Ep. 809 Wine Education & Market Update In The U.S. (NorthEast) | wine2wine Business Forum 2021

This episode is brought to you by the Italy International Academy, the toughest Italian wine program. One thousand candidates have produced two hundred and sixty two Italian wine ambassadors to date. Next courses in Hong Kong Russia, New York, and Verona. Think you make the cut. Apply now at vin Italy international dot com. Italian wine podcast. A wine to wine business forum twenty twenty one media partner is proud to present A series of sessions highlighting the key themes and ideas from the two day event held on October the eighteenth and nineteenth twenty twenty one. This hybrid edition of the business forum was jam packed with the most informed speakers discussing some of the hottest topics in the wine industry today. For more information, please visit wine to wine dot net and tune in every Thursday at two pm Central European time for more episodes recorded during this latest edition of wine to wine business forum. Welcome. Thank you for, watching us on Sherupirone. I'm, co host and co moderator with, my good friend here. Next door, Jaluka Guadali, which I'm gonna go ahead and introduce for those of you that are not familiar with. So, Jaluka, after being an international tax consultant for almost twenty years, made a career switch and joined the wine industry five years ago. He's originally from Italy and he's now based in the Boston area where owns and runs wine empire and fine wine retailer. Jilica holds a low degree and master in accounting and international tasks and speaks fluently three languages. He also dedicated himself to many aspects of the wine world such as tasting events, writing, and wine education. He became an Italian wine ambassador and educator through the Italy International Academy in two thousand nineteen, and he's also certified as French wine scholar, American wine expert, Cordou and Burgundy specialist, Sherry wine specialist, holds a WIC diploma and currently master wine candidate. In twenty twenty one, he launched in the US Italian wine based drug certification. It's a true pleasure. Been here spending a little time with my now long time friend, Chilo Pilona. So it is, my true pleasure to, in turn, introduce Chilo to, all of you that, don't know Chilo yet. Here is the director, of Italian wines for Horizon beverage, company. They see here in, in New England, in Boston, and, with operations in, five different states. He's a graduate of, Chicago Deliero, Hotel and Restaurant Management School. He's also a Vineilio wine ambassador, from the Illinois Academy, travel extensively, in Italy, in England, in the US, and especially, the the note, Chiro, they can affirm how, is incredible, passion of wine, travel, food, you know, culture, is, considering after all, how important is being born and raised, in Italy, all these, you know, themes are in ninety nine, Chiro moved to, the US, permanently, he came to, to Boston where he continued, to further his, his wine studies at Boston University, international summary at Yield WSTT, as well as, he became an Italian wine specialist that, with honors, with the North American Sonery Association as a part of the worldwide, more recognized and time summary Association. In seventeen. And, again, in nineteen, you completed the, VIA Academy, Ambassador ship, you know, program, e recently actually, you know, honors, for his, you know, efforts. And, in two thousand and seven, he did, actually accept a position with, mister Cabri from, from Montefalco, that everybody is where we are, of, and, as a top producer, after which in twenty eleven, so now we're over, you know, ten years, you know, return to Horizon Beverages, to, actually be a director for the Italian wine portfolio. Expanding presence in New England. So thank you again for, co moderating and, and doing the session with me, Chiro. It's been a pleasure. So we're gonna talk about, a few, very interesting, aspect of the wine trades. Specifically, we'll take a look at the, agenda here. I'll, briefly introduce for those who are not familiar the, so called three tier system, how the wine trade worked, in the US. We're gonna take a look at the, market performance, slightly pre pandemic, pandemic, and today's with a little bit of a outlook for the near, you know, future as much as we could. And then, both Chiro and I will give you two very interesting perspective, mine from a retailer, point of view, where, Chiro's gonna fill us in with, some interesting details on the distribution side, in the northeast area, of, of the United States. And then, we'll touch on, wine indication how we change our Chiranawi, had experienced, in this past eighteen, twenty four, you know, months, and now we've seen things, you know, change. So with any further ado, So how does it work? I get a lot of calls, especially, you know, being familiar, and meeting people doing travels, during events. Oh, who are even, you know, former friends. I wanna I'm making wine, or I know a family that is making wine, maybe, you know, small production. We would like to to come over, to the US market. It's like, especially if you are in the trade that you sell wines, like, why I don't send you, a number of cases of, you