Howdy. I’m delighted to introduce myself as Palate Press’ first columnist.

I’ve been writing about wine for more than a decade, as a freelancer and as a staff writer for a couple of publications, but what I haven’t written about before today is that I also spent a little over a year working in the wine industry, as a vice-president for a startup that bought unsold wine cheaply and sold it to wine shops in the Northeast.

I learned something important about myself: I like buying, but hate selling, so there’s only so much use I’ll ever get out of my Certified Wine Professional sheepskin. If somebody didn’t like our wines, all I wanted to do was get out of the conversation.

I also learned many important things about the way the retail wine market operates, and they’re not going to make wine aficionados happy. But what the heck, the wine world’s not all vintage Krug and 30-year-old Auslese Riesling. So let’s kick off this monthly feature with Ten Things I Learned in the Wine Business.

No. 1: Old wines are more unattractive to wine shops than old people.

Wine buyers think they make the store look out of touch. It doesn’t matter if a 2005 red is still approaching its peak: most stores don’t want to buy it and can’t wait to get rid of it.

No. 2: Publications like this love unusual varieties. Consumers do not.

This is the biggest disconnect between the wine media and the public. Writers, me included, generally want to find a great dry Furmint. Yet the great majority of consumers are happy with Cabernet Sauvignon, Chardonnay, and Merlot; there’s still room in most people’s hearts for Pinot Grigio, Pinot Noir, Sauvignon Blanc, Zinfandel, and (maybe) Syrah. But Pinot Blanc? Sylvaner? Forget selling by the pallet; a single case is a challenge.

No. 3: Most people don’t care about wine-food pairing.

It makes me laugh to see wines described as perfect with a certain dish, but only if you use this seasoning or that sauce. Hah! The average consumer’s going to drink that wine with whatever she’s having for dinner and not give it a second thought.

I once had a conversation with the wine buyer for San Francisco’s Dosa, which serves spicy south Indian food. Off-dry German Sekt sparkling wine is a great match, and Dosa carries some. But the buyer said his best selling wine is Cabernet Sauvignon. I can hardly think of a worse match, but patrons don’t care.

No. 4: Wine writers like to explore lesser-known regions. Consumers do not.

It’s cool for aficionados to find the best Petite Sirah from Livermore, or a great northern Greek white. But the average wine consumer can’t tell Saint-Estèphe from Saint-Joseph and would rather drink almost anything from Napa or Sonoma Counties.

No. 5: Wine writers hate Robert Parker for a reason—he’s influential and they’re not.

It’s chic to complain about Parker’s palate and whine about his negative influence.

The fact is, in his heyday, if Parker gave a wine a high enough score, it would sell, regardless of the price. It could be a Paso Robles Grenache for $175, but if Parker gave it 98 points, people would buy it. And if he gave 90 points to a wine that cost under $20, it would fly off store shelves.

Wine aficionados are celebrating Parker’s pulling back from rating California wines, but the industry as a whole is nervous, because whether or not Parker picked the right winners and losers, at least he drove sales and drove up prices. No other writer has that power.

No. 6: Nobody cares about gold medals.

Every winery I considered buying from told me about every wine I didn’t like, “But it got a gold medal from …” Every retailer and distributor has heard this story a thousand times more than I have. There might conceivably be consumers who are influenced by gold medals. But retailers and sommeliers are not. Which leads to my next point.

No. 7: Gatekeepers are king.

Retail wine buyers rule strip-mall fiefdoms. It’s good to be the king—wine purveyors show up on the schedule the king dictates, cool their heels as long as it takes to get an audience, pour samples, leave gifts. The best sales people remember the names of each buyer’s kids and which sports team he likes (almost all store wine buyers are men).

There are only a few super-popular wines that retailers feel obligated to carry, like Kendall-Jackson Vintners’ Reserve Chardonnay. Otherwise, they can exercise any whims they want. I walked into a small store in New York where all the wines had some sort of circular pattern on the label. The owner, after she finished a long phone call arranging concert tickets, told me circles contain a lot of powerful energy. If you live in her neighborhood, you’re going to drink a lot of energetic wines.

