Monday, January 30, 2023

(Failing) to visit the wineries of India

I have not written a blog post like this before, on any of the blogs that I have maintained. So, please excuse me this time, if this is not the sort of thing you expect to read here. I normally write about the wine industry, but I do also drink wine, and visit wineries. This post is about the latter.

You see, my wife and I have spent the past few weeks in southern India (avoiding the Swedish winter). We thought that in the final couple of days we might visit a couple of wineries, near Bangalore, since India is not well-known as a wine-producing nation, and thus might be interesting (6 vineyards in India every wine lover must visit). Here, I report on our experiences.

Grover Zampa Vineyards

The first one we chose was Grover Zampa Vineyards, which was recommended in our guide book. It was a Monday, and their web page indicated that they had guided tours / tastings at 10:30am, 12:00pm and 2:00pm on weekdays. We tried to confirm this by phone, but all we (eventually) got at the listed phone number was a very excitable woman, who passed us on to a man who had no information.

So, we turned up at 11:00am. The man at the gate asked us to sign in (common in India, a very security-conscious country), but he said nothing about whether the winery was actually open that day. We got to the reception area, and were finally told that there were no tastings or tours that day. Apparently, they were “cleaning” something. We expressed our disappointment, both for the outcome and for the fact that there had been no way to find this out without a 1.5 hour drive.

My wife attempted to use their toilet facilities, but merely encountered the excitable woman, who seemed rather angry at my wife’s presence. After some yelling from the nearby males, my wife found some passable facilities, and used them. We then left, after being told that we could buy some wine if we wanted to. We declined!

I have visited wineries in many countries, on several continents, including Australia (many regions), Sweden, the USA, the UK, France (several regions), Italy (several regions), Spain, Portugal, and Germany. Never have I encountered this situation elsewhere. Maybe this makes me fortunate? Anyway, all other visited wineries of my experience score 4.5 or 5 out of 5 but, in my annoyance, I am tempted to give Grover Zampa a score of 0.

Domaine Sula

The next day, we tried India’s best-known wine company (Sula Vineyards), which has one of its wineries, Domaine Sula, near Bangalore. Their web page indicated that they had guided tours / tastings every hour from 10:30am. So, we turned up at 11:30am on the Tuesday.

Sadly, no sooner had my wife paid for our tickets than she doubled over in pain. She struggled back to the car and lay down for a while, during which she started vomiting. To cut a long story (5 hours) short, a year ago she had a kidney stone, and now seemed like a repeat episode. For those of you who have never experienced this, be very very grateful. Waves of severe pain come over you periodically, and it is this that induces the vomiting.

A very good friend organized for us to be received at a nearby hospital (run by his aunt), where my wife got an ultra-sound followed by a CT-scan. These confirmed our preliminary diagnosis. She eventually got some painkillers, and was told that, with some medicine, she would be able to travel back home on our scheduled flight, early the next morning. We did, however, never get near the actual winery. When we asked about getting our money back they declined, but said that we could use the money as credit against the purchase of some wines. We declined!

During this episode, I learned that the expression “heart-breaking” is not just a fantasy of romantic novelists, as I felt it every time my wife (literally) cried out in pain. I also learned that neither is the expression “joyous” just a fantasy of those same novelists, because I certainly felt it when my wife laughed again later in the same day. A quarter-century of marriage has had some effect on me!


India is not a well-known wine-producing region, and there is a reason for this. Not only is the climate wrong, it is apparently not an easy task for international wine lovers to sample the local produce, in situ. You can try to get some of the wine in your local shop, if you want, but do not venture further!

PS. Things only half improved on the flight home, with Emirates. On the second leg, the so-called "entertainment” system did not work for my seat. Should I start to feel that the world is against me, just at the moment?

