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Economy Aside, Wine and Beer Sales Still Relatively Good

Beer and Wine Feature The Shelby Report

by Katie B. Davis/staff writer

The U.S. surpassed France as the world’s largest wine-consuming nation in 2010, with wine shipments to the U.S. from California, other states and foreign producers growing 2 percent from the previous year to nearly 330 million cases, a record high for the ­industry, according to the Wine Institute. The estimated retail value of these sales was $30 ­billion, up 4 percent from 2009.

“U.S. wine market conditions remain highly competitive, but we are optimistic that this growth trend will continue. Americans are increasingly ­interested in a lifestyle with wine and food, demonstrated by the presence of wineries in all 50 states and 17 con­secutive years of growth in U.S. wine consumption,” said Robert P. “Bobby” Koch, president and CEO of the Wine Institute, in a press release.

As of 2010—based upon the Census Bureau ­estimated resident population—the total wine ­consumption per resident annually was 2.54 ­gallons, up from 2.50 gallons in 2009, 2.33 ­gallons five years ago and 2.01 gallons in 2000.

With U.S. consumption of wine increasing annually, competition doing the same—there are 7,000 wineries in the United States alone and 70,000 worldwide—and money tight, differentiation is the name of the wine game.

The traditional method of marketing, according to Brandon Westling, who ­authored several white papers for wine sales and marketing consultants, Tincknell & Tincknell ­including Wine Marketing 101, “focuses on products and services.

“People are financially struggling, yet sales of wine are up because, for lack of a better way to say things, people are looking for an escape and a way to feel normal and a treat. That said, differentiation is key because there are so many options, cheap options, and for the wine industry, possible differentiators that give a wine a unique position are a feature of the winery, a unique feature of the winery’s geography, a unique application as in, ‘this wine is best consumed with spaghetti,’ or something like that.

“Also, some of the wines that are successful are marketed to a specific segment or ­consumer like generation X, baby boomers, and ­contend themselves a category leader like saying they’re a zinfandel specialist or environmentalist,” Westling added.

There is a great segment of the population, however, that doesn’t care about catchy phrases or ­colorful labels: they’re interested in taste and with no sommeliers lurking around corners at the local grocery store, those people often waste dollars that have become even more valuable in today’s ­economy.

“No doubt point of sale is the key for a very fragmented category,” Westling told The Shelby Report. “However, wine is subject to numerous ­unwieldy ­regulations that vary widely from state to state. Because of this, it is very difficult to ­create a nationwide (marketing) strategy around in-store. For ­example, many states do not allow coupons on any alcohol product and minimum prices and point-of-sale materials are strictly regulated.

“With the economy being what it is and with the choices seeming limitless, wine buyers and consumers need help and guidance in making what, for them, is the right selection. The absence of a so-called wine expert in grocery channels creates huge void which is why experiential triggers generated by packaging/labels design, is a good place to start and will help. However, it’s unfortunate that the grocery shopper—and that’s where a lot of wine is being sold these days—is still left to fend for themselves.”

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