No. 8: Very little of the wine’s retail cost goes to the winery.

This is why wineries want you to buy through their tasting room or wine club. If you buy a $25 wine in a store, the winery gets at most about $10, and probably doesn’t make any profit. Distributors take about 30 percent and retailers take as much markup as they can get away with. And restaurants? If you haven’t heard of a winery that makes a $40 wine, assume they bought that wine for $5 a bottle—or most likely less.

No. 9: Winery economics are screwed up because many people don’t think about wine as a business.

Our business was supposed to succeed by finding wineries that needed cash and were willing to sell their wine below its cost of production. If the wine business were rational, these deals would be rare.

But they’re not rational, as evidenced by the growth of sites like Wine Spies and Lot 18. Seduced by the romance of the wine industry, newbies decide they’re going to make a 95-point Cabernet that will sell for $100 a bottle. Then they don’t get 95 points, and it turns out they didn’t have a plan B.

Realistically, wine in America is like food: we pay too little for it. It’s hard for long-time, hard-working family wineries to keep putting out good products and satisfy a bottom line while competing against both giant corporations with economies of scale and small-scale dreamers whose wines are eventually going to be heavily discounted.

The moral of this point is: find a local winery that’s not run by absentee owners, and buy their products. They probably need the money.

By Jeff Kubina [CC-BY-SA-2.0 (www.creativecommons.org/licenses/by-sa/2.0)], via Wikimedia CommonsNo. 10: While wine is a business, it is almost as cool as you think it is.

We didn’t talk about tasting a bouquet of strawberries or getting a flutter of nutty Edam cheese on the business side; we talked about prices by the pallet, shipping charges, delivery dates—the same stuff people selling laundry detergent talk about. But we had better business lunches, because nobody looks askance at ordering a bottle of good wine for the table; in fact, it’s often required. And if there’s product sampling in the laundry detergent business, I’m glad I don’t have to do it.


Wine writer W. Blake Gray is Chairman of the Electoral College of the Vintners Hall of Fame. Previously wine writer/editor for the San Francisco Chronicle, he has contributed articles on wine and sake to the Los Angeles Times, Food & Wine, Wine & Spirits, Wine Review Online, and a variety of other publications. He travels frequently to wine regions and enjoys coming home to San Francisco.

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  • http://www.cista.it/ cantinetta

    Nice post, very interesting!!

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  • http://irenesharonhodes.wordpress.com/ Irene Sharon Hodes

    Great piece. Excellent observations. I look forward to reading…

  • Lizzy

    Thank you for your post, it’s really very interesting. And, in some points, a little bit disheartening for us, wine writers… (p.2,3,4,5). For wineries, too (p.6,7,9).
    But we all agree with p.10!
    :-)

    Lizzy

  • http://www.keyconsult.com/corporategovernment/ Jennifer

    I really got an inside view of the wine business and how it works. I am an amateur and enjoy visiting vineyards, taking tours and learning more about how wine is made. Now I understand why vineyards make it so appealing to visit them and buy there – they certainly profit from it more than distributing to retailers. I also agree few people are interested in old wines or wines from remote places – a big change from a decade ago. Great post!

  • http://chezbonnefemme.com Wini Moranville

    Brilliant! And while I agree with everything you say, I might quibble about number 2 and number 4 (that consumers don’t care about lesser-known varietals and regions). I do wonder if there’s an exception: If you can tell people about great values with these lesser-known varietals and regions, they’re all ears. …. Aren’t they?

    • Wes

      There are niches for those wines. Some small CA wineries are even doing very well catering to those niches. But really, those obscure wines require hand selling. Some shops and restaurants do a great job at hand selling, but they are rare. On the plus side, introducing customers to unique intriguing value wines is a great way to build up a good base of loyal regular customers.