Well, obviously not. After all, the rest of the holiday was very good for both my wife and I; and we are very grateful to the people who helped to organize it, and who helped run it. Our driver was excellent, as were the people at the hospital. The people we met on our travels were all friendly, both tourists and locals. Indeed, when we were the only obvious foreigners around, we were often asked to appear in many selfies, or photos with family members (or were simply asked by young people where we were from) — now we know how celebrities feel. Our good friend Ajith is to be thanked many times over, both for proposing the holiday and for looking after us. Interestingly, the only part he was not involved in was the visits to the wineries!

Monday, January 23, 2023

Global per capita wine expenditure versus consumption

I have looked before at the relationship between national wine consumption and wine production (Does wine production increase wine consumption?). Another interesting relationship is between national wine consumption and wine expenditure (The cost of wine consumed differs greatly between countries), which I will delve into again here.

Let's have a look at some data for 2015, as contained in the Annual Database of National Beverage Consumption Volumes and Expenditures, 1950 to 2015, compiled by Alexander Holmes and Kym Anderson. Their Tables 1.17 (Volume of beverage wine consumption per capita) and 1.22 (Expenditure per capita on wine) contain the information that we want. We need to standardize the summed data (total) from each country, in order to deal with different population sizes and demographies (ie. we should compare expenditure and consumption per adult). Unfortunately, we have data only per capita, which deals with population size but not with the proportion of people under drinking age.

The result is shown in the graph, for 77 wine-consuming countries. Each point represents one country, located vertically based on the amount of money (in $US) spent on wine during 2015 per person, and horizontally based on the liters of alcohol consumed per person during 2015. Twenty-two of the points are labeled.

Unsurprisingly, the data show that there is a reasonably strong relationship between consumption and expenditure — the more that is consumed per person then the more money is spent per person. However, the increase in expenditure accounts for only 69% of the variation in consumption — some countries definitely drink cheap wine and some drink more expensive wine! It is this between-country variation that is of most interest.

The pink line (on the graph) indicates an average expenditure of c. $US90 per liter of alcohol per person per year. So, if a container of wine contains 12% alcohol, then this equates to $7.50 per liter, or $5.50 per standard bottle (750 ml). The countries above the line spend more money than this, on average, and those below the line spend less.

Graph of expenditure versus consumption

Note that the people of the majority of the countries do not drink much wine at all, and consequently do not spend much money on it — these are the points clustered in the bottom left-hand corner of the graph.

Portugal, Italy, and France are the countries where the most wine is consumed per person, which surprises no-one. However, the people of France are prepared to spend considerably more money on that wine, on average, than are the Portuguese and Italians. The Spaniards, on the other hand, consume far less wine per person than any of these three countries, and the $/liter is also a bit less than for Italy and Portugal. The Argentinians are not that different from the Spaniards, either.

The Germans consume a bit more wine than do the British (UK) but spend far fewer $/liter on it — the British spend nearly 2.5x as much money per liter as do the Germans, on average. The Australians and New Zealanders are in the same ball–park as the British, not unexpectedly. The Americans, on the other hand, are not big wine–drinkers per person, nationally, and they spend very close to the average amount per liter — the silver-tails are counter-balanced by the ordinary folk.

The Scandinavian countries differ considerably from each other. Although Sweden and Norway spend about the same amount of money, Sweden consumes considerably more wine for that money. Denmark consumes twice as much wine as Norway per person, but spends only two-thirds more money. So, it is the Swedes who drink wine on the cheap, and the Norwegians who are the least thrifty of the three countries.

Note that the people of Switzerland, Denmark, and Slovenia stand out from the rest in the graph, being the countries that spend the most per liter of wine alcohol. They drink roughly the same amount as do the people of France or Austria, but are apparently prepared to spend considerably more money on their wine (these people have more money than sense, perhaps?).

