Beverage Bulletin March 2010

California Beverage Retailers Association

P.O. Box 56686

Sherman Oaks, CA 91413

(818) 788-8120

www.cbraliquor.org

 

March 1, 2010

 

2nd Biggest Wine Grape Crop in History – A Buyer's Market

A report issued by the California Department of Food and Agriculture says the wine grape crop for 2009 was second in size only to the 2005 crop. This means wines will be more available and prices should be lower. The crush was 3.7 million tons; up 20% from 2008. All major varietals showed increases. Chardonnay crush was 728,000 tons, up 28%. Pinot Grigio showed the biggest increase at 145,330 tons, up 61%. The huge crop is expected to put downward pice pressure on premium wines and imports which are already having sales problems and need to move inventory from overflowing warehouses. It's a good time to wait it out and look for good values. This is definitely a buyer's market!

 

Americans paying off credit cards and other saving facts

Just got some interesting economic factoids from the website BillShrink.com. Are your customers part of the savings trend?

  • 46% of credit card holders paid their bill in full each month in Feb. 2009

  • 59% of credit card holders paid their bill in full each month in Feb. 2010

  • The average American family had $2,000 in unexpected expenses last year

  • Americans have reduced their debt by $101.2 billion in the past 14 months ($1,874 per household)

  • We are currently saving at record rates, setting a 15-year high (Check out BillShrink’s super cool graphic about American’s personal savings and debt, which goes back to 1960).

  • We still over pay for lots of stuff, including ATM fees, credit card late fees, and dealership auto maintenance (though I’m seeing coupons from dealers these days)

To get this data BillShrink surveyed 154,000 users on its site from February 2009-January 2010. The pay off rate has been steadily increasing each month.

Key Consumer Trends to Watch in 2010

  1. Consumers will continue to hone their do-it-yourself skills to cope with the economy. These include home cooking and meal planning, and home improvements. More meals at home means more wine and other alcohol sseved at home and less in restaurants.

  2. Consumers will continuosly re-evaluate their shopping habits to save money and take advantage of the best deals. They will buy premium brands, but only if they are convinced of the value.

  3. Consumers will increasingly hold manufacturers accountable for product quality and garantees. The internet takes this to a new level. An unhappy customer used to tell 10 friends. Now people go online to find out about products and an unhappy customer can tell thousands.

  4. People have scrimped and stayed at home for 2 years. Look for those who can trying to get out.

  5. The media revolution will continue. Social networking, interactive sites, and email will be used by millions more. News now travels worldwide in minutes. People challenge authority as grass roots communication becomes part of their daily lives. Newspapers, magazines, and other old media will continue to be under severe economic and reader pressure.

  6. Ethics are becoming more important. The new media allow people to question government, politicians, manufacturers, insurance companies, and retailers as never before. Only the most ethical will survive.

  7. Consumers are looking for stability and preparedness in their spending. Purchases will be in moderation and binge spending is a thing of the past.

These trends were identified and reported by Mintel, a marketing research firm. The full report can be read at www.mintel.com

 

Kraft Foods will be selling its pizza business to Nestle. The product line has had a virtual monopoly on the frozen pizza category. Brands include DiGiorno, Tombstone, Jack's, Freschetta, California Pizza Kitchen, and others.

 

Foster's Group (Australia) Had previously announced that the companies wine and beer divisions would be separated. After the first half net declined 14% Ian Johnston announced “all options aqre open.”

Annheuser Busch Inbev is trying to reduce costs by various methods including laying off employees. The company looks to furlow 800 workers in Western Europe. 263 of those in its home ground of Belgium alone. Since its 2008 U.S. merger the company has laid off 1500 and plans to lay off 350 more this year. Other cuts will come by shutting down underperforming breweries and its recent sale of 824 restaurant oulets in Belgium. All these cuts have met with worker strikes and sit-ins at some of the affected plants. Workers objecting to the cuts point out that even though sales are down, the company still had a volume of $274 billion and profits of $3 billion in the first 9 months of 2009.

 

Tasting Notes

Wines from 22 Burgundy wineries, shippers, and negociants were featured at tastings in San Francisco and Beverly Hills on February 10th and 12th. Most of the wines were overpriced considering today's consumer resistance to wine prices, the glut of past vintages crowding shipper's warehouses, and the size of last year's crop. Yet we were still able to find a few good values. Cave de Lugny, represented by Tracy Napp of Pasternak Imports had white burgundies that are value wines. Macon Villages 2008 and Les Charmes 2008 were both clean, flavorful, and will pair well with food. The Les Charmes has earthy grassy undertones and sophistication. At retails in the $13 to $16 range they should sell well. Contact Tracy Napp at www.pasternakwine.com or 800-946-3110.