know, this wine that's being made. It's not it's not so simple, unfortunately, because the three tier system essentially works that, three distinct and separate, figures are involved in the, in the wine, in the wine trade, in the wine process, from, you know, production, to, to selling. So the first one is clearly is the producer. And then or importer, because the importer would, act upon the, the the the the the products, being recorded. The second figure is the, wholesaler, or distributor and in some cases is actually, the same and in some cases is actually, you know, separate. So you can have a, any porter, and then you can have, which is also a wholesaler or you can have a distributor in this case, you know, Chiro, for example. And then you have the third figure which is the retailer. So the retailer obviously encompasses, not just a wine store or in Ottega, a bar, but also a restaurant, for example. And there is a first distinction between what we call in the trade business, on premise or off premise. This is a system that which which in turn sells ultimately to to the consumer, to the wine drinkers. Right? So we go into to a restaurant that will be the last, you know, key, chain point or we go into a one store to buy our bottle of wine. So this assistant was put in place in nineteen thirty three upon, the repeal of the, prohibition, law, and, as a as a change of, introduction to the twenty, first amendment. And, The the tricky part here is also to understand that as much as the United States is a, one federal government, we are subject to the rules of fifty different states. So Cheer and I, for example, RM, Massachusetts, There are certain rules where New York or Connecticut or California, you know, may have others. And one of the main challenges is, in fact, once the product arrive in one state, how it can be distributed across, across country. The federal government does only have the power to regulate, any potential conflict. And there are actually been plenty in the in the history of this, of these rules. So, another key point to understand is unlike many other countries, especially European countries, is how wine is, consume. So if you go and buy a bottle of wine in a store, you technically buy the wine unopened, completely sealed and you don't have the right to, consume that bottle of wine, on the floor. Where is the opposite when you go to a bar or to a restaurant where you can obviously consume your bottle of wine, but with few exception and, based on, on a state by state basis, you cannot, go to a restaurant buy a bottle and bring it home. So, hopefully, this will give you an idea. Other exceptions are, what we call DTC or, the abrecht to consumer, arrangements, such as the ones from, you know, wineries, wine clubs, and things of that nature. So, let's talk about markets how how things have shaped up up to now almost on two years of this COVID nineteen situation. So, you know, we all were aware that, by now, that a lot of our friends, you know, restaurants unfortunately, have closed, hopefully just on a temporary basis and, a few have been reopening. Unfortunately, some have lost, you know, the business. So it's estimated over thirty percent, you know, of restaurants, have, clearly, stopped and slowed down, the wine, the wine buying and they'll be selling to, you know, consumer. So in my experience, in talking to other, retailers and, and distributors, you know, as well. The fortunate part is that the, the business, the operations form, the retail side, absorb almost entirely. In some cases, not entirely. Well, everything that has been, sort of, you know, lost on the on premise or restaurant, you know, side. So on a net, on a net basis, we're still probably, still in a in a small, loss, you know, position, but we certainly, have, have, have limited the, the impact. In particular, within this this numbers, we have seen the go to larger brands, to hold up, fairly, fairly well. Especially if you don't have the opportunity to go to a restaurant, to a bar to consume your, go to, wine by the glass. And, if you don't have, a special relationship, to, to maybe your wine retail stores. You go with what you know. And, unfortunately, a little bit of the the the higher value wines, they, highly highly allocated, you know, wines have have been offered, to retailers, that have not been offered before or in larger allocations because, restaurants and on premises accounts have not been, been able to, to offer this, on their on their on their menu. So we have a little bit of a consumer spending, a little bit more often and a little bit, you know, less. And, and of course, we have we have had a younger, sort of, you know, crowd to invest a little bit more into, higher value, you know, wines, you know, as well. So particularly California and Florida, have, have seen, a huge rise in consumption on both side of the spectrum. On, on, on entry level mid market, as well as premium and high end, value as well. And we will also see from a statistical standpoint that American folks in general at probably, look at a little bit more, you know, domestic than say, the typical, larger, country importers such as, obviously Italy, you know, France, you know, Ed, Spain. This has been, obviously, due to