Posted on | June 24, 2013
Written by | Jeff Siegel
This mild-mannered bianco is entrenched as a coast-to-coast favorite. But at what price?
Whenever it’s beach season in South Florida, Raj Patel knows exactly what his customers want: Pinot Grigio. “It’s refreshing, it’s white, it’s light drinking, it’s only a little fruit, and there’s no oak,” says Patel, who owns Caladesi Wines in Dunedin. “They come in, and they want their Pinot Grigio, and they don’t want to spend a lot of money for it.”
Patel’s experience is not unique. Pinot Grigio drinkers, say retailers, restaurateurs and importers, are loyal (to the grape if not the label) and price-sensitive, focusing mostly on Italian labels and brands around $10. In this, Pinot Grigio is a common-denominator wine stylistically, a high-margin cash cow when sold by the glass, and a mascot for imported white wine everywhere. Not coincidentally, eight of Nielsen’s top 10 Pinot Grigios showed sales growth in 2012, and four of them grew by double digits.
Yet Pinot Grigio has the potential to be more than just an $8 white wine sold only to women of a certain age. Santa Margherita, the category leader, has retailed for $20 and more for years, and there are also opportunities with brands in the $12-$15 range. In addition, Pinot Gris from California and Oregon has made inroads among younger and more adventurous wine drinkers. (Pinot Gris and Pinot Grigio are the same grape genetically; the choice of nomenclature in New World regions is often a marketing decision.)
“That whole area in the middle has less competition and more room for growth,” says Francine Kowalsky, the director of marketing for the national brands portfolio at importer Frederick Wildman. “There is a consumer who wants to buy what I call ‘affordable luxury’—willing to try something different that costs a little more that offers quality for value and isn’t what everyone else is drinking.”
Always Popular… and Safe
Pinot Grigio has been an on- and off-premise staple for more than a decade. In 2012, reports Nielsen, sales rose 8.8% and it was the second-best selling white wine after Chardonnay.
“Why has Pinot Grigio remained so popular for so long?” says Alfonso Cevola, corporate director, fine wine group, for Glazer’s Distributors in Dallas. “It’s easy to pronounce. It was part of the backlash for the Chardonnay craze because it wasn’t expensive, alcoholic, oaky—and it was more than just a cocktail.” Yet, in many ways, it has long been in a rut.
“There has always been a hierarchy with white wines,” says Christopher Freeze, vice president of the wine division for 21st Amendment, an Indiana retailer with 19 locations, and which carries more than three dozen Pinot Grigio and Pinot Gris SKUs. “People are willing to pay more for Chardonnay than they are going to pay for Sauvignon Blanc, and they are willing to pay more for Sauvignon Blanc than they are for Pinot Grigio. Fair or not, that’s the way it has always been.” He likes to refer to Pinot Grigio as “the stereotypical patio pounder.”
In this, it is a safe wine—safe for consumers, who are still mostly women 35 and older and who feel comfortable with its simple style; safe for retailers, who know exactly how much they will sell every year, regardless of anything else going on in the market; and safe for restaurateurs, who can sell an $8 or $10 glass that may cost them $4 a bottle.
But that safety has bred its own problems, including tremendous price resistance, says Patel. “I do try to upsell, but there are only a couple of brands that people are willing to try. They are really focused on that $10 range,” he explained. In addition, it’s difficult to cross-sell customers to similar wines in other categories. Freeze at 21st Amendment recommends French Picpoul and Muscadet, while Patel likes Spanish Verdejo. But it’s a hard sell, given how much Pinot Grigio drinkers love their Pinot Grigio.
So what can be done to lift Pinot Grigio out of that safety zone? Glazer’s Alfonso Cevola says that the topic is not a new one, and the category has remained pretty much the same for 20 years despite constant discussion. On the one hand, there has always been a talk about higher-end Pinot Grigio, but no real significant movement toward taking market share away from Santa Margherita. On the other, he says, every year seems to bring new producers who are willing to undercut on price to build share, as well as others who are willing to sweeten the wines to make them even more demographically friendly. Plus, the category has seen its share of what Cevola calls silly label marketing in order to differentiate wines that aren’t all that different.
Yet, perhaps, there are signs of change. There is a growing market for Pinot Grigio that costs more than $10, particularly in bigger cities like New York, Chicago and Philadelphia, says Guiseppe Locascio, the director of brand management for Winebow’s Italian wine portfolio.
“This is a more sophisticated consumer who is trading up,” says Locascio. “On- and off-premise can use the Pinot Grigio category to sell something different because their customers are already familiar with Pinot Grigio. They were drinking entry level Pinot Grigios, but they’re willing to spend more for what they perceive as different quality in the bottle.” Notable examples in the Winebow portfolio include the single vineyard Unterebner Pinot Grigio from Tramin and Tiefenbrunner Pinot Grigio Vigneti delle Dolomiti IGT.
At the restaurant Fountainhead in Chicago, proprietor Aaron Zacharias has forced diners’ hands, so to speak, by featuring a stepped-up Pinot Grigio from Alto Adige, as opposed to a generic, cost-driven choice. “Alois Lageder is a big producer but we find that they offer value and that their wines still offer some character from the grape, says Zacharias. “It’s our second best-selling white by-the-glass.” There are limits, however, on how far some Americans are willing to reach, Zacharias notes: “What kills me is that we offer a beautiful Alsatian Pinot Gris by the bottle and half bottle and we can’t move it. We’re practically giving it away at $33 a bottle. We need to do a better job of explaining this varietal because the perception often is that PG above $8 a glass must be overpriced.”
Meanwhile, Pinot Gris from California and Oregon, like J Vineyard’s critical and popular hit, are making inroads both on- and off-premise. J, based in Sonoma, first produced Pinot Gris exclusively from Russian River Valley fruit in the 2003 vintage. Expanded production into a California bottling has paid off; this screwcap version is now the top-selling California Pinot Gris in America above $14 SRP. Melissa Stackhouse, J’s VP of winemaking, attributes the success both to the wine’s food friendliness and the economy. “The introduction of J’s California Pinot Gris in 2009 was a classic example of the right wine at the right time,” she says. “Consumers were demanding great quality and value during the downturn.”
Patel, who just started carrying the J, is eager to see what he can do with the $15 retail label. Meanwhile, the best-selling white wine by the glass at the Pyramid Room, the restaurant in the Fairmont Hotel in Dallas, is the Pinot Gris from Oregon’s Adelsheim Vineyard—something that sommelier Hunter Hammett is quite proud of.
“That’s why it works, because there are some people who are tired of Pinot Grigio as they know it,” says Hammett, who has three Pinot Grigio and Pinot Gris on his list, none of which are among the category leaders. “They don’t want to drink Chardonnay, but they also don’t want the same old thing. And we’re in an environment where we can do this.”
Age is the common denominator among these more adventurous Pinot Grigio drinkers. They’re younger than the typical 35 and older woman—and may even include men, something not often seen. Hammett says his Adelsheim drinkers include young couples and male single business travelers, while Kowalsky says she thinks these new drinkers could eventually skew the category’s demographic younger.
Hence, there are possibilities that may not have existed before. Says Kowalsky: “Pinot Grigio is what every wine drinker wants in a white wine.” The question to answer is which Pinot Grigio they will be drinking.