However, the people who spend the most money per consumption (ie. expenditure ÷ consumption) are in the United Arab Emirates and Venezuela, both of whom have very small wine consumptions per capita — these appear to be the real silver-tails in the list. They are followed in the list by Singapore and Thailand, and then Hong Kong and Malaysia, who are all in that same boat. In these countries, most of the wine is imported, of course, and thus presumably more expensive than it is in wine–producing countries. The countries who spend the least money per consumption are in Romania and Belarus, both of whom have medium consumptions per capita.

So, we learn from all of this that the world is a very variable place, and that this applies to the wine part of the world just as much as anywhere else. Only two-thirds of wine expenditure is related to the amount consumed, with the other third telling us that countries and cultures each go their own way.

Things will change, of course. For example, at the moment the Older generation in France blamed for domestic wine lull, and the incoming generations will presumably differ from this.

Monday, January 16, 2023

If you are American, then the TTB might be after you

I noted in my previous post (Long-term negative trends for wine in the USA) that it is the Alcohol and Tobacco Tax and Trade Bureau (TTB) that looks after federal government regulations regarding alcohol in the USA, rather than it being the Food and Drug Administration (FDA). This is an unusual separation of duties, as the TTB combines things like tax collections with seemingly unrelated human health issues. This is an odd consequence of the repeal of Prohibition, way back in 1933.

I also noted that it was not until 2017 that the TTB was given an explicit budget to chase commercial wrong-doers (The TTB ramps up enforcement over trade practices). We might therefore expect that they were not very successful at investigating unlawful trade practices prior to that time. This topic is worth looking into here.

For some context, we can start by quoting the Annual Report for the Fiscal Year 2020, which discusses the TTB Trade Practice Program:
Unlawful trade practices threaten fair competition because they undermine equal access to the marketplace and limit consumer choices. TTB enforcement has never been more important to ensure a level playing field and fair competition within the marketplace, particularly following years of growth by new, small industry members who cannot afford to pay for market access.

Since 2017, TTB’s enacted budget has included directed funding for the purpose of increasing trade practice enforcement. With these resources, TTB established an Office of Special Operations within its Trade Investigations Division, which includes dedicated investigators to increase trade practice enforcement. TTB started FY 2020 with 23 open investigations and initiated 10 new investigations this year, including a National Response Team case that involved a large-scale, complex investigation.

Due to their complexity, often involving multiple locations, crossing several jurisdictions, and requiring coordination with local and state authorities, trade practice cases can take several years to conclude. In FY 2020, in the fourth year since receiving dedicated resources, TTB closed 19 trade practice cases, with 74 % resulting in successful outcomes. These successful resolutions included 3 Offers-in-Compromise and 11 permittees that served suspensions.

The TTB noted for 2018 that: “The federal government has allocated $5 million for TTB trade practice enforcement funds ... Prior to receiving this funding, the TTB averaged two trade practice investigations per year, based on its limited enforcement resources and the resource-intensive nature of these investigations.” So, let’s look at how it has fared since then. Most of the information is contained on the Administrative Actions web page, or in the Annual Reports.

One of the most serious Actions seems to be Suspension of an industry member’s permit (if the permit holder has willfully violated any condition of its basic permit). No Suspensions are listed before 2018, and the numbers since then have been:
2018    10
2019    19
2020    11
2021     3
The decreasing number seems to suggest that people have gotten the message! The TTB now has some teeth, and they can bite.

The most common Action seems to be to arrive at an Accepted Offer in Compromise:
A compromise is an agreement made between the Government and an alleged violator in lieu of civil proceedings or criminal prosecution. TTB generally considers offers in compromise for any violation of the laws and regulations it administers, and TTB will provide appropriate assistance to any person or business that wishes to make an Offer in Compromise.
The data concerning such Compromises, provided by the TTB, are shown in the graph.

Accepted Offers in Compromise

Note the big burst in 2018, compared to the immediately preceding years. The dedicated money for pursuing violations certainly seems to have had an effect, compared to the previous six years. However, there actually were quite a few Accepted Offers for the four years prior to that (2008—2011), suggesting that the TTB was quite active back then, as well. The Compromise numbers have been erratic since 2019, but still mostly high.

