The Future of the Wine Industry

Every September, I tread off to Napa for the annual Wine Industry Financial Symposium. Now in its 17th year, this conference is supposed tWine Industry Financial Symposiumo give us the latest and greatest in financial information, so we can run our businesses better and navigate the choppy waters of our times.  I'm not sure it achieves all that, but it does provide a snapshot of trends, challenges and opportunities. Of particular interest, are the results of an industry survey that the University of California at Davis puts out.

I remember years ago when neo-Prohibitionists were considered our primary threat. Everyone was a buzz about how to protect our beloved industry. We came away well versed and armed with talking points on how to combat the anti-alcohol movement. Then there was the year that White Zinfandel was proclaimed the next best thing. (Thankfully, this one passed us right by!) After that it was Chardonnay. This was followed by Merlot. Then, one year we learned about Generation X. I was a Generation Xer myself, and I began to spend way too much time trying to analyze the demographics of my social circle.  Of course that was BK (before kids) and The Husband and I had a lot more time to sit around and ponder this stuff while drinking a good bottle of Zinfandel!

This year, the over-riding messages were consolidation (both at the distributor and winery level), Internet sales, and the potential of the Millennial generation to be the largest market for fine wine in the history of America. Every year, 4 million people turn 60, and another 4 million will turn 21. So the market is growing. And unlike my parent's generation, or even my own, these young people are enthusiastic about wine and not afraid to experiment.

The symposium has changed a great deal over the years. It used to be 75% of attendees were winery owners with just a small group of bankers, venture capitalists, and financiers. Despite the economy, I was struck by the sheer number of “guys in suits” representing the financial industry in one form or another. Bankers, private equity firms, analysts, insurance agents…all there making it clear that money is available and brands are desirable for acquisition, growth and consolidation. There was an entire panel devoted to this. And while we all hesitantly speculated about the impact of the situation on Wall Street, we agreed with cautious optimism that when times are tough, people still drink. And, wine is a relatively affordable luxury.

Probably the most profound realization was when I looked around the room. To my left sat Margaret Duckhorn (Duckhorn Vineyards). To my right was Warren Winiarski (Stags Leap), both pioneers of iconic brands who've been acquired recently. I realized what a dinosaur I'm becoming…an endangered species practically, as few of the people I grew up with are still around. Even keynote speaker Michael Mondavi, who spoke passionately about the importance of authenticity and family values in branding today, was a harsh reminder of the rapidly changing environment in which we do business.

I came away with a new mantra. AUTHENTICITY. The fact that we've been that way for over 36 years, and now it's considered trendy is somewhat ironic.

| | Comments (4)


JohnLopresti Author Profile Page said:
September 27, 2008 6:40 PM

I think you are right about the theme's being authenticity, plus improvement of the original vision, which was pretty good from the time Dave deployed Wilma with a shovel to prepare the first groundbreaking for the crushpad in then sleepy, old-fashioned Dry Creek Valley.

What occurred to me as WaMu, Bear Stearns, Lehman Brothers, AIG, Merrill Lynch, and other stressed outfits churned Wall Street in recent months, was a lot of investment money is going to look to arrive at yet more secure repositories, something like an inversion of capital into agrarian businesses like farming. Admittedly wineries are an eccentric niche in the ag sector, but there might be a few more dollars out there available to the most sagaciously managed winegrape outfits. I wonder how much control those investors would think commensurate with some infusion of their cash, or even whether the pricey northcoast is where they might look for land investment.

Mike McCracken Author Profile Page said:
September 28, 2008 9:27 AM

A Haiku for you:

Based on family values
Dry Creek Vineyard Wine

Jeff Hogg said:
September 29, 2008 12:58 PM

Authenticity, like 'classic', never goes out of style.

Kim (aka Wilma) Author Profile Page said:
September 30, 2008 10:17 PM

Great stuff! We're in the process of coming up with a new tagline or signature for the winery and your comments are very helpful.

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About this Entry

This page contains a single entry by Kim published on September 27, 2008 9:39 AM.

Wine for a Cause was the previous entry in this blog.

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