 2017 to 8.8M HL in 2022 (#8 globally) vs. US in the top slot at 34M HLGlobal health/wellness; Millenial/Gen Z slowing down alcohol consumptionWHO says no alcohol is good for you (released a statement Jan 2023)Gen Z drink 20% less than Mill, who drink less than prior generations - college-age abstainers went from 20% -> 28% in the last 20 years (to 2020) Better non-alc and low-alc alternatives (kombucha, pot, mushrooms, better no/lo options for alcohol)Is wine part of the good life? Wine, particularly fine wine, is used differently than beer & spirits; it is also better from a health perspective The Wine Access interview re-emphasized - the experiences with wineThe Italian lifestyle / holy trinity of the good life - cheese, wine, & bread

As the podcast space matures, it becomes a more meaningful channel to market wines to consumers and create new experiences.  3rd time guest Amanda McCrossin, Host of the Wine Access Unfiltered Podcast, and AJ Resnick, CMO of Wine Access, explain their rationale and experiences in launching and building the podcast and associated wine club.  From celebrities crying on the show to creating a 360 experience with their wine club and podcast audio and video, the Unfiltered Podcast continues to build traction, make wine more accessible, and build Wine Access into a loved wine brand. Detailed Show Notes: Wine Access backgroundLaunched in the late ’90s, it hosted wine retail websites and described wines2004 - offered wines on their platformCurate wines (team includes an MS), tell the story behind every wine, excellent customer service, and technology (powers wine clubs like Michelin Guide, Sunset, Decanter, and Williams Sonoma)Goal - to be a loved wine brandWine Access Unfiltered podcastLaunched in 2020A wine podcast w/ conversations around wine w/ wine, but not about wineReleased every other week, 45 min - 1 hour show lengthThey have done podcast ad buys and have seen successFormat - Season 1 - talk about wine stories, mostly with celebritiesSeason 2 - off more value add, more thematic (e.g., wine regions), added a wine club to drink the wines w/ the show (full 360 experience)Has IG (>10,000 followers) and YouTube (>300 subscribers) channelsListener baseThey assumed it would be the same as Wine Access customersThey found it to skew younger and less wine-savvy, but very curiousAnother way to connect with membersTraction>100,000 cumulative downloadsPast episode performance increases with new listenersHolds people’s attention for an extended period of timeMost podcasts fizzle out after five episodesGetting celebrities on the show“Do you want to drink wine with us?” worked during the pandemicThey did a lot of cold calling, worked with a few producersMore prominent celebrities didn’t always have the best performanceBert Kreischer’s episode was very successful; he cried on the show and then mentioned it and FaceTimed Amanda while on 2 Bears, 1 Cave podcastWine ClubFour wines for four episodes, sent every other month, curated by Amanda10% off all Wine Access purchasesIncludes shipping, can add wines w/ free shipping to shipmentSome wines exclusive to the wine clubQ3 2023 - Unfiltered Wine Club had more new members than any other club that Wine Access runsROIThe wine club helps cover the costThe goal is more brand awarenessRetention through connecting w/ members in a different wayContent creation (audio, video) that can be reusedPodcastingSpotify is bringing new energy to the space with a better listening experience (went from 15% -> 30% of Unfiltered listeners)YouTube has a podcast sectionRepurpose clips for social media is a best practice