Premium Wine Sales Jump, Coolers Flat for ’87

Sales of California premium wines leaped in 1987, jug wine sales were down and sales of wine coolers were flat over the prior year, according to the Gomberg-Fredrikson Report.

The San Francisco-based wine industry consultants said Tuesday that cooler sales rose less than 2% in 1987 over 1986 after three consecutive years of spectacular growth, from 8 million gallons shipped in 1983 to 120 million gallons in 1986.

Jon Fredrikson also confirmed earlier reports that Seagram’s Wine Cooler had surpassed E&J; Gallo’s cooler, Bartles & Jaymes, as the nation’s favorite.

However, Fredrikson said the most dramatic news in the report was the astounding 22% increase in premium wine sales over 1986. The huge bulk of premium wine shipments came from small wineries, many of them family-owned--a category of winery that has increased by more than a third in four years.

“We haven’t heard stories like this in a long time,” said Fredrikson. “It’s like the latter part of the ‘70s when people were selling everything they made. And that makes the vineyard market so hot. People are going around paying premium prices for Chardonnay (grapes) and still guys (winery owners) are telling me they don’t have any wine to sell.

“And I think it’s going to get better before it gets worse.”

He said the demand for premium wine may be pegged to a number of factors, one of which is the increasing demand for White Zinfandel, which continues unabated. More than 7 million cases of wine marked White Zinfandel were sold in 1987, he said, up from 4.3 million cases in 1986.

Fredrikson noted that sales of all premium wine (priced $3 per 750-milliliter bottle or more) represented only 20% of the state’s total wine gallonage but 45% of all California wine sales dollars.

“This indicates that someone finally is beating Gallo to the punch and although all of this volume was produced by a lot of very small wineries, these small wineries combined now have a force that makes them a lot bigger than they ever envisioned. No longer do they have to walk in the wake of the giants of the industry.”

Fredrikson added that with the small wineries’ “new-found economic power, they will realize they don’t have to be pushed around any more.”

Among the success stories noted in the report: Groth, up 48%; Cuvaison, up 76%; Kendall-Jackson, up 75%; Foppiano, up 47%; Zaca Mesa, up 63%; McDowell Valley, up 67%, and Hanns Kornell, up 78%.

In the so-called pop-premium segment ($3 to $7 wines), Glen Ellen Winery rose 80% in sales to more than 1.5 million cases, almost all of it designated Proprietors Reserve.

Coolers, meanwhile, were flat, with the two market leaders, Seagram and Gallo, controlling almost 60% of the market.

The Seagram cooler rose from a 15% market share in 1986 to 31% in 1987, following its strong advertising campaign that featured actor Bruce Willis. Meanwhile, Bartles & Jaymes was dropping from 29% to 27%.

Despite the very small increase in cooler sales, Fredrikson said, “I have not written off the category yet. I think both Seagram and Gallo will be up in 1988.”

Calorie Issue

Asked why the cooler market has seemingly collapsed, Fredrikson said one reason was that an advertising campaign by Anheuser-Busch, which produced the Dewey Stevens cooler, that claimed it had lower calories than other wine coolers may have hurt the entire category.

“Anheuser-Busch stirred up the hornet’s nest by bringing the calorie issue to the front with Dewey Stevens, and that may have hurt everyone,” he said, noting that his wife mentioned to him that if a wine cooler has more than 200 calories, “why not have a diet soft drink. . . .”

That same thinking may have prompted some cooler consumers to switch to flavored waters. “That has become a strong category,” he said.

But cooler sales could leap this year, he said, if both Gallo and Seagram come to market with new flavors, as anticipated. (He said Gallo’s red cooler fizzled in 1987 because it merely cannibalized the market for white coolers.)

Meanwhile, sales of jug wines continued a slide that began earlier in the decade, dropping another 3%, the report showed. It said that six of the seven largest volume producers of wine in the state, who specialize largely in jug wines, had decreases in shipments in 1987 over the prior year ranging from 2% (industry leader Gallo) to 20% (California Cooler and The Wine Group).

Only Guild, ranked fifth in size, showed an increase, a hefty 44%, which Fredrikson said was due to the company’s new “Easy-Pour” milk-carton package, its fast growth in Cook’s American Champagne, its line of Cribari varietal wines, and to the business it does making Matilda Bay Cooler for Miller Brewing, which markets that cooler in boxes.

Despite all the negative news, Fredrikson said, premium wine’s growth is far and away the biggest news in the issue.

“We’re in a real boom phase,” he said. “We haven’t seen this in a decade.”

He said the movement of American buyers toward California premium wine began three years ago when the dollar began to slip against European currencies, making goods from those countries more expensive here.

“There’s about a year and a half or two-year pipeline in the European (wine) market from the time the wine leaves the warehouse in France to here, so our boom started when prices for French wines began to rise.

“Also, there is increasing recognition that California wine really has come of age.”