      • Sherry

        My favorite wine store has a fun – and effective – way around this…wine classes! If you taste a terrific Nero d’Avola in a Wines of Italy class, and the tasting notes clearly state “Available in our store for $10,” you’re going to be inclined to keep investigating that wine, regardless of whether you even knew it existed 24 hours before. I love finding new varietals, and I love turning my friends onto them. Classes are a cost-effective, social way of doing just that.

  • http://www.talleyvineyards.com dblock

    This is the most accurate and poignant piece I have read in a long time. Blake hits every point on the head and illustrates the new state if this industry. It’s a jungle of wine and no one who makes and sells quality wine seems likley to make a profit.

  • http://norcalwine.com Fred Swan

    Excellent column, Blake.

    The lack of profit for wineries in retail sales is an issue that will catch many consumers by surprise, but it’s dead on. Wineries consistently tell me that they just hope to break even with retail (and restaurant) sales. The wineries have to look at it as a marketing expense that will eventually drive direct to consumer sales.

    I think direct to consumer is also where the gold medals actually have some value. There and in “helping” an average consumer make a decision between two sub-$20 bottles of Cab or Chard on a store shelf when there are no posted scores for the wine.

    Fred

  • Chris

    This is great! I learned lessons 1-9 in the first 1+ year I was in the business…and almost quit. I got into the business because I liked wine and I figured if I wanted to keep liking it I would be better off getting another job and just spend my free time drinking it. Then I finally learned lesson # 10! It isn’t easy, but it is a gracious industry.

  • http://twitter.com/#!/sooperdoo Nick

    Great post!

    The wine biz has it’s joys and its uniqueness. Seeing ‘how the sausage gets made’ from a commercial perspective is just priceless. The common theme in a lot of what you said here of course, is that the vase majority of wine lovers may love wine, but that doesn’t make them highly-engaged with food pairings, off the beaten path varieties or locations, etc.

  • http://www.GardVintners.com Alison

    Thanks for this article, spreading it with hopes that consumers know we know what they’re thinking and hopes they’ll have a little insight into the industry as well!

  • Giuseppe

    I’ve read many of your posts on The Gray Market Report and while I enjoyed many of them, I have to say this is my favorite piece that I have read from you. Keep it up!

  • http://blog.wblakegray.com/ W. Blake Gray

    Thanks for the kind words, everyone! The good thing about all these mainstream points is this: the off-the-beaten-path wines we all love — and even the well-known ones that are higher in acidity — are cheaper. Personally I’m glad Robert Parker doesn’t understand Chianti Classico.

  • http://Steinfamilywines.com/donations Josh Stein

    Hey Blake,

    Good to hear your voice again; I was wondering you’d gone :)

    You are correct that, particularly on that side of the distribution baton toss, it’s about numbers, pure and simple, and I have said any number times to a client that “that’s not a wine business problem–it’s a business problem.”

    It’s not the new normal, though. This is how wine has been since Prohibition ended and people with money wanted a different way of living.

    There’s a reason that so many people want to get into the production side regardless of all the downsides, and your number ten sort of touches on it. In no other business that is tied so closely to the land is pure enjoyment part of the offering if done right and utter, utter bankruptcy if done wrong.

  • http://fatcork.com Bryan Maletis

    Love this post, Blake!

    Especially your reply about being happy RP doesn’t understand Chianti, we agree!

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  • Marina

    I totally agree with Giuseppe. I have read the Gray Market Report for years, but this is my favorite column by far. Your insights are so spot on and succinct. I have belabored many of these points myself over the years. My industry friend’s nod when we discuss these types of things and my non industry friends stare at me quizzically…unless the topic is #10 and then they’re jealous.

