The world of wine economists met in Davis, from June 25th to June 28th, at the 4th Annual Conference of the American Association of Wine Economists. With the aim of sharing researches, views and prospects about consumer trends, markets, distribution and strategies, several businessmen and economists from all over the world met this important event. Mendoza was also present through Área del Vino.Some 200 people met at this annual event, which presented the new challenges and opportunities for the wine industry. Wine executives, academics and entrepreneurs were at Davis for an update on consumer, production and distribution situation.
As an introduction, the conference opened with a seminar entitled “Outlook and Issues for the World Wine Market”. For more than four hours, experts shared their knowledge and experience with a great audience.
The conference was chaired by Robert Smiley, Professor Emeritus and former Dean of the UC Davis Graduate School of Management. The main subjects were the post crisis situation in developed countries, the opportunities in Asia, the Australian case in the US market and the new consumers and demands.
In an interactive and dynamic conference, speakers offered their view and answered questions from the audience. Dealing with emerging markets, Daniel Sumner highlighted the great opportunity for wineries in China, Russia and India. As Director of the Agricultural Issues Center and Professor at UC Davis, he explained that the population and economic growth in these countries determines their high attractiveness to the wine industry. Additionally, he mentioned that the age pyramid is interesting as it defines big focus groups. When asked about the real interest for wineries in the short term, Sumner answered that “a big portion of something big is always big.”
James Lapsley, Adjunct Associate Professor in the Department of Viticulture and Enology of UC Davis and former president and winemaker for Orleans Hill Winery, spoke about issues and prospects for California wine. He worked over consumer projections for 2030, establishing at 407 million cases the expected volume of sales. Out of this volume he estimated that most of consumers will be hispans and that the number of abstainers will reduce in future years, reaching international level. Wineries situation was also analyzed and the fruit source and distribution appear as main issues. In 10 years American wineries have doubled in number as domestic and foreign demands grow, but cultivated yields have not grown at this rate. According to James, there will be a need for 500,000 more tons of grapes in the next years.
The Australian case was presented by Kym Anderson, Professor of Economics and Director of Wine Economics Research Center from University of Adelaide. He explained the main problems faced by Australian wineries, with falling sales in all major markets. He shared his ideas of new markets and new marketing as the main tools to recover from the crisis. For new markets he meant the Asian countries and concerning the new marketing needed to address consumers, he pointed out the Wine Australia´s marketing campaigns, which were designed to reconquer consumers basically in USA and UK. Anderson gave special importance to the bulk wine business as one that needs analysis but can definitely be of interest for many wineries that cannot work for Premium wines.
In the case of Argentina, Javier Merino and Jimena Estrella, General Manager and Content Manager of Área del Vino respectively, spoke about the competitiveness of small companies in the Argentinian wine industry. They pointed out that Argentina´s wine industry has experienced great transformation in the last decade mainly driven by exportation. Moreover, Merino and Estrella explained that the creation of new wineries and brands has been very fast, encouraged by a growing external market but threatened by local crisis and vulnerability of small young companies. According to the speakers, this phenomenon, which is widespread among New World producing countries, needs to be addressed to ensure a long and profitable performance for the industry. Finally, Merino and Estrella highlighted that the two key factors to work over are definitely availability of working capital and market focus.
At the end, the conferences were commented by two special guests: Jon Moramarco and Tom Selfridge. Former CEO of Constellations, Moramarco defined three different businesses a winery can be in: commodities, mainstream and quality wines. The ability of the winery to define these and to work consciously in creating those markets is the key for success, according to Moramarco. Besides, bulk wine offers some interesting advantages for both consumers and wineries. First, it reduced the carbon footprint as wine is transported in without bottles and thus reducing the weight of transportation. Second, it allows better quality controls and wines are bottled and labeled close to the consumer. Third, glass can be recycled in the destiny market much easier. Finally, this business offers a quick answer for retailers, as the wine is always closer to the markets. Moramarco concluded that the bulk business is a very interesting one that should be operated under special rules.
To conclude the seminar, Tom Selfridge explained that one should be “optimistic but careful”. Former president of The Hess Collection Winery and Chalone Wine Group, he explained that emerging markets are great opportunities but need a detailed plan to work over it. He emphasized the new consumers as the great opportunity for wineries: “This generation, the millennial, are 72 million people and each year 4 million is turning 21 and becoming a core drinker almost immediately. They are willing to expend some 20 dollars for a wine and are interested in learning about it.”
The conference was a complete success and will be repeated next year in Bolzano, Italy.
Source: http://www.winesur.com/news/challenges-and-opportunities-for-the-wine-industry
