Comment: How the US fine wine market looks in 2021

One American retailer recently characterised the current wine scene in the US as 'a tsunami of wine'. Oh, how times have changed. In October of 2019 the Trump administration imposed a 25% tariff on still wines (at 14% abv or below) imported from France, Spain, Germany and also the UK - as part of a wider dispute with the EU over aerospace industry subsidies. [subscriber-content]The administration continued to threaten further action, and tariffs were expanded in January shortly before Trump was ushered to the door later that month. By March of 2021 the US had suspended tariffs on wine , and importers began to ship orders that had been languishing in European warehouses. American consumers are now being deluged with offers for wines that had long seemed painfully expensive, if not entirely out of reach. The tariffs on wine coincided almost precisely with the worst of the pandemic, and the combination of these two factors has profoundly changed the way Americans buy wine. On the surface, the volumes didn’t change that much in 2020. Industry sources say through last month, shipments to wholesalers were off by 8%, but that much of this was due to pre-tariff distributor loading at the end of 2019. The Silicon Valley Bank estimated wine sales by volume in the US - including domestic wines and imports - were up by nearly 1.3% for the calendar year 2020. However, the pandemic changed both the type of wines purchased and the method of acquiring them. Price cuts and 'the flight to familiarity' One of the effects of the pandemic was to drive down prices. As the New York Times noted early in the pandemic, ‘New Yorkers want cheap wine, and lots of it'. Another impact of the pandemic has been the return of consumers to old favourites in what one importer called ‘the flight to familiarity’. Largely due to consumers shopping remotely on their own, the trend may also have a budgetary component, since the tried-and-true is often cheap-and-cheerful. However, better wines also did well. Michael Quinttus, president of Vintus Imports, notes that ‘less expensive branded volume drivers such as Guigal Côtes du Rhône did well but so did Bollinger and Ornellaia, who had record years.’ In this environment, established producers were at a definite advantage. Savvy retailers used electronic platforms such as Zoom to drive sales, and the rise of influencer marketing has also taken on greater importance as consumers turned to their mobile phones for entertainment and information. This burgeoning digital marketplace is evident in the success of online retailer Wine.com, which reported revenue of US$329m, up 199% over 2019. Another winner was the alcohol delivery service Drizly, which was acquired by Uber for US$ 1.1 bn earlier this year. As grateful as we all have been for the ability to purchase wine online during the pandemic, it has inevitably limited consumer experimentation with new wines and unfamiliar producers. This has long been the role of leading merchants and, particularly, of sommeliers. Sales in the on-trade have plummeted during the pandemic, and most estimates are that turnover in this channel is down by 90%, particularly for fine wines. Many producers who relied on restaurant sales have taken drastic measures: this week the online discounter First Bottle Wines was advertising the “Coriolis” Chardonnay from Oregon cult producer Maggie Harrison at a 50% discount. Once, this wine would have sold almost exclusively in restaurants. Without knowledgeable opinion leaders, crowdsourced opinions and "pay-to-play" influencers will increasingly drive sales. Quinttus believes it will take three years for the vibrancy of the on-trade in the US to return to pre-pandemic levels. New-wave retailers Despair not. The knowledgeable influencers that we once relied upon are still eager to sell us wine. Even before the pandemic, sommeliers once prominent in the restaurant world were beginning new projects. One example is Dustin Wilson, the Master Sommelier who formerly ran the wine programme at Michelin three-star restaurant Eleven Madison Park. In 2016 he and Derrick Mize founded the wine shop Verve in Tribeca. The operation now has bricks-and-mortar locations in New York, Chicago, San Francisco, and an enviable online presence. Mize and Wilson manage the business with 16 staff, and they are bringing their abilities to source fine wine to a wider audience. The selection at Verve includes many hard-to-find items and intriguing selections, from collectible Burgundy, Rhône and Piedmont to everyday wines from extraordinary producers. Another Master Sommelier to branch out into retail is Ian Cauble, who founded SommSelect in 2014 to bring sommelier-curated bottles to a broader audience without the restaurant mark-ups. He now heads up an all-star cast of contributing sommeliers that includes two-time James Beard winner David Lynch and such