  • Ale

    What an awesome piece, it has it all … the pain of us selling wine on the street, dragging the bag in the rain or the snow, having to “serve” the retailers the way pharaohs where served, and how about having to pick up checks? Why can’t the pay their bills like everybody else? …. and it has the hard reality of an industry that is populated by snob sommeliers, who preach against anybody who makes more than 1,000 cs but are part of restaurant empires, corporate machines, with chefs that act as movie stars, with no passion left, and care very little about their patrons …. and it highlights in a few words the obsessive presumptuousness of certain B- wine writers who take their negativity everywhere, with everybody, and in everything they write, unless it’s all exactly as they want to see it, thinking they can actually move the needle … This article has a lot of truth, perfectly condesed in 10 points, that venting truth we would like to tell … without the courage to do it. Blake did it for us … and he is a hero. Thank you!

  • http://www.culinarywineandfoodmatching.com/ Randy Caparoso

    Congratulations, Blake! I especially love your observation: gatekeepers are king. Yes, indeedy: it’s been proven ad infinitum that a good, passionate retailer or restauranteur can sell any wine to anyone, given the wherewithal and circumstances (the latter of which is a 100% chance opportunity when you are actually engaged with a consumer or guest).

    But then, that’s why I have to take a little issue with two of your other observations: that consumers don’t love unusual stuff and don’t care about “new” regions. I can understand your perspective, especially in California-centric markets like LA and SF. But surely you must know about the zillions of places on the East Coast, and multiple pockets of the Midwest, where retailers and restaurateurs cheerfully sell what might be considered “alternatives” in California to perfectly average consumers — by the truckloads. In my own restaurants (over 30 across the country), *twenty* years ago, we were selling far, far more Pinot Noir and Pinot Gris (definitely considered “altenative” in those dark days) than the “C” words (marketers didn’t talk “ABC” for nuthin’). And if you put even a modest effort into it, it was easily something from one of those “new” wine countries you allude to. Given today’s internationalized market and incredibly competitive pricing of imports, it’s much more so like this in present times.

    Heck, these days I live in Lodi, where it is far easier to “sell” Albarino and Tempranillo than Cabernet Sauvignon and Chardonnay. Granted,that’s because Lodi’s rep for the latter two isn’t as great, but it goes to show: regular ol’, everyday consumers are far more open minded than what you would think, given the right circumstances.

    Yes, gatekeepers are kings. And you’re seeing it more and more: most of those who have made the break from merchandising with those silly Parker or Spectator scores have discovered just how easy it is to turn consumers on with their own choices — all it takes is a modicum of effort and independent thinking. But if there’s anything I’ve learned after over 35 years in the business (and remember that 35 years ago, White Zinfandel and Merlot were considered cutting-edge — we were in the Boone’s Farm, Blue Nun and Mateus age, after all): never, never underestimate the customers’ capacity to learn and appreciate good wine, whether well known or unknown.

    That’s the entire crux, in fact, of the “new” way of marketing and writing for Millenials: be cool with them, but for Pete’s sake don’t insult their intelligence or they’ll come back and bite you in the ass (having three grown kids in that generation, I know this for a fact). Fact is, it’s always been that way for consumers in general — it’s just that many people weren’t quite aware of that for a long time.

    • http://www.1winedude.com 1WineDude

      What Randy said!!! :)

  • Paul M

    Excellent post and apparently universal. Pretty much all points would apply to producing and selling wine in Canada. From a business perspective the wine business is a very poor model that is complicated and dysfunctional because of all the points outlined by Mr. Gray….well done.

  • Dosage dog

    Exactly right on every point. Especially for all of us who have spent years repping a winery to wine shops and retailers who don’t give a rip about your time or wine no matter how good it is. I’ve been there when Blue Nun, Mateaus and Lancers were the go to wines on the list and I find hope in that we have all moved on from there and hopefully the wine drinking public will do the same. There are many great wineries out there producing many great wines that aren’t Merlot, Cab Sauv and Chard and the best way
    to make this known is the tell a friend!

  • Ron Drinkhouse

    long retired wine shoop owner, small town in Ct., your column is a revelation. No hip nonsense. Good job.

  • http://vinoviola.blogspot.com/ Prateek Arora

    Crisp,informative and a joy to read.Great points about an average wine consumer’s psyche.Looking forward to reading more from you in the coming days!