a couple different factors. You all familiar with it, past a couple of years debacle on, you know, tariffs, you know, increased twenty five percent at the moment with the Biden administration on hold temporarily for another four and a half, you know, five years, as well. And then, of course, as we mentioned before, given the three tier system, also with the shipping, you know, challenges, thinking about shipping from, from one state to another, thinking about, maybe different formats, whether it's small models or, you know, or larger, you know, format as well. But also, the style of wine. Sparkling wines are obviously very difficult and and challenging, per se, to, to be shipped, and considering also, some of the geography as well as the, weather conditions, for example, you know, during, you know, summer months. This created, a number of opportunities and a number of, of, of challenges. So online sales, shot up, over forty percent in this, you know, eighteen months, you know, time. Obviously, we increase online events. Virtual. Everybody probably has done, at least a few of those, virtual, you know, tasting more, locally or, you know, spread, spread out. Then increase the opportunity to sell, you know, perhaps a smaller, you know, formats as we, as we mentioned before, three thousand and seventy five, ml, as well. And, and there, unfortunately, It was a little bit of decline in larger, you know, format, you know, as well. And then, also as mentioned, the allocation probably of those higher, you know, and, hard to find, hard to seek, you know, wines became a little bit more of a norm as channels of the distributions, switched, and changed from, restaurants and bars, and other on premise accounts to more like a retail online, you know, sales, you know, focus. And this is actually what we also see, going forward. Obviously, we are going to depend largely on, how the, COVID nineteen pandemic, will be, you know, handled going forward. We obviously hope all for, for the best. Now restaurants and non premise accounts have reopened with less restrictions locally Tounds and municipalities have the option to enforce, you know, ask, but there is no, you know, distance, there is no reservation, you know, limits that used to be up to, May this year of, you know, ninety minutes. So things have slowly, getting better and and open up. And as we see this happening, my personal point of view and expectation is to see some sort of this, reallocation of revenue redistributed and back to, you know, the restaurants, you know, the bars, and the, and the, and then, online online premises. Perhaps also we're gonna open up a two in person, you know, tastings, you know, as well. And we're probably gonna have for a period of the time a little bit of, you know, both online and, any person as well. So With this, I wanna pass the ball to, to Chiro that can give us a little bit more, facts and details in the, is, his experience as part of you. Yeah. We had, thank you. Same epineer. So the state of distribution for us as a fairly large distributor, the second largest here in Massachusetts. And as you mentioned, we, Horizon Beverage company operates in the five states. Three of which Rhode Island, Massachusetts. It's been the eighth quarter. And you, I'm sure we have full distribution of wine, liquor, and beer. And then me and Vermont, we only, distribute liquor and beer, you know, for for different reasons. But anyway, in twenty twenty, interestingly enough, and this is an overall scale we had the best year of our history, right? So it says a lot how things went in spite of the COVID pandemic. Now that being said, this overall, which includes a lot of different products that go from liquor beer and wine as well. But we look at the Italian side of things, specifically. We had a loss of roughly thirty five percent of overall sales. And that's obviously due for many factors, which we'll, you know, be discussing about, you know, we, as a company, represent a sixty different Italian wine, wineries, say that the prime region that we focus on is Tuscany, which is obviously very, you know, beloved here in the United States and understood and appreciated that many people traveled to, followed by Benito and Piedmont that take the second place. On our side of things. And then lastly, or thirdly, anyway, would be sisley, all altogether represent wineries that cover fourteen different regions of Italy. So, a little bit of all over the place, if you will. Now when we look at, you know, obviously, in twenty twenty, like I said, we had this loss of a thirty five percent, and who lost most, obviously, was the smaller wineries. For many reasons, one being, because you don't have the power to stand out, also because you were not necessarily as large or wineries distributed somehow evenly if you will between on and off premise of being both in restaurants and retailers. A lot of times smaller wineries from smaller suppliers, they tend to be represented mostly in restaurants. And restaurants, as John Luca mentioned, were the ones that really took the biggest hit and, sometimes they close for long periods time or they were only doing takeouts. Obviously, the sales of wine were really, you know, damaged. But hopefully, you know, this