bold-face names as DLynn Proctor, Vincent Morrow MS, Chris Miller MS, and others. The offers include a daily highlight, such as the CVNE Monopole Bianco, $30, a series of curated collections, and themed wine clubs. One of the original groundbreaking efforts to bridge the restaurant world, fine wine collectors, and a discerning and upscale retail experience was Crush Wine & Spirits , founded in New York in 2005 by restaurateur Drew Nieporent, of Myriad Restaurant Group, and his partners Josh Guberman and Robert Schagrin. Nieporent is among the most respected restaurateurs in the US, whose projects have included Montrachet, Tribeca Grill, Nobu, and Rubicon. Crush managing partner Robert Schagrin has assembled one of the country's best selections of Burgundy, Champagne, Rhône, and Piedmont wine selections. Offers last week included Gevrey-Chambertins from Bachelet, a vertical of Côte Rôtie from Jamet, and Champagne from Bérêche. Cutting-edge wine shopping is not the sole province of sommeliers, however. Scott Wright is the former managing director of Domaine Drouhin Oregon and a founder of boutique Oregon producer Scott Paul Wines. Wright sold his interests in Scott Paul to set up Caveau . Caveau specialises in Burgundy and Champagne, where they source artisanal wines from small growers and bring them to market using wine clubs that pre-sell selections imported directly with a minimal overhead shipped to their loyal client base. A similar strategy is used by Champagne specialist Bryan Maletis at Fatcork in Seattle, German wine maven Lyle Fass at Fass Selections , and Burgundy-based courtier Dennis Sherman at Elden Selections . All of them are blazing the route directly to consumers with varied, high-quality, and reasonably-priced offers. Kevin Sidders has pursued a slightly different tactic with VinConnect . Sidders connects consumers to European wineries who contact his clients directly through their mailing list. VinConnect purchases the wine from the producer's US importer and receives the wine in its Northern California warehouse for onward shipping to the final consumer. Winery partners include Clos de Tart, Laurent Ponsot, Domaine du Pégaü, Massolino, Ciacci Piccolomini, Robert Weil and Artadi, to name just a few. Thriving wine auction scene In addition to these exciting merchant innovations, many wine consumers are discovering or rediscovering the pleasures of buying wine at auction. The wine auction scene in the US is thriving, and more wine is sold at auction in the US than either in London or in Hong Kong. Traditional auction houses such as Christie's, Sotheby's, and Bonham's regularly auction wine and collectible spirits. There are also specialist auction houses in the US, including Zachys, Acker, and Hart Davis Hart, who play an essential role. Auctions are still live events, but they happen online, and the only spectators are virtual ones. With the progress in digital technology, collectors are increasingly bidding online and it is no longer necessary to sit through a long wine auction in person. Another benefit of the new digital format is that two of the large specialist houses, Acker and Hart Davis Hart, have been able to move their sales to the state of Delaware, which does not charge a sales tax on purchases. Although the logistics of picking up and shipping can be more complicated, this is more than compensated by the tax savings. To help avoid these complications, Acker has established a warehouse in Delaware for private clients to store their winnings, and will ship the wine via refrigerated trucks to New York. Buying wine at auction can be a habit-forming pastime. New York collector Jim Finkel notes, ‘The pandemic has perhaps changed the focus of long-term collectors. In a natural evolution, they tend to appreciate older wines and naturally purchase less wine as futures.' Finkel adds, 'One of the factors that has not disappeared is the hedonic pleasure in buying wine.’ He likens this to being in the casino, and suggests that people with a passion for fine wine engage not just by consuming the wine but also in the act of acquisition. Even if fine wine is increasingly a virtual marketplace, Vintus president Michael Quinttus opines that ‘bricks and mortar will never die. At present, occupancy in Manhattan commercial real estate is about 15%; once it returns to pre-pandemic levels of 80 – 90%, people will once again begin to purchase in person.' However, until then, online sales, wine clubs, and auctions will ensure that we won't be thirsty during lockdown. [/subscriber-content] You may also like: Luczy: why US winelovers can’t buy the bottles they want Anson: What's new in Bordeaux in 2021? Bill Harlan interview, with new wine ratings Collector's Guide to Left Bank Bordeaux

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Comment: How the US fine wine market looks in 2021

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