Tough business climate will test North Coast wineries in 2019
Wineries will have to grapple with flat sales and a consolidated marketplace making their business much more difficult as they head into 2019, industry leaders and analysts said Thursday.
Recent events foreshadowed those expectations, particularly the North Coast grape harvest that wrapped up a month ago. There was an excess crop, many buyers were reluctant to buy the surplus grapes and more wine was forced into the bulk market. Wine sales for the past 52 weeks as of mid-July declined 0.1 percent in volume, according to Nielsen. The dollar volume of those sales advanced 1.7 percent.
“I’m sorry it sounds like gloom and doom. But it is like it is,” said Bryan Foster, national sales manager of strategic brands at Turrentine Brokerage in Novato, at the seventh annual North Coast Wine Industry Expo and Conference at Sonoma County Fairgrounds. “We have hit a plateau.”
Wineries are taking steps to try to adjust, which is especially difficult given consolidation among wholesalers and grocery stores. For example, the top four U.S. wholesalers control 67 percent of the market, Foster said. Ten grocery chains control 50 percent of the nationwide wine sales.
“The game is going to be stealing share,” said Dale Stratton, vice president of commercial insights at Constellation Brands Inc., an international wine, beers and spirits producer. The company owns wine labels Clos du Bois in Geyserville and Simi Winery in Healdsburg, among others.
Most wineries outside the multinational companies have to devote much of their business in selling direct to the consumer, many through their own wine club.
For example, at Kosta Browne Winery in Sebastopol, the focus has been to listen to more of the wishes of their customers, said Stephanie Peachey, vice president of direct-to-consumer marketing at the winery.
“We actually have an opportunity to grow by paying attention to consumer trends,” Peachey said. She said her customers “shop at Amazon and stay at Four Seasons.”
Kosta Browne, which this summer was acquired by private-equity backed Duckhorn Wine Co., recently opened its tasting room in The Barlow, a retail, food and artsy complex. That allowed customers to build a stronger relationship with its brand, which has been pioneer in the cult pinot noir wine sector.
“They wanted a way to engage with us more,” Peachey said of the tasting room in Sebastopol.
You can reach Staff Writer Bill Swindell at 707-521-5223 or firstname.lastname@example.org. On Twitter @BillSwindell