year, we've seen a a different quite a switch. And hopefully, they're coming back and there's a lot of interest towards that. In twenty twenty one, if we compare twenty twenty one in the quarters between, you know, twenty twenty one and twenty twenty, the first quarter, we were, you know, still down because the first quarter of twenty twenty, obviously, we were still in a good place. It really thinks didn't affect us here in this neck of the woods was an until, you know, basically the second half of March. So practically, we were down. But then I looked at the numbers of the second quarter of twenty twenty one, and that's when we were up thirty percent because now we were facing a moment in twenty twenty when restaurants were totally closed. Everything had stopped. So distribution as far as on premise was zero versus twenty twenty one finally with the good season coming the spring, if you will, things, you know, kind of reopening a little bit, definitely give a boost, you know, for Italian wine, and, so that helped a lot. And this last quarter, which we just closed by the end of September, Definitely, we continue that trend. We are up now twenty five percent overall in sales, you need for the Italian wine portfolio. And again, our Italian wine portfolio being a large distributor includes a very large wineries. At the same time, you know, mid sized wineries and also we have a variety of small wineries. So there's a little bit of everything that it's, you know, included in that. Now the things that we continue to face today as far as a distributor and especially in the on premise world. As you know, like I mentioned, there was an incredible increase even during the pandemic of the high end wines. People wanted those wines. There was a lot of disposable income that wasn't being used in different ways. People weren't traveling, people really weren't going out for dinner, shows anything, you know, that they were able to spend money on. So they wanted to, in some cases, they wanted to, you know, have a better bottle of wine. Or people that could afford, they wanted to have those special balls wines they would have consumed at a restaurant. So that was quite incredible to see that the high performing wines or the high, you know, pedigree wines and high rated wines were doing incredibly well. But the things we're facing today as a challenge, first and foremost for for for the restaurants is definitely the challenge with the, employment. You know, every restaurant is short in employment, and I'm sure that's not just here in this in this part of the United States and also in this part of the world, being short on people is really affecting the restaurants to be able to have the right people in place and be able to provide the ideal service and also cause a shrinking of the wine lists which obviously creates less opportunity for less wineries to be on those wine lists. So we all have to work harder to be able to, you know, getting onto those wine lists and then make sure that the wines, you know, do well. Another big challenge is definitely bendy, the disruption, if you will, of the chain of product coming, you know, into the country. So so many out of stocks has been in a very long period of time where some of our best selling wines have been out of stock. Sometimes for a month, month and a half. So that means your distribution for that product is solely gone. So now we have to start from scratch and recreate that distribution, which is obviously a very tough job because, obviously, everybody's trying to get, onto the action for that piece of the pie. But you know, definitely, there's a different aspects that have been challenged. But one positive that I've witnessed, you know, this has been since last year, onto this year, in spite of it all, in spite of the challenges, you know, restaurant tours have been very resilient. Obviously, it's a tough life. It's a nightlife. You know, it's a weekend and holidays life. And new restaurants have opened. Yes. Many have closed. Unfortunately, but many have also opened, through the pandemic and fortunately they're thriving and they're doing well. And it's a great message for, for the industry at large, but also for the Italian wine industry, and for the producers we present, but also for many other people of Italy, they're trying to get into the market, that there is a continuing, you know, passion towards Italian wine, Italian food, and all that encompasses around it. So, we're very positive. I think we're gonna, you know, face a great end of the year and continue growing and Italian wine will continue to very, very well for us. Jaluca, all yours. Yes, thank you, Chielo. That's, that's so true. What where you just reported, especially on the smaller, you know, winery side of the concentration on the on the apprentices. And, yeah, we did, you know, see that, you know, logistic, you know, issues and distribution you know, supply chain, you know, challenges for sure. We'll reserve the last few minutes of, today's presentation to, to wine indications. So there's a lot to talk about here. So will try to be as condensed and, you know, as possible for the time that we have. But, essentially, it's a very small, you know, each. I was just reading, you know, some