Many of the reported violations involve what is usually referred to as Pay to Play (Pay-to-Play schemes keep TTB busy). Such behavior involves payment to a retailer (for example) to increase sales of specific products, or to obtain preferential shelf or promotional space within their store (which might lead to greater sales). Providing promotional material is one thing, but pay-for-service applies to employees only, not to outsiders, when it comes to alcohol sales. Apparently, the list of illegal financial offences that have been committed by alcohol suppliers and wholesalers is a long one.

Advice has been offered as to what suppliers can do about this (How to avoid pay-to-play violations). Obviously, the suppliers need to learn which practices are prohibited for alcohol sales, irrespective of their status for other commercial products. The most common violation practices are ones that compromise the retailer’s independence. This includes inducing a retailer to purchase certain products to the exclusion (in whole or in part) of other brands’ products, or requiring a retailer to buy a product that it doesn’t want in order to get access to a particular product that it does want. You cannot even offer a “consignment sale”, where the retailer has the option that if a product doesn’t sell, then the retailer can return that product to the supplier.

Put simply: as an American, you must avoid “This for That” situations in the wine world, even if you are quite used to them in other spheres.

Monday, January 9, 2023

Long-term negative trends for wine in the USA

The USA has one of the world’s biggest two Gross Domestic Products (along with China), which means that its people have the most money to spend at the end of the pay week, on average (this is called Purchasing Power Parity). Some of this money is spent on discretionary things like wine and other alcoholic beverages, such as beer and spirits.

With this in mind, we could usefully look at how big the U.S. wine industry might be, in relation to the rest of the alcohol industry. For example, concern has recently been expressed about a decrease in relative wine consumption (A response to wine's diminishing place in the society, by Tom Wark):
There is and has been for some time, a distinct feeling in and around the wine world that wine is losing ground; that its share of the consumer mind and pocketbooks, is being diminished from what it always has been. I think those feelings are based on sound observations and grounded in reality.
So, I think that it we should have a look at this for ourselves, as part of the New Year (see my Gott nytt år! post).

As an interesting preliminary note, the USA differs from most other countries in one notable way. Almost all governments have a department with some official control over those things that their citizens put into their bodies, which in the USA is the Food and Drug Administration (FDA). However, the USA puts alcohol under the control of the Alcohol and Tobacco Tax and Trade Bureau (TTB), instead. So, it is this latter department that we must consult about data concerning trends in U.S. wine production.

This governmental anomaly arose at the end of Prohibition (1933). Instead of being sensible about repealing the federal restriction on the sale of alcohol, the US national government simply handed control back to each individual state. So, to this day, each state is potentially different concerning over-sight of alcohol sales. American citizens cannot necessarily even transport alcohol across state borders (whereas European Union citizens can receive alcohol from anywhere within the EU — the European Union is thus more united than is the United States!).

More importantly, for our purposes here, the TTB was set up mainly, as far as I can see, to make sure the feds get some tax money out of the newly created situation. Sadly, the TTB has not always been able to deal with all of its role, especially with regard to human health, which has got to be at least as important as taxes. For example, only in 2017 was it given an explicit budget to chase commercial wrong-doers (The TTB ramps up enforcement over trade practices).

One of the things that the TTB has always done is formally approve the labels on containers of alcohol. Each year, the producers need to get a new Certificate of Label Approval (COLA), if they have changed anything at all since the previous year. Similarly, there is an Alcohol Beverage Formula Approval (via laboratory sample analysis), which may be required before the COLA application. Note that, since approval is needed only for new or changed labels, this applies to only a small percentage of the number of alcoholic beverages fighting for shelf space each year.

COLA applications

Moving on to the main topic of this post, there are various sources of TTB data, including annual reports (2016—2021), and an Open Data web page. Unfortunately, the types of data that are reported do vary considerably from year to year; but we can do our best to look at some of the trends this century.

