Tuesday’s Wine Market Council presentation at New York’s Museum of Modern Art took place early in the morning following a night in which most of us got very little sleep. The WMC, working with The Nielsen Company, collects a vast amount of dry-as-dust data, from a multitude of sources, and then looks for patterns that make sense of all these shifting demographic and behavioral trends. The average person would fall asleep within three minutes of the Powerpoint show (and I saw several attendees who did), but for those of us hardcore industry geeks, it’s absolutely fascinating.

The WMC found that people who shop at supermarkets and superstores buy an average of $41 per visit (my number are approximate, as there was no complete handout of the slideshow, so I’m going by memory). But if they add a bottle of wine to the cart, the average purchase amount rises to about $74. This is why every store in the country, from mom-and-pop markets to Costco, wants to sell wine. However, the average price of that bottle of wine is $14, which leaves the extra $19 unaccounted for. I wonder what it goes to? The trimmings for a fancy home-cooked dinner? Flowers? Candles? Higher quality food?

The WMC people (and by the way, Wine Enthusiast helps underwrite the company) also pointed out that, while most of today’s marketing and PR energy seems geared toward Millennials, the fastest growing segment of the population actually continues to be Baby Boomers and seniors. But who is marketing to seniors, the man from Nielsen, Danny Brager, asked. Good question. Companies are marketing Depends, cholesterol meds and Medicare supplementals to seniors, but you never see ad campaigns for wine directed at them. And yet the white-haired crowd still drinks a lot of wine. Seniors would be a good target for wineries small and large (although I could envision a marketing or PR maven arguing, “But we don’t want to be perceived as a wine for old people”). Many wineries are pursuing Millennials and Xers with such gimmicks as animal labels, loud colors, vehicles, crazy designs and pun-like names, but seniors don’t care about that and may in fact be turned off by them. Seniors care about price and quality and they want to feel that the producer thought about them. So, wine marketing managers, don’t write off senior citizens.

This relates to the survery’s most fascinating finding. According to WMC and Nielsen:

WINE       BEER

I like well-known brands:                              1             34

I like to explore new brands:                       42              5

In other words, beer drinkers stick with their tried-and-true favorites (Bud Lite, Coors, whatever) and rarely venture outside their comfort zone. Wine drinkers by contrast are 8 times more likely to be adventurous and try something new.

Why? The WMC guys didn’t know, but we can hazard some guesses. It’s because:

1. wine is inherently more interesting than beer.
2. wine changes with each vintage and people know that whereas beer always tastes the same.
3. wine drinkers listen more to gatekeepers, such as critics, than do beer drinkers.
4. wine is so much better with food than beer.
5. there are so many more wine brands than beer brands to choose from.
6. most importantly, wine drinkers are more adventurous than beer drinkers because we’re risk takers, curious, liberal, open to improving ourselves and our lives, smarter (but don’t think we know everything), and more hopeful than beer drinkers, who, for all their charms, are (let’s face it) happiest with a kegger and an ample supply of beer nuts.

Anyway, that’s what I think! It’s great to be back in (relatively) warm Northern California.

Corrections: Michael Mondavi did not attend the recent Wine Star Awards, as I reported. The correct name of the President and CEO of Southern Wine & Spirits is Harvey Chaplin.

The last time anyone proposed a big tax hike on alcoholic beverages, including wine, was back in the early 1990s. I dont recall all the details, but the industry widely regarded this as an attack by neoprohibitionists (a term that, I believe, Wine Intitute’s then-chairman, John DeLuca, coined), and DeLuca himself led the charge against the “sin tax” hike. He didn’t entirely succeed in eliminating it, but the eventual rise amounted to only a penny for a glass of wine.

I was against a tax on alcohol, especially on wine, at that time, as I believed wine to be a civilizing influence, and things that calm and relax adult humans ought not to be taxed. But here we are, some 17 years later, and once more a serious proposal is on the table to tax wine, beer and spirits. This time, it comes, not from neopros, but from California’s Republican Governor, Arnold Schwarzenegger, who according to what I’ve heard enjoys a little nip of something now and then. Here’s a link you a YouTube that seems to be Arnold in a Japanese drink commercial, and back in his weightlifting days he made no secret of his affection for beer and wine.

That ain’t no girlie-man Chardonnay

Anyway, this time around, I have to reluctantly support the Governor’s proposed tax hike on alcoholic beverages. The particulars, according to Meininger’s Wine Business International, are that the proposed tax increase will amount to about five cents for a glass of wine. If you assume 8 glasses of wine per bottle, that’s a rise of 40 cents per bottle, which doesn’t seem like all that much to me, if it will help bail California out from the enormous fiscal hole we’re in.

Republicans, who never saw a tax they liked, have reacted predictably. Here’s a snippet from former Republican presidential candidate Ron Paul’s website, which contains an official statement by the Sonoma County Republican Party, in which they censor the man they call, without affection, the Governator:

“Governor Arnold Schwarzenegger…has reached across the aisle and found his true niche as just another, run-of-the-mill tax and spend liberal.” The declaration of censorship also says that the proposed excise tax hike “would equate to a tax on wine grape growers of $217 a ton of grapes, more than the average cost per ton for the majority of wine grapes grown in California.” Actually, this isn’t true. According to the 2007 Grape Crush Report, published by the California Dept. of Food and Agriculture, the average price per ton of wine grapes, red and white, last year in California was $565. But, hey, what’s a little exaggeration when you’re making a political point?

Look, nobody wants to see taxes go up just for the hell of it. But anyone who hasn’t been living in a cave knows that California is broke, with all that implies for roads, schools, cops, the environment, fighting fires, hospitals and the rest of the infrastructure and services upon which we depend every day. In my judgment, 40 cents per bottle of wine isn’t too much to pay for keeping our state alive.