figures, you know, a few weeks, you know, ago of just a few million dollars, at least in the US, type of market. So, but I have seen, small, new wine schools popping up. I have seen, historical ones doing, you know, very well. Think about those large organizations that, you know, such as WSTT, the Court of Master So Maria, the Master of Wine, you know, program where everybody has, has adapted. You know, to these times. So they offer, you know, vials, for, you know, students to, to take classes and and courses and certifications, you know, online. Then I open up you know, again, other opportunities, you know, to shipping. But as we've seen before, with shipping at least across the United States and, continental as well, you have, you have challenges. So those are like the new challenges that wine schools and wine education as as had. Chile and I have been involved in a high, high, high number of, virtual, tasting events. He has done, and and he will talk to us in a minute, a lot of, you know, wine dinners, with, with, with restaurants and on premise accounts, is done, educational services. I have done, probably forty to fifty just in twenty nineteen alone, with our with our with our customers, with our customer base. You know, you know, locally and, and across, you know, states. We ship wine. So that again, you know, it will give us the opportunity and we and we set it here. We needed to have this spirit of, you know, adaptation to look of what we've been, you know, dealt, at any point in time and, and sort of, start to become a little bit, you know, creative. Chirani, about, you know, part of the, Vineili International, Academy, organizations, VA has done a tremendous job in promoting agile, formats, where we have done lectures, you know, online and and and and as things have opened up and got a little bit more relaxed than on a more concentrated basis. We have offer, tasting, you know, in person, you know, as well. I launched, and and and Chiro did teach with me the, the master course, the beginning, of two thousand and twenty one. And we sort of adapt it, to do the same thing, to do a course over a number of weeks, and then over a weekend to taste the, an number of great, you know, wines, you know, as well. And I think another show that I wanna give is that actually, that I've been working on for the past few months is, agencies around the world, in this case, you know, familiar. Reach out to us. We are your eyes, your, hands, your feet, on the ground. There are still a little bit of challenges for winemakers for, you know, producers to come and work on the market, to promote their wines, to have worked with, you know, with Chiro and other distributors to come and visit mine and other stores, you know, across across the country while things are opening and cleaning up, just use, you know, us as your tool. We are as happy, you know, to promote your product as you can possibly, you know, be. Chita, I don't know if you have a, few thoughts on, your experience, when it comes to, wine, education and and to afford that you wanna share with your audience. Yeah. I think, you know, following what you said, education is critical and, I was being a strong believer of that. And especially, living and breeding Italian wine and only Italian wine every day, I see the the immense interest of ease as much as there is on our part of many, many consumers. They might know a lot less, but they wanna know, and it's so important that the right message is relayed and people do understand Italian wine because, yes, there is an element of complexity when it comes to the many grapes and territories and regions and names and things like that. So it's incredible what the obviously via at the forefront, but also other great organizations have been doing in really laying the ground for people to embrace Italian wine, understand Italian wine, and now also spread the golf of Italian wine and start, you know, buying and tasting and whatnot getting their friends also involved. So education is critical, and I think it's important for all the ten and sixty degrees. And then as far as the virtual part, yes, just as much as you did, and many others did, last year for me that I do a lot of events throughout the course of the year because I realized that's really the way of promoting our wines, not only with our direct customers, which would be you, John Luca, and obviously restaurants, but also to find to touch the final consumer, it's important for me to be always out there many, many nights throughout the course of the year. And last year, things being impaired, I realized that I had to switch immediately to this virtual world and, it proved to be very successful, obviously because everybody was home, everybody wanted something to do, and wine is always a form of enjoyment, fun, you know, gatherings that weren't happening. But at the same time, you could bring a little bit of fun, a little bit of, obviously, wine. At times food to people's homes, and especially Italian in mine with so many stories and beautiful stories and great wines and all those things that make it engaging, we were able to really create an incredible, level of sales, but more most importantly engagement with the, with the, like I said, our