  • http://happyhourmary.com Mary

    I’m going to wine school and this is great. After 6 hours today of the intricate nuances of Italian wines, this brings me right back down to earth! Excellent!

  • John Aylward, CSW

    It is a good read! You put a smile on my face as I relived the moments in your article, keep up the good work. Aaah, the glamorous life we lead…

  • http://lineshackwines.comm Bob Leighton

    Very to the point and in my always (well most always) humblle opinion right on the money!!!
    Please excuse the website, its been a little neglected, (economic/ personelle constraints)

  • http://lineshackwines.comm Bob Leighton

    Wha 1WineDude said !!!

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  • Erik

    Great piece. Spot on observations.

  • http://www.tgicimporters.com Andrea

    I found this post so fascinating–both as a consumer of wine and as an employer of a wine importing company. I shared your article with my friends. #6 is my absolute favorite! Thanks again for a brilliant post.

  • http://www.tairanniew.com Tai-Ran Niew

    Wonderful post! Succinct and pertinent. One of the problems of so much wine writing is that it often portrays a world the writer would rather have, then the world we actually live in. This is great. Thank you.

  • http://www.bobbycorputty.com Bobby

    Good info, thats the fact. In the real wine world, wine is like a ketchup brand, every single wine producer just want to be number 1 for their wine, wine seller just want their wine sold.

  • http://www.facebook.com/saugatuckgrainandgrape Jeff M

    I’ve been on the retail side of the wine biz for 20 years. Number 2 and number 3 couldn’t be any more accurate. Everything you say is absolutely tru in this post.

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  • http://www.champagnefluteau.com/ Jennifer Fluteau

    Ouch !
    What a well written,interesting, and insightful piece filled with truths we wine producers would perhaps rather not think about. My husband and I run a small, family owned champagne winery in the Aube district of Champagne. Yes Champagne is world renowned, but grower champagnes (especially if they are not “grand or premier cru”)definitely fit your point n°4. Sometimes I’d much rather be the “gatekeeper” in point n°7, but n°10 is one of the reasons we keep doing what we do…..
    PS – Blake, if you’re ever in the area, stop by !

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  • http://www.twitter.com/joesommelier joesommelier

    There’s a little bit of a disagreement among the members of a wine group I belong to on LinkedIn about your article. I for one agree with you. The following is my response to my fellow LinkedIn members:

    Sorry guys, but he is 100% right on all levels. The author is writing about the “average consumer”, not “fine wine” drinkers, or us.

    1. Old wines are more unattractive to wine shops than old people: This is 100% accurate for the vast majority of wine shops and liquor stores. We’re not talking about Wally’s or Morrell’s. We’re talking about BevMo and Costco. You know – where the average consumer shops for wine.

    2. Publications like this love unusual varieties. Consumers do not: Totally true. Just go into any liquor store and see how much single vineyard Carignan or Petit Verdot they carry… Hell, the only reason shiraz caught on is because of the marketing powerhouse that is W.J. Deutsch/Yellowtail. (Ironically, California syrah is still mostly ignored and misunderstood by the average consumer.)

    3. Most people don’t care about wine-food pairing: Food pairing? Consumers don’t care. They may act like they care when they are in a good restaurant with a sommelier focused on pairing, or in a tasting room because they don’t want to look like neanderthals, But when they go home or to their local haunt they’ll drink whatever is on the list that a) they recognize or b) fit’s in the budget. Anyone who thinks the average consumer cares about “red with meat” or “white with fish” or even Spatlese with curry is delusional.