Somebody missed out on a real bargain last week: A case of ‘45 Mouton-Rothschild they could have snagged for a mere $200,000.

“This vinous legend — in original wood from the cellars of Bordeaux negociant house Mahler-Besse, no less — failed to reach its reserve, or confidential minimum price, and didn’t sell,” in the words of this article by Elin McCoy, published in yesterday’s Bloomberg.com. (I suppose Hizzoner, Mayor Bloomberg, could have afforded the Mouton, but that wouldn’t look good at a time when he’s slashing New York’s work force and raising taxes.)

It wasn’t just the Mouton that failed to stir bidders’ hearts and minds at the Zachys’s auction, and it wasn’t just the Zachys’s auction that was hurting. At a recent Sotheby’s auction, four cases of DRC’s Romanée-Conti — not Echézeaux, not Romanée-St.-Vivant, but Romanée-Conti itself — failed to reach the minimum price of $750,000.

OMG, WTF is going on when no one can afford Romanée-Conti anymore? Forget General Motors and AIG, the financial crisis has hit Main Street! (Well, Park Avenue, anyway.) I remember when I used to write the Collecting Page for Wine Spectator, all the famous American collectors would pay whatever it took to get their hands on such stellar bottles. They didn’t care. Flush with money from whatever source, they scoured the auctions of the world, nabbing First Growths, Grand Crus and Têtes de Cuvées that gave them endless boasting rights. But that was then; this is now, and “The air is getting thinner for $2,000 bottles,” the Bloomberg article quotes auctioneer John Kapon  as saying.

I couldn’t help but think about this when I read the sad, but inevitable, news that COPIA is going to sell its beautiful building. (The news was reported in Wines & Vines.)

Something very serious and disconcerting is happening, and while no one quite knows what it is, the signs are everywhere. Or maybe we should call them the canaries in the coal mine. There’s irony, too, in the fact that the artist label on that ’45 Mouton reads Année de la Victoire. It celebrated the end of World War II, and was designed by Philippe Jullian, a gay artist who committed suicide in 1977. There was certainly something to celebrate in 1945. Not so now, or so it would seem — Barack Obama’s election notwithstanding.

I was happy to read that two new “industrial condominium projects” are going to make it easier for small, undercapitalized wineries in Napa Valley to produce their own wine in rented facilities located in industrial parks. The story, as reported in the North Bay Business Journal, explains that the projects will be located in southern Napa, near the airport, and in American Canyon. As the head of one of the development companies explained, “Many small wineries are unable to get winery permits in Napa County and are forced to go to custom-crush facilities. This allows them to go to their own facility and have product control and tasting rooms.”

I’ve known a lot of winemakers who made their wine in industrial parks or similar facilities. Kent Rosenblum started in an ex-shipbuilding hangar in Alameda and he didn’t do too badly. Adam and Dianna Lee are still in their little facility in Santa Rosa, where they make Siduri and Novy Family wines. Rolando Herrera, who like the Lees is in my last book, New Classic Winemakers of California, makes his Mi Sueno in an industrial park in Napa. My friend Dan Morgan Lee makes his Morgan wines in a park in Salinas. And then there’s the famous “wine ghetto” in an old industrial park in Lompoc, where the likes of Rick Longoria. Kathy Joseph (Fiddlehead) and, until recently, Brewer-Clifton crafted their wines.

I used to think a winemaker needed a fancy winery building to make great wine, but I’ve learned that’s nonsense. There are gorgeous wineries that produce plonk, and then there are winemakers who report to work at industrial parks that might just as easily house computer chip companies or aluminum siding manufacturers. These facilities are not glamorous, but they’re efficient and they get the job done. All you really need to make world-class wine are great grapes, a talented winemaking team, and some pretty basic equipment. Doesn’t matter where you do it.

Hats off the Costo

Article in an online journal, The Wine & Spirits Daily, points out how Costco’s wine sales are expected to hit $1.15 billion this year, making it one of the nation’s leading wine retailers, if in fact it’s not already the biggest. And they don’t sell the cheap stuff. Most stores no longer carry boxed wines and offer only limited choices in jugs. I like to think that Wine Enthusiast is at least partly responsible for Costco’s success.  A few years ago, Costco added Wine Enthusiast to the only other two critical publications it uses for shelf talkers, Wine Spectator and Robert Parker’s Wine Advocate.

Wine Intelligence, a London-based wine industry consulting and market research firm, is reporting that American wine is doing just fine, and that “there is still huge potential for building sales, particularly among less regular wine drinkers.”

The report finds that “Americans are embracing wine as never before as a younger generation of health-conscious and cosmopolitan drinkers discover the pleasures of a glass or two with a meal.” But “wine is still not a mainstream product in most parts of the US,” said Graham Holter, an associate publisher at Wine Intelligence.

There are about 73 million regular wine drinkers in the U.S., but 85 million adult Americans don’t drink alcohol of any kind. Among wine drinkers, 40 percent account for 80 percent of wine’s market value.

The report divided wine drinkers into 5 unique groups: Generation Treaters (wine is an integral part of their lives); Premium Brand Suburbans (highly involved with wine, but don’t see themselves as experts); Senior Sippers (the oldest segment, a group that enjoys wine with food); Kitchen Casuals (with a low interest in wine, they’re not opposed to screwtops) and Un-Engageds (may drink, but wine is not a part of their lifestyle).

The report suggests that wine marketers concentrate their efforts to raise per capita consumption among less regular wine consumers, such as Un-Engageds and Kitchen Casuals.