The first graph (above) shows the total number of COLA applications since 2009, along with the separate numbers for the three beverage categories that the TTB recognizes. Note that wine greatly exceeds the other two, comprising 85—95 % of the applications. However, you will also note that the number of wine applications has not actually increased recently, whereas spirits applications and especially beer applications have definitely been on the way up.

Moreover, only a certain percentage of the applications are actually approved by the TTB. This information is shown in the second graph, for both the total applications and for the wine subset. The percentage approved has increased through time, which I presume means that the producers are getting better at submitting approvable beverages. Wine does quite well, in this regard.

COLA approvals

However, if we look at the actual number of wine approvals over a much longer time, we see a definite ongoing trend. This is shown in the third graph (below). Since 2015, the number of wine approvals has not really changed at all, even though the total number of approvals has continued to rise. As noted above, it is the number of spirits and especially beer approvals that have increased.

This means that wine comprised > 85 % of approved alcohol labels until 2007, after which time the percentage has continually decreased. This is shown in the second graph (above; the green line), which shows an ongoing linear decline in wine COLAs as a percentage of the total. Current approvals are now c. 60 %, but will presumably be less than this soon. Beers are at c. 25 % and spirits at c. 15 %.

COLA percent approvals

So, what are we to make of this situation? The basic pattern is that wine label applications in the USA have not increased, whereas spirits and beer labels have done so. In this sense, wine is definitely “losing ground” in the USA, as Tom Wark put it in the quote above. This has involved 15 years of steady decline, so we are not talking about a recent event.

Tom is concerned about what (if anything) can be done to “stave off further erosion of wine’s place in society”. However, the issue seems to be that wine is not growing, whereas its competitors are doing so. That is: “wine has been losing its diversity and variety advantage over its main beverage competitors”. Consequently: “over the past two decades the amount of editorial coverage beer and spirits have received in the media has increased significantly”. This sounds very much like the infamous Parkerization of wine (that is, a strong conforming force turning wine into a mass of sameness).

If beer and spirits are expanding, and wine is not, then there are only three alternative responses: expand wine, contract beer and spirits, or do nothing. Wine as a commercial product has not changed much over the past century, whereas beer and spirits seem to have done so (eg. many new styles of beer, many new spirits mixers). It may therefore come as no surprise to you that some wine producers have taken a leaf or two from the latter two books. For example, the number of RTDs and cocktails involving wine are increasing, as are the number of fruits / varieties from which wine is being made. There are also premiumization trends, and low alcohol trends; there are popularization trends, and social media trends. *

Apparently, the Do Nothing option is not the default one. This is good to know. However, the young people are always the future; and thus seriously engaging them in wine, in whatever way they choose, is the only way to go, long term.

* Wholesalers want TTB and Treasury to investigate how soft drink companies market new alcohol crossover products.

Monday, January 2, 2023

Gott nytt år!

There is not really a new blog post this week. It was my 65th birthday yesterday, which may explain my lack of enthusiasm for writing. I will recover by next week, when I have gotten used to the new set of aches and pains. In the meantime, if you haven’t looked at last week’s post, then you should (Hangovers — is there anything to be done?).

As one piece of news, I will point out that the Swedish government has now increased the tax on alcohol and tobacco, as a New Year present for its citizens (More expensive beer, wine, spirits and tobacco from the turn of the year). It is claimed that this is in order to reduce consumption and promote public health. However, the tax on tobacco has increased by 3%, and that on wine and beer by 4%, while the tax on spirits increased by only 1%. So, it is doubtful that this has anything to do with reducing unhealthy behavior! It is more likely that it has to do with the idea that the increases are expected to bring in one billion kronor (100 million USD) more to the government in 2023.

The government has promised us another set of tax increases for New Year 2024 — 8% for beer and wine, and 1% on spirits and tobacco. So, you have to give them credit for the consistency of their attacks on wine appreciation.