    4. Wine writers like to explore lesser-known regions. Consumers do not: Yep. Just ask the wineries from the Languedoc or Umbria…

    5. Wine writers hate Robert Parker for a reason—he’s influential and they’re not: Duh. But; Parker doesn’t hold influence over the average consumer that buys wine based on vague familiarity or price. The following plays out on a daily basis in wine stores all over the country:

    Sales clerk; “Parker gave this zinfandel 91 points”. Consumer; “Who?” Sales clerk; “Robert Parker – he’s the world’s most influential wine critic”. Consumer; “Oh. Is it a white zinfandel?” Sales clerk; (Rolling his eyes) “No, it’s a single vineyard RED zinfandel from Paso Robles.” Consumer; “Where?” Sales clerk; “It’s an up and coming wine region south of… Consumer (interrupts). “I just want a decent red wine under $15 bucks. I usually drink Yellowtail so something similar to that.”

    6. Nobody cares about gold medals: A gold medal on a bottle in a sea of bottles without them might have some pull with the consumer, but I don’t believe they make enough of a sales impact to persuade (or dissuade for that matter) a retailer from carrying that wine.

    7. Gatekeepers are king: This is the only point I don’t 100% agree with. Depending on the state, the wholesaler is often king and largely dictates what retail stores carry. Sure, if the retailer does enough volume the wholesaler will accommodate them and source specialty wines for them. But by-in-large most retail stores carry what is listed in the wholesale book.

    8. Very little of the wine’s retail cost goes to the winery: I think we all know this to be true. This is why practically every winery has some sort of “exclusive” club/membership.

    9. Winery economics are screwed up because many people don’t think about wine as a business: Yep.

    10. While wine is a business, it is almost as cool as you think it is: Totally. What; you’d rather be a successful actuary than work in the wine biz? Please…

    We would all do well to step out of our little world of oenophilia and “fine wine” and recognize that the majority of wine consumers look at us like we’re crazy. To us wine is about terroir and experiences and romance and collecting, etc. It’s also a business. To the average consumer (to borrow the tag line from the Beef Council), “It’s What’s For Dinner”.

  • http://www.kellyflemingwines.com Kelly

    thank you for sharing your observations on the industry. Once you start looking closely at retail or restaurant core lists, you find too often all wine is from a few huge distributors. Buyers who spend the time and have a true interest in wines without being influenced by buy one get two free deals, offer customers a more interesting store or restaurant.
    I also appreciate you noticing the small family wineries. I’d like to see someone post a list of just how large or small every winery is, who runs it and who owns it. I’m afraid the family owned, operated list would be tiny.

    Thanks, Kelly

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  • http://www.localvinacular.com LocalVinacular

    Let’s not be so harsh on wine writers. Those of us who love wine and all its nuances and unique qualities want to invite others into the fold. The hope is that wine writing will somehow penetrate the consumer marketplace and raise awareness for what’s out there. But it’s difficult as we writers are relegated to wine blogs and other platforms were we basically . . . speak to ourselves. But you are right, WBG. Most consumers are really just happy with “red” and “white” wine. For them, that’s enough. So, how do we overcome this?

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  • http://www.Raidis.com.au Steven Raidis

    Great artical Blake. I think you have really hit the nail on the head. Keep up the good work.

  • http://byownbob.blogspot.com Bob

    Overall this is informative. I do not agree with you on this:

    No. 8: Very little of the wine’s retail cost goes to the winery.
    This is why wineries want you to buy through their tasting room or wine club. If you buy a $25 wine in a store, the winery gets at most about $10, and probably doesn’t make any profit. Distributors take about 30 percent and retailers take as much markup as they can get away with. And restaurants? If you haven’t heard of a winery that makes a $40 wine, assume they bought that wine for $5 a bottle—or most likely less.

    If you are talking about Yellowtail types, then it is somewhat sensible, but if you are talking Opus One, Lafite, and wines of that ilk, then I think you are not right.
    Most wineries I know and work with sell to a distributor at a 40% discount normally.
    What winery that you can establish proof of sells a $25 srp wine (and they are the suggester!) to a distributor for $10?
    I may be completely misinformed, but I doubt there are very many who do that and are still in business.

  • http://www.vinoenology.com Petar@VinoEnology

    Nice article!
    Cheers
    Petar@VinoEnology

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