 

4 Ways to increase Bar & Restaurant Wine Sales

In this economy it is important for restaurants to keep pumping beverage sales. In fact, it may be the only way to survive. Research firm Technomics predicts an overall decline in on-sale consumption of 2.5%. Their prediction are for the biggest declines in alcoholic beverage sales to fall in fine dining(down 10.4%), casual dining(down 6.8%), and hotels(down 6.1%). Smart operators will take steps now to beat the trend. Here are four ways to keep those extra sales and profits up.

  1. Keep your beverage program interesting. Promote Craft Beers by the bottle or on tap. Keep changing the offering to keep the adventurous trying new brews. Run specials like $1.99 during happy hour or on your slow day of the week, or every Monday. You make money on the sale and customers that come for the drink special stay for the food.

  2. Search out values the customers will appreciate. They are not buying familiar brands that they know sell for half the price in supermarkets and liquor stores. Pick out lesser known labels that are sound wines at lower costs that they will buy so you can get your traditional profit.

  3. Try the value priced wines listed in our tasting notes. We are continually tasting wines of all types, looking for hidden values and better pricing. Our recommendations are based on the quality and price of the wine. We don't accept anything for doing this. These wines should provide you opportunities to make extra profits, or give your customers exceptional values, or both.

  4. Reduce the size and price per glass of wine. Instead of pouring a 6 ounce glass and getting 4 glasses per bottle pour a 5 ounce glass and get 5 glasses per bottle. By doing this you can reduce the price from $7 to $6 and keep the sales and profits rolling.

 

Congratulations to Dick Williams recently retired after more than 30 years as Wine and Liquor buyer at Gelsons Markets.

 

Coming up:

March 9 New Zealand Wine Tasting. West Hollywood. CBRA members can attend at no charge. Contact the association office.

March 11-14 Natural Foods Expo Anaheim. CBRA members can attend at no charge. Contact the association office.

March 14 Daylight Saving Time Begins. At 2 AM set your clocks ahead to 3 AM.

March 14 Family Winemakers Tasting. San Diego. CBRA members can attend at no charge. Contact the association office.

March 15 Howell Mountain Tasting Los Angeles. CBRA members can attend at no charge. Contact the association office.

March 16 Family Winemakers Tasting. Pasadena. CBRA members can attend at no charge. Contact the association office.

March 22 Napa Valley Vintners Tasting Westwood Village. CBRA members can attend at no charge. Contact the association office.

March 23 New Zealand Wine Tasting. San Francisco. CBRA members can attend at no charge. Contact the association office.

March 24 Napa Valley Vintners Tasting Orange County. CBRA members can attend at no charge. Contact the association office.

March 25 Napa Valley Vintners Tasting San Diego. CBRA members can attend at no charge. Contact the association office.

March 27-28 Rhone Rangers Tasting San Francisco. CBRA members can attend at no charge. Contact the association office.

 

Merchandising opportunities for March.

March 17 St. Patrick's Day. What sells? Irish Whiskey, Irish Whiskey in Christmas gift packs, Irish Beers like Harp and Guiness, Irish Cheeses, Irish Biscuits and Cookies, and anything that is green! Leftover green candy canes from Christmas can be sold as “Leprechaun Canes.”

 

March 30 through April 6 is Passover. Plan on selling Kosher Wines and other Passover products

to your Jewish customers. But they are not the only ones to buy. Asian customers like the sweet Passover wines. These displays should go up at least 3 weeks ahead of the holiday. Customers will stock up ahead.

 

April 4 is Easter Sunday. Wines that pair with food sell well for this holiday. Whites and Rose's sell in a greater proprtion than for other holidays. Displays should go up at least 3 weeks ahead.

 

April 5 Christermon Foundation Golf tournament. This tournament raises money for college scholarships for the children of industry members. To attend register at http://www.christermon.com/golf/

 

Brands and Comments

 

The CBRA Newsletter has not accepted any payment from any of the brands mentioned in this edition. The editor, Ron Ziff, welcomes comments at ron@cbraliquor.org

 

CBRA Membership Remains Open

Now, more than ever, access to your industry is important. The CBRA is California's only statewide association of licensed retailers, and our membership continues to be open for the first time in 20 years.

 

At CBRA we deal with licenses and regulations that affect the beverage business on a daily basis. That's why CBRA offers practical solutions, unique products, services, information, and timely advice for both large and small beverage businesses. With reasonable fees, superior service, and associates that are easy to reach, CBRA helps you to run your business better and easier.

California Beverage Retailers Association – We know how to get it done.