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July 2017, Volume 23, Number 3

Wine, Food

The US had over 9,000 wineries in mid-2017, including at least two in each state. Most are small, and many are success-driven, that is, they are owned by persons who were successful financially in a non-wine business.

Small wineries normally receive half of the average retail price for their wine from wholesalers. By selling wine directly to consumers, wineries capture more revenue at the cost of operating a tasting room and fulfilling orders on a bottle-by-bottle basis rather than selling a pallet of cases. Most wineries that sell less than 10,000 cases of wine a year aim to sell most of their wine directly to consumers who visit and members of their wine club.

The fastest-growing types of wine sold in the US are red blends that cost $8 to $11 a bottle, followed by Cabernets that retail for $11 to $15. Wines priced at $20 and above sometimes become short-term hits, prompting comparisons with the US movie industry, that is, detecting shifts in consumer tastes and moving quickly to satisfy these tastes before they change.

US spending on wine surpassed that of France in 2013, which is followed by Germany, the UK, Italy and China. Chinese wine sales are growing, and are projected to reach $22 billion in 2020, putting China in second place behind the US at $39 billion.

Chinese American investors are buying vineyards and wineries in Temecula, the wine-producing area of southwestern Riverside county with 50 wineries in the midst of the 25 million residents of Southern California. An influx of Chinese money aims to double the number of Temecula wineries to 100 by 2020.

Twelve Oaks promises private vineyards on 700 acres surrounding a hotel and conference center and private homes in Temecula. Europa Village is a similar project that is raising money through the EB-5 program, which awards immigrant visas to foreigners who invest at least $500,000 in US projects that create or preserve at least 10 jobs.

The EU had over 3.2 million hectares of vineyard in 2015 and 2.4 million growers, making the average vineyard 1.3 hectares (3.2 acres). Spain had 941,000 hectares, France 803,000 hectares, and Italy 610,000 hectares; these three had three-fourths of EU vineyards. Next was Portugal, 199,000 hectares, Romania, 184,000 hectares, and Greece and Germany, 103,000 hectares each.

Romania had the most growers, 855,000, followed by Spain, 518,000, Italy, 299,000, Portugal, 212,000, and Greece, 189,000. The average vineyard size was 0.2 hectares (0.5 acres).

Brandy. The Distilled Spirits Council reported that 13 million cases of brandy were sold in 2016, including eight million cases of US-produced brandy. Brandy sales exceed those of gin, Scotch, and Irish whiskey. Gallo's E&J Brandy is the best-selling US brandy, and Cognac from France is the best-selling import.

Brandy is fermented and distilled fruit juice, although most brandies are made from grapes. Cognac is made from trebbiano grapes that impart the flavors of the soil, while US brandies are made from a range of grape varieties.

Food. Amazon announced a $13.7 billion buyout of Whole Foods in June 2017, sending the stocks of Walmart, Target, Kroger and Costco tumbling. Amazon is worth $465 billion, so buying Whole Foods is equivalent to a person with a $1 million stock portfolio investing $30,000.

The US grocery business is fragmented. Sales at the 262,800 US grocery stores in 2015 were $700 billion. Walmart supercenters, Kroger, Safeway and Publix accounted for 36 percent of grocery sales in 2013. Walmart has 4,700 stores and the largest share of the grocery market; Whole Foods has 460 stores. Both firms have few union-represented workers.

Many analysts expect a Walmart -Amazon battle for consumers based on a mixture of physical stores and online sales that will displace less-nimble retailers. Walmart, which had US sales of $486 billion in 2016, is entrenched with lower income consumers in rural and suburban areas, while Amazon and Whole Foods are well-established with more affluent consumers in urban areas. There is speculation that Amazon will use Whole Foods stores as pickup points for merchandise that is ordered online.

Some studies suggest that Americans increasingly buy from both high-priced and low-priced stores.

As consumers get more comfortable purchasing more goods online, suppliers with robots could make goods such as shirts with robots and deliver them quickly to consumers. The result would be ever-more industries with high-fixed costs and low-marginal costs, such as airlines, banking and telecoms. Only the employees of the winning firms tend to have rising wages.

German discount grocer Aldi announced plans in June 2017 to open 2,500 US grocery stores by 2022, which would make Aldi the third largest grocery store chain by outlets, after Walmart and Kroger. In Europe, discounters such as Aldi and Lidl have increased their market share by offering store brands at lower prices. More Americans are buying store-branded products, prompting Aldi or Lidl to expect success in the US.

South Dakota's Beef Products sued ABC News over a 2012 report on "pink slime" or the lean finely textured beef included in ground beef. USDA approved a procedure to separate the remaining meat from the fat in trimmings and then treat the meat with ammonia to kill pathogens in 1993, but skeptics said beef processors simply aimed to get an extra 10 to 20 pounds per carcass.

In response, McDonald's, Taco Bell and Burger King dropped beef with pink slime. Beef Products sued ABC News for defamation, seeking $2 billion. The case was settled in June 2017 during a trial in South Dakota.

Almost a quarter of the world's 7.4 billion people, some 1.6 billion, are obese (800 million) or undernourished (800 million), unable to obtain enough calories over a year. Almost all undernourished people are in Africa and Asia, although Haiti stands out as the country where over half of residents are undernourished, followed by almost half in Zambia.

An equal number of people are obese, with a body mass index of 30 or more; BMI is a person's weight (in kilograms) divided by the square of his or her height (in meters). The highest rates of obesity are in Pacific Island nations such as Tonga, but a third of adults in the US and Mexico are obese; an eighth of the 800 million obese adults worldwide are in the US. Women have higher obesity rates than men, and Blacks and Hispanics in the US have the highest obesity rates.

Much of the world's food is wasted or not consumed by people. In developing countries, most food waste occurs before being purchased by consumers, especially as harvested produce is stored incorrectly and spoils en route to consumers. In industrial countries, most food waste occurs after consumers purchase food.

Fish. The FAO says that 90 percent of the world's fisheries are fully exploited or facing collapse. One reason is China's expanding fleet of deep-water fishing vessels, some 2,600, that ply far-away waters. Over 14 million people are employed in China's fishing industry, and China is the world's largest seafood exporter.

China consumes a third of the world's fish, and its share of global consumption is growing. Critics say that the Chinese government subsidizes the construction and operation of large fishing vessels, which sail to the waters off Senegal and other countries and deplete fish stocks. Senegal has 300 miles of coastline and 20 percent of its workers are employed in fishing, but large fishing vessels that operate near the 200-mile economic zone catch most of the fish of Senegal's coast and send it elsewhere.

Some countries welcome Chinese fishers. China is building roads in Mauritania, which allows Chinese trawlers to catch migrating fish and turn them into fish meal for animal feed. Mauritania has 20 fish meal factories, and their number is expected to double to 40.