Sunday, January 26, 2020

Has the battle for Italian wine in high-traffic retail been lost?

Now that I’ve scaled down my activities in the wine trade, I spend more time shopping for groceries, including the occasional bottle of wine. But I’m finding something about buying Italian wine in high-traffic retail (groceries, convenience stores, drugstores) to be very discouraging, verging on the sinister. The battle Italian wine has waged, interpolating itself into the greater American culture in the last 50 years, has been lost. It’s disheartening. And it’s disgusting. Because it treats Americans in search of Italian wine in those outlets, as if they are a bunch of immature babies just looking for a sweet lollipop.

So, let’s dig in and take a look at this situation.

One of the things I analyzed in my career was the categories Italian wine was selling in America. And I saw that there were four major groups that made up the bulk of the sales. Not the drill-down into the artisanal selections that went into the fine wine shops that interested me. This was the view from 40,000 feet. Those four categories are:
  • Pinot Grigio
  • Chianti
  • Moscato
  • Prosecco
A white, a red, a sweet and a sparkling. Over time, rosé has insinuated itself into three of the categories, namely the Pinot Grigio, the Moscato and the Prosecco categories.

Sidebar: While this happened, a whole new category of Italian wine, dominated by one company, overtook the white Zinfandel, the German Riesling, the Lambrusco and the overall sweet wine category. More about that later in the piece.

There are several factors which caused this concentration of limited variety in the high-traffic retail. Consolidation played a part. Acquisition also figured in. And the strategy by major players to take short-term gains over playing the long game, had an effect on this state of affairs.

Pinot Grigio – this category triggered a gold rush mentality by players, large and small. Producers in the Veneto and Tuscany were dreaming up their own labels and using the power of their brand to inculcate distributors and retailers into extending product lines beyond their traditionally held positions. A Chianti producer could now be a major force in the Pinot Grigio category. As well, large companies, who held sway over the store sets dreamt up their own labels out of the blue and insinuated them into the set, effortlessly. Of course, the pressure was on from the get-go, enticing and exhorting the distributors to get behind the push. Distributors, sensing the strength of these large forces, got in line, and did so all the way down the line to the front-line salespeople and shelf-stockers. This was a mandate and it was the beginning of the end of the small, artisanal producer, in favor of profit over particularity.

In reality these large forces were following a trailblazer, the wine that made the category popular in the first place, Santa Margherita. In time they chase some of the giants into their own backyard, Tuscany, with mixed results. It was dog-eat-dog, and it wasn’t pretty.

The reality in America was that it was simpler to just let the big companies have their way. Wine in high volume stores like supermarkets was seen as this confusing mess and jumble of products and the store managers wouldn’t (or didn’t have the budget) to pay a wine steward to “curate” the selection. It was all about turning the product. As with meat and produce, Q-tips and aspirin, two turns a year was not acceptable. Bonuses were based on turns, and the large suppliers knew exactly how to play to that. And to a large degree, that was the beginning of the dumb-it-down stage for Italian wines in the greater American retail landscape. I know, I was there, fighting for the little guys, for the better part of my career.

So, Pinot Grigio was the eruption that opened the chasm.

Chianti – While this wine had a greater history in the American market, going back to before World War II, it was really after the war that the category blossomed. GI’s bringing back their memories, Walt Disney making new ones and the cheap and cheerful allure of the fiasco. Mid-century modern meets kitsch.

Once they got a toehold into the market, then the Tuscan wine importers and producers started bringing in better wines. Along the way a couple of them became huge behemoths. With that came the marketing of the Italian lifestyle in America. The Mediterranean diet, the rise of the celebrity Italian chefs, and the explosion of Italian chain restaurants like Olive Garden and Maggiano’s.

Now you go into a supermarket and you’re lucky to find a Chianti. It’s usually in the “red blend” section, or perhaps the European row, next to the lone Beaujolais. It has lost its place and I submit, its soul, in the world of the high-traffic retail. Don’t try finding one in a drug store or a convenience store. But you’ll have no problem finding Italian pasta, olive oil or balsamic vinegar there.

What you will find will be sweet red wines from Italy. But we’re not going there yet.

Yes, the soul of Chianti is nowhere to be found in these stores and at best one might find a sad fiasco bottle (because it’s so kitschy and Instagrammable) and maybe one of the really well-known ones. But don’t hold your breath.