customers and the final consumers to continually, you know, stay connected with Italian wine world. So, really, that worked incredibly well. Fortunately, we've now, for a while, shifted back to, in person, yeah, with some limitations, maybe smaller groups and whatnot. But ultimately at the end of the day, you know, the wine, wine is something that it's nice to share together in the same room possibly with a lot of people. But we're going in the right direction. So we're hoping for definitely a better twenty twenty two for all of us. Well, well said, you know, Chiro. We came to the end of our presentations today, but I wanna make it just a couple of quick notes and there is also a question. You know, Rebecca and the audience say education is critical. That should be our motto. And, we all agree on that at all adult level. Not just education for us in the wine trade, but education for consumers, anybody that wants to advance their study, but also about learning, about cultures, about, you know, food, and so forth. So, that's Greg and and and well said. Thank you Rebecca. So one question which is, aligns with the very last point of our presentation, Chiro, is what and maybe we'll we can both answer to this. But what are we seeing, you know, Dishamu, what are the movers and the the the the faster the the faster movers in the slower, you know, movers in terms of wines or appilations or style, that that we have seen. I'll I'll first answer to that. So my answer is twofold. I've talked to many other, you know, you know, colleagues and, and and and store, you know, owners, and restaurants. And, is if you're not that highly specialized, it's probably a lot of answer was, what people have known so far. So what do people have come to know fairly well? Or, appylations, obviously, like Canti or Barolo or valpolicella, a little bit of, you know, Aetna or, wines from Mabrucci and and so forth, where It my very, very personal, you know, world where we cover all the twenty regions, a very high number of different grapes, and there is more like a one on one type of relationship with our with our customers. We see, a huge increase in, in a, so called, like, a lesser known or minor grapes more, such as, for example, we have seen on the red side, negramaro, as well. And we have seen, Nebula from Altopi Monte, from all those great appalachians, that we all all come to know about the the the wanting to, explore either new grapes or the same grapes from a slightly different, you know, appalachian wine. What about you, Chito? What have you seen? Yeah. I think, there is, for us has been outside of it, obviously, at the giants, right? The Verizons, everybody knows, they have police, historically famous and recognized, and where there's been a lot of interest is definitely ceasily. Lot of interest. And, again, even within Sicily, which is a world of its own, there's been things like, for example, catarato, has been a great mover, interestingly enough, on a higher level quality. Then there has been, you know, also, you know, for obvious reasons, could be from at night or maybe surrounding areas, but anyway, it's been a very, very many people passionate about it and wanted to try and experiencing and loving it and continuing to do so. And then, you know, also, white wines from Kompania. Maybe because I'm biased to that because I'm from there, but there is to say that doing a lot of events and reengaging people on varietals that maybe have been around for a long time and that they've been in the market also for a long time, in this market, anyway, people now getting re exposed to Fiano, Fangna Greg, or, you know, the classics, not even talking about the more esoteric or lesser known. So there's there's a lot of different things that people are really you know, connecting Wing and getting the, you know, getting passionate about. So, it's very exciting. It's exciting to see that there anyway living in in this market, everything is out there. They're really I I've seen every possible for Rital imaginable, but these have been the ones that given us great satisfaction outside of, obviously, the classic from, you know, touscany Piedmont Vanator. Yeah. Awesome. Thank you. Thank you. Thank you. Let's take a look. I don't see any other, questions. So we are going to, close today presentation. Thank you, wine to wine. Thank you, Verona. Thank you, Italy. Thank you, Chiro. In a rise in beverage. It was fun to be here. You can, if you have any questions about these presentations, about the Northeastland market, about Italian wine, You can, just contact us. We have our information on the platform. We'll be happy to, to answer any question you might have and continue to spread your gospel out Italian y. Thank you, everybody. Listen to the Italian wine podcast wherever you get your podcasts. We're on SoundCloud, Apple Podcasts, Spotify, email ifm, and more. Don't forget to subscribe and rate the show. If you enjoy listening, please consider donating italian wine podcast dot com. Any amount helps cover equipment, production, and publication costs. Until next time. Cheaching. Hi, guys. I'm Joy Livingston, and I am the producer of the Italian wine podcast. Thank you for listening. 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