Ensure Wine Quality and Path to Market

Experts in the wine trade discuss 'pain points' of wine sales and distribution

by Andrew Adams
Brian Phillips, right, director of wine strategy for Darden Restaurants, speaks at the recent Wine Conversations forum in Napa, Calif.

Napa, Calif.—Brian Phillips, director of wine strategy for Darden Restaurants, says wineries better be sure their product is of consistent quality and well represented. Otherwise, wine risks losing further market share in the on-premise sector, especially to spirits.

Phillips, currently pursuing final certification as a master sommelier, manages the wine program for Darden, which operates more than 1,700 restaurants including Capital Grille, Yard House, LongHorn Steakhouse and Olive Garden restaurants. The company’s total sales in 2017 surpassed $7 billion, he said.

He said the company can serve about 250,000 people a day and about 25% of those order wine. Assuming all that wine is sealed with cork and 3% to as much as 12% of those corks could be tainted, he said that’s a huge number of bottles with potential problems. Unless a customer detects a problem, however, they will be served that wine no matter what. With more than 175,000 employees, Darden can’t train its servers to screen wines prior to serving. “Maybe they consume it and don’t go back to it,” he said. “That’s a big concern.”

Phillips’ remarks came during a panel discussion that was part of the Fifth Annual Wine Conversations forum hosted earlier this month by French closure supplier Diam, its North American distributor G3 Enterprises and Full Circle Wine Solutions. In addition to Napa, the companies also hosted the event in Paso Robles, Calif., and Newberg, Ore.

“I’m not pitching anything,” Phillips said, adding he just wanted to stress the importance of quality when his white table cloth diners still expect a wine to be sealed with cork. “They still prefer the romanticism of pulling the cork.”

Yet what also concerned Phillips was price inflation and simply being able to source some wines. Brands he typically has relied on have become more expensive and it’s harder to know who to work with when wholesale reps can change two to three times per year. “I’ve had to make some really tough calls in the past six months,” he said.

He urged the more than 100 winemakers in the audience to take great care in understanding how their wines get to market and who is representing them. As wholesale prices rise, he has to raise his wine-list prices to maintain margin. He observed that customers are skipping a bottle of wine and having just one glass with the meal and a cocktail before it. “We’re seeing this in our restaurants. This is a growing trend,” he said.

In December 2017, Nielsen announced spirits had overtaken beer as the “most valuable on-premise category” with spirits dollar sales edging out beer $42.6 billion to $42.4 billion.

Joining Phillips on the panel was Greg Martellotto who produces Bordeaux-variety wines through Martellotto Wine Productions in Buellton, Calif., owns an import company and an online wine retail website. Martellotto has also recently partnered with Vivino, the wine ranking app and e-commerce company.

While wine shipments to consumers have opened to nearly every U.S. state, shipments by retailers are still closely regulated in many states. He said as consumers do more and more of their everyday shopping online, the wine industry needs to confront lingering restrictions on wine shipments. “We want to eliminate the middle tier as much as possible,” he said.

The current system is riddled with inefficiencies that stem from just a handful of very large companies dominating almost every market. He said when he wants to buy a pallet of wine from a Northern Californian winery and get it delivered to the Central Coast it can take up to three weeks for that order to process. “I hope you guys realize that is totally absurd,” he said.

Wineries should be advocating for an end to all restrictions on wine shipping, he said, because everyone —producers, retailers and consumers — would benefit from truly free, open markets. “These restrictions on shipping are anti-American,” he said.

Peter Granoff, a master sommelier, is the co-owner of the Ferry Plaza Wine Merchant & Wine Bar in San Francisco and a similar business in Napa. He said he and fellow panelist Martellotto likely could have a long debate over the value of social media as he’s decided the term itself is a misnomer. Granoff described a common sight of four people at a restaurant table and all of them with their faces buried in their phones. “How social is that?,” he asked, “seriously how social is it?”

Granoff said he’s particularly irked when customers in his wine shops choose to rely on peer recommendations and rankings to make wine purchases rather than the more than 100 years of combined experience held by his staff. “If everybody is an expert than no one is an expert,” he said.

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