UCLA grad school has 6-mo. wine study results

Wines & Vines, Feb, 1991

Results of a six-month study of the California wine industry by the UCLA Graduate School of Business were presented to Wine Institute members at the Robert Mondavi Winery Feb. 8.

The four-part study is available for $40 (total) or $10 each from WI at 425 Market St., Ste. 1000, San Francisco 94105. Part 1 deals with growth strategies for ultra-premium wines, Part 2 with distribution of ultra-premiums, Part 3 with alternative packaging opportunities for champagne/sparkling wines and Part 4 with an analysis of anti-alcohol groups.

The UCLA study defined ultra-premiums as retailing for more than $14 per 750 ml bottle. For example, a "fairly typical" ultra-premium producer does not exist; each is unique. Thus, the market is highly fragmented. Consumers tend to be insensitive to price; quality and distinction seem to be the most important factors.

On distribution, the researchers divided the category into two parts: logistics of moving wine to retail and development/flow of information. On the second part, recommendations to improve information flow included trade shows and development of producer cooperatives to consolidate marketing efforts.

On the champagne front, the study recommended development of smaller bottle sizes to satisfy "less, but better" consumers.

As for the antis, the study recommended developing an industry-wide counter-strategy that would acknowledge legitimate concerns of reputable forces, such as considerations about drunken driving and underage drinking.

Surplus bucks

* The "windup committee, " completing dissolution of the voted-out California Wine Commission at a January meeting, found there was $600,000 in excess funds to be returned to vintners. The latter may direct payment according to a formula recommended by the committee or to any organization they propose. The formula calls for half the money to go to the Wine Institute and the remainder to organizations such as AWARE, the American Vineyard Foundation, the National Wine Coalition and the Association of American Vintners, with anything left split between U.C., Davis and CSU, Fresno. After Feb. 28, approximately, the Commission will exist only in documents filed with the California Department of Food and Agriculture. The last official act: an audit by Deloitte & Touche, the accounting firm. Charles Carpy, chairman of the Wine Commission, also was chairman of the windup committee. Jim Errecarte, executive director, will handle the pay-out to the vintners.

10-month figures

* The figures are out for California wine marketings for the 10 months of 1990 ending Oct. 31. In that time 319,597,000 gallons were shipped; that is only 1.1% below the like period of 1989. The Wine Institute Economic Research department said that if you factor out coolers, the 10-months figure held about the same both years. Speculation had been that the decline would be greater due to federal warning labels and the anti-wine campaigns of the de facto prohibitionists.

The over- 14 % wines fell the most; by 12.4 % to 21,555,000 gallons. Table wine held about even at .1% as did champagne. Wine coolers represent about 19% of the table wine total.

Liquor Barn cuts

* Liquor Barn announced it has closed selected stores in southern California and will focus on its strongest markets, mainly in San Diego and northern California. The 63-store chain, which had 1990 revenues in excess of $200 million, said it closed 19 stores serving Los Angeles, Orange County, Riverside and Palm Springs.

Govt. error

* A new study has revealed that alcohol abuse costs fell $50 billion short of previous estimates made in 1984 by the Research Triangle Institute (RTI). RTI's earlier figure of $116.7 billion gained wide support in the ethanol control areas and was most often used in citing abuse estimates and statistics in pro-control recommendations and media stories. The new study was conducted for the Alcohol, Drug Abuse and Mental Health Administration (ADAMHA) by U.C., San Francisco, under the direction of Dorothy Rice, Ph.D., former head of the National Center for Health Statistics. The new study estimated costs at $70.3 billion for 1985, the most recent year for which data is available.

The grossly-inflated figures in the 7th Special Report on Alcohol and Health by the National Institute on Alcohol Abuse and Alcoholism (NIAAA) pegged costs at $136.3 billion for 1990. The U.C./S.F. study projected a cost of $85.8 billion for 1988, about 30 % lower than the figure estimated in the NIAAA report.

Floor tax due

* The Bureau of Alcohol, Tobacco and Firearms has announced the onetime federal floor tax imposed on wholesalers and retailers on licensed beverages, imported perfumes and cigarettes in inventory as of Jan. 1, 1991.

The floor tax follows the increase in federal excise tax on licensed beverages and tobacco products. Payments are due by June 30, 1991, to BATF.

The tax rates on licensed beverages are: wine (except sparkling) 90cts per wine gallon; spirits, $1 per proof gallon (U.S. gallon at 50 % a. c.) and beer, $9 per barrel (1 barrel-31 gallons).