Moscato – Good bye Blue Nun, Moscato is now the leader. And one will find any number of Moscato wines from Italy and elsewhere. It’s not that Moscato sells, because it has this unique aura of terroir, in these stores. Though anyone who tastes a bonafide Moscato D’Asti knows there is something about that wine that can only be found in those specific wines – a sense of place and tradition. But in American business, tradition? Get-outta-here!

Moscato, I originally thought, would be a good gateway wine, a wine that folks would start at and work their way to drier wines. But the largest marketers had another idea. They just wanted to follow the lead of the spirits marketers, and get folks “hooked” on their product. Not go away, not upgrade, not diverge from the path. And that has worked. But who the hell thinks German Riesling is in any way the powerhouse of marketing strength that it once was? Or Lambrusco? Yeah, in their day, they were kings and queens and they ruled the land. But no longer. Moscato only needs some seltzer producer to make a cheaper sweet version of White Claw and they can take that market away from the Italians, eventually. Just like they did to Lambrusco with wine coolers, back when.

Prosecco – Cava paved the way, as did Moscato. Champagne made it possible, by the endless premiumization of their product. And folks who went to Venice were bathed in Prosecco at every turn. Along with every other place in Italy. Prosecco had the unique advantage of crossing over regional lines, in that anywhere you would go in Italy, one could find Prosecco. Not so, Chianti, Pinot Grigio or Moscato. So, the Italians banded together, for a change, and built a monster.

And the large companies in America saw dollar signs. The ones who made their fortunes in Chianti got one. So did the largest American wine company. And as well, the ever-industrious Venetian people, who created the Pinot Grigio monster, almost effortlessly took Prosecco higher and faster than the still white wine that brought so much wealth to the region. Yeah, this was a slam-dunk, and everything was in place. Prosecco was going to be bigger than Champagne in America. Along with Freedom fries.

And now, with Prosecco rosé coming onboard, and with the surge of popularity of rosé wine, there seems to be no end to the climb to that mountaintop.

With it, the marketers are getting people who drank Champagne and Cava and fizzy sweet wine and fruity German wine and, and, and, well, you get the idea? It’s the biggest monster on the shelf. But only for a few, because this monster must be kept simple. You know the KISS principle? Well, this wine was made for it and the largest companies want to keep it that way, all to themselves. Lots of money here, lots of money.

So, the sidebar a thousand or so words ago. Two words about that phenom – Stella Rosa.

About ten years ago one of the geniuses in the corner offices asked me about this brand. “Should we go after it?” Those were his words. Probably the most brilliant idea he ever had, although it was probably not his idea. I told him I knew the folks behind the brand, they were family friends (but not “family” in the mafia-don sense) and I’d be glad to reach out to them.

Nothing ever came of it, because the genius was chasing sparkling sake or popcorn flavored vodka, which he saw as “bigger” in his world view of things. None the less, the folks who dreamt up Stella Rosa, took shelf space away from white Zinfandel, sweet blush wine, Port wine, Sauterne wine, Tokay wine, Lambrusco, you name it. If it wasn’t Cabernet or Pinot Noir or Sangiovese or Pinot Grigio or Champagne or Prosecco, they eventually extended their line into a billboard of products. Such that now, you walk into a supermarket and they command a huge swath of real estate. It’s only a matter of time before some bigger fish decides to choke up millions for that brand and kill it, as only they can do. They might not though, because they are currently too obsessed in their frenzy with seltzer.

What I can say about Stella Rosa, is they really carved out a niche. They didn’t copy anyone. But they did take advantage of the lack of momentum in flagging wine categories and they managed to corral those abandoned drinkers into their world. This is the genius of Italy. They make something out of nothing. But that doesn’t necessarily mean it is good for Italian wine outside of the major categories.

And that is where the battle is being lost. Look, the amount of Italian natural wine that ends up on people’s tables is less, by a large margin, than the amount of Stella Rosa that gets spilled in their factories. Meanwhile every wine writer and p.r. hack are tripping over themselves to beat the drum. But that drum circle is relatively small. The sound of one hand clapping, the sound of a tree falling in the forest when no one is there small. But, hey, keep on beating it, if it makes you feel good.

No, my concern is more for the hundreds of small producers, who I meet with regularly, who have these lovely wines -Dolcetto, Grignolino, Sangiovese, Falanghina, Nebbiolo, Trebbiano, Montepulciano, Carricante, etc. What are they going to do in the shadow of the giants? How many individual drums can we beat? And how do we win the battle for Italian wine in America when the largest of the large do not want you inside their tent?

Sounds more like the larger 1%-99% battle that’s being fought in cultural America, doesn’t it?

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