Bulk gets bulked up

Felicity Carter visits the bulk wine fair in Amsterdam and hears about the latest trends.

The World Bulk Wine Exhibition, Amsterdam
The World Bulk Wine Exhibition, Amsterdam

If you want to see what’s happening in the world of wine, the place to be is at the World Bulk Wine Exhibition that takes place each November in Amsterdam. Trends show up here first – if there is overproduction or shortages looming, it’s reflected in the bulk wine price. When wine is being sold at under a dollar a litre, as bulk wine often is, producers must be responsive to the market. The stands here have no extra frills.

One walk around the hall at this fair is a better indication of what’s happening in wine than a dozen research reports. It was clear that the premiumisation trend is affecting even the bulk end – the share of organic and sustainable wines is growing sharply. A visit to the tasting zone at the end of the hall also demonstrated that quality is getting better and better.

Not all the news was good, however.

Grape glut in the US

“There are four major trends to watch in the United States,” began Erika Kirschenmann, managing editor of Wine Business Monthly. The keynote speaker in a seminar on the US wine market, she said the first notable trend is that the number of wineries continue to grow – as of the end of 2019, there were 10,476. The second trend is that the “2019 harvest is expected to be above average”. The third is that there is now an oversupply of grapes. And the last, and most ominous trend is that consumption is beginning to slow down. “Americans are not purchasing as much wine, though they are spending more,” she said.

Volume in the US was down 1%, value was up 2%; however, exports from California are down by about 1.2% in volume. “More importantly, we are down 9.3% in value, to $995m,” she said. “To put that in perspective, the 2018 value was $1.5bn.”

Bulk wine was most affected, with some companies seeing falls of 70%. “The big reason is our grape glut,” said Kirschenmann. “There is an excess of supply in the West Coast states.”

The news kept getting worse: there is bulk wine from 2016 and 2017 still in tank; fruit prices have dropped from $2,000 a tonne to $200, and grape growers have been leaving fruit on the vine, because it’s too expensive to harvest.

“The hardest hit are Cabernet Sauvignon and Pinot Noir, two of our biggest selling varieties,” she added.

It all sounds like the American version of what happened in the Australian wine industry in 2005, when grape prices collapsed. That caused a shake out of the entire industry, with many grape growers forced to pull out vines – or even sell their land.

“The US is starting to brace for a slowdown or economic recession,” said Kirschenmann. “We have had ten years of growth and we are waiting for that to change or turn. When that happens, people will not buy as much wine as they used to.”

Other speakers on the panel, however, thought there was a silver lining to the glut, even while they acknowledged the challenges.

“If you are in the market, it’s a great opportunity for people looking to start a custom label,” said Ana Diogo-Draper, winemaker at California’s Artesa Vineyards. “Cabernet has reached its lowest price in 15 years.” Pinot Noir was also suffering, she said.

Steve Daniel, the well-respected buyer for Hallgarten Wines in the UK said that while UK consumers won’t buy the Cabernet Sauvignon, they absolutely would be interested in the Pinot Noir. “I’m hearing rumours that premium Russian River Pinot is coming onto the bulk market for the first time,” he said, adding that Californian wine is normally too expensive for the UK market. “A reality check in California means an opportunity to sell bottled wines and, with our bottling facilities, to ship premium Pinot Noir.”

Kirschmann agreed with Diogo-Draper, that there is an opportunity for someone to create private label wines for smaller US retailers. “They see great consumer loyalty and great sales, so smaller-to-mid-size retailers are jumping in. Or hotel chains. That’s a great opportunity in the American market.”

As for what this means for international wines heading to the US, the news wasn’t all grim either – depending on what happens with the tariffs. “Imported wines are selling well,” said Kirschenmann, particularly wines from Italy. “We’re seeing people want lighter, fresher, lower alcohol wines – they’re looking for wine they consider a bit more healthy.” Rosé remains strong. “Rosé used to be something you drank in the summer, that only women drank. Now everybody drinks it all year round and the same thing is happening in sparkling.”

The other good news is that although people are buying less wine, they are spending more on it. “Wines at under $10 are decreasing,” said Kirschenmann. “If you want to sell wine in the United States, you want to look at those $11-or-more price points.”

She said the above-$10 price point would stay strong, even if a recession comes. “We did see people trade down in the last recession,” she said. “Currently the sweet spot is $15 to $19 – so when they trade down, it will be to $10, which is still fairly premium.”

All in all, with tariffs and wine gluts hitting the US market at the same time, it looks like difficult times ahead for much of the industry – but not for wine consumers, who will soon be finding better domestic wines for the same price.

Wine in cans

Another trend that’s shaking up the US market is canned wine – and, according to Dr Robert L. Williams from WICresearch, the market is set to grow. “This is where screwtop wine was 15 or 20 years ago,” he said, during a seminar on canned wines, adding that the appeal of cans is their convenience. “It’s early in the product lifecycle.”

Although people have been canning alcohol since World War I, the wine market really came into being after Barokes in Australia created their Vinsafe technology in 1996. Then, almost ten years later, Francis Ford Coppola launched Sofia, a bubbly wine in a pink, luxurious can. But it was the release of Underwood in 2012 that kicked off the wine can juggernaut. “All the top wineries in America are canning,” said Dr Williams. “The top-selling varieties are all found in a can.” Even the beer companies, such as Anhauser Busch, are getting into the canned wine market.

The reason cans are resonating now, rather than ten years ago, is they tap into contemporary trends – not only are they convenient, they also offer consumers portion control, while the aluminium is endlessly recyclable. “All generations will buy wine in a can if you put it in more places,” he said.

Canning does, however, have unique problems. “If you intend to can with bulk wine, you need a technical approach,” Dr Williams advised. “You need to get it into the winery early and copper testing is fundamental – if the values are high, treat the wine to lower those thresholds.” Sulphur can degrade the can’s liner, while wine that comes in contact with aluminium will create sulphites, so constant corrosion testing is a must. “I would reduce the use of SO2 from the beginning,” he said. He added that mobile canning lines are less reliable than “facilities that have been around longer and done the research.”

The future is bulk

At present, those European wines that attract a tariff in the US can get around it by shipping their wine in bulk. This, plus the fact that private label is rising plus environmental concerns, mean ever more wine will be shipped this way.
Alison Leavitt, managing director of the Wine and Spirits Shippers Association, warned that shipping brings its own risks. “Last year [2018], there were more natural disaster losses than in any year in history,” she said. “There were $225bn in losses due to floods, hurricanes and fires – cargo ships are so huge that fires are hard to put out because the fire fighters can’t get to the cargo holds.” She also said that while bulk wine doesn’t attract the attention of organised crime, the way that bottled wine does, “bulk wine can become contaminated.”

Her advice? Insure, insure, insure; take out contingency insurance, and read the insurance policies carefully. “If you don’t carry your own insurance, you have to prove someone else was negligent and it’s not easy, whether it was the carrier, the trucker or the freight forwarder – and they will put a limit on liability.”

Take photos of everything, and if there are any problems – react immediately. Don’t wait 30 days.

Outside the hall where she was speaking, hundreds of people were doing deals and tasting wine. The scene was a far cry from the early days, when the fair was in a much smaller hall, there were fewer people, and a lot less branding to be seen. The bulk wine market has evolved – and it’s only going to get bigger.

Felicity Carter attended the fair as a guest of the WBWE.

This article first appeared in Issue 1, 2020 of Meininger's Wine Business International magazine, available by subscription in print or digital

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