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Dec. 23, 2021

Adaptation: 2021, a Year of Re-Opening, Wine Pricing, and Clean & Natural Wine

Adaptation: 2021, a Year of Re-Opening, Wine Pricing, and Clean & Natural Wine

2021. A year with big expectations. The re-opening of economies around the world with Covid vaccines in distributions instead led to fits and starts with the Delta and Omicron variants. Wine pricing and costs went through gyrations with the tariffs bet

2021.  A year with big expectations.  The re-opening of economies around the world with Covid vaccines in distributions instead led to fits and starts with the Delta and Omicron variants.  Wine pricing and costs went through gyrations with the tariffs between the EU and US imposed and then lifted and supply chain disruptions creating both cost and availability issues.  And clean and natural wines continued to become a broader topic amongst wine consumers and the trade who struggle with their definitions and impact.  XChateau assembled a panel across the wine value chain (Producer - Diana Snowden Seysses of Snowden Vineyard and Domaine Dujac;  Importer - Xavier Barlier of MMD; Distributor - Michael Papaleo of Banville Wine Merchants; Retailer - Kyle Meyer of The Wine Exchange; and Lisa Perrotti-Brown MW of The Wine Advocate) to discuss these issues and answer audience questions live on Clubhouse.  A wide-ranging and captivating conversation!

Also, people have asked us how they can support the show.  So, we recently launched on  Patreon, where your contributions will help keep the wine business content flowing! 

Detailed Show Notes: 

  • Panelists: 
  • Topic: Re-opening from Covid
    • Diana - producers in Napa and France weren’t required to close. Their biggest concern was keeping employees safe
    • Mike - learned how to conduct non-in-person sales (online and on the phone) by creating compelling content and using humor to find ways to engage accounts
      • Luxury wines did well - the average case price pre-pandemic was $136/case; increased by $30/case
      • On-premise recovered, but not all the way - 2019 - 55% on-premise, 2020 - 27% on-premise, 2021 - 44% on-premise
      • Collectors who were drinking through their wines started re-filling their cellars
      • Banville Wine Merchants was able to expand through the crisis (headcount went from 12 salespeople in 2020 to 16 in 2021, with 21 expected in 2022)
    • Kyle - 2020 Q2/3 - online orders went up dramatically - people bought everything
      • 2020 Q4 - needed more inventory, supply chain issues created lack of access that persisted into 2021
      • A lot of people are now comfortable buying wine online, do to a big pick up business
      • 75% of sales online pre-Covid, now 85-90%
      • 2021 felt more normal, like 2018 (2019 had issues w/ tariffs, etc.)
    • Xavier - MMD’s luxury portfolio was positioned mainly towards on-premise 
      • Pivoted to off-premise (e.g., high-end Safeway stores in Los Angeles)
      • Champagne shortages in 2021 - Roederer is sold out, pricing of Champagne is higher than it was before, bubbly is more popular than ever
    • Lisa - The Wine Advocate piggybacked on the success of online wine sales -> web views were up 10x vs. pre-Covid, subscriptions showed strong growth, but not as much as web views
      • Events had to be canceled in 2020, tastings re-factored, including re-packaging wines into little bottles for tastings
      • Pulled off some events (e.g., Kings of Rhone, Bordeaux 2010)
      • End of 2021 - lots of Zoom fatigue, people want in-person events, but push for smaller events (e.g., masterclasses, dinners) to avoid large groups
      • Hope to keep some virtual events in the future w/ hybrid elements
    • Xavier - used to have to travel a lot before, pivoting to virtual staff training in the B2B context in 2021 was more efficient and convenient
  • Topic: Inflation / Wine Pricing
    • Kyle - some prices have gone up, but more steady than expected
      • CA prices are going up because of the light 2020 vintage (fires)
      • Bordeaux 2020 releases prices much higher
      • Burgundy - pretty steady pricing with slight increases
      • Germany - top producers are increasing prices as they were underpriced before
    • Xavier - w/ tariffs and increased shipping costs, MMD has tried to absorb the impact with their partners - sharing ⅓ producer/supplier, ⅓ importer/MMD, and ⅓ distributor
    • Mike - bought long on some products pre-tariffs, which helped through the first half of 2021
      • Did reduce some margins and tried not to pass on increased costs to customers
      • Some allocated Burgundy had to pass on cost increases
    • Lisa - people looked more at domestic wines than usual, specifically 2018 and 2019 Napa wines, primarily because of 2020 fires and short vintage
      • Bordeaux 2020 is a lot higher pricing than 2019, even with a less consistent vintage
    • Diana - had supply chain issues pre-Covid, including a glass shortage (as only river sand can be used, not desert sand)
      • Have learned to order early to deal w/ shortages (e.g., glass, labels, capsules)
      • Facing labor shortages globally
      • Wineries have absorbed increased costs of glass and corks
  • Topic: Clean & Natural Wines
    • Lisa - there is no definition of clean wine. It’s just a marketing fabrication
      • Natural wine is a misleading term as well. It means different things to different people
    • Kyle - no one has asked for clean wine yet
      • Customer curiosity around natural wine, but people believe they are faulty wines (e.g., mercaptans, Brettanomyces)
      • Wine merchants need to educate consumers around these topics
    • Xavier - positive part of this trend is that it creates a conversation around wine
    • Diana - need to educate consumers around sustainability. It’s positive that people are worried about the climate and sustainability. If there’s no definition of the term, it becomes greenwashing
  • Audience Questions: 
    • Matthew - how do you best educate, communicate organic sources, and implement sustainable practices without greenwashing? 
      • Lisa - be very honest about what you’re doing
      • Kyle - make them “a” point vs. “the” point, the wine should be “the” point, make the best wine you can
    • Ziad - how is the wine sector coping with climate change? 
      • Lisa - need to live w/ extreme events (e.g., wildfires, water shortages) more frequently, all over the world
    • Xavier - Piemonte & Champagne have benefitted from climate change, and some have adapted winemaking; e.g., Louis Roederer has evolved their Brut Premier multi-vintage wine to “Collection 242,” a new multi-vintage wine that will have a unique number and release each year as the wine is now based around a single vintage
    • Diana - there are two conversations - one on adaptation and one on decelerating climate change through GHG emission reductions
      • Adaptation - France has to deal with frost issues, especially in Burgundy, Napa has drought and heat
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