THE FUTURIST WHO’S BEEN BEATING HIS DRUMS FOR NEARLY 10 YEARS

(THIS NEWSLETTER HAS BEEN 100% WRITTEN BY A HUMAN -- ME)

Rob McMillan behind his kit, has been beating his drums of warning for almost 10 years

Folks in the wine industry have been well-tuned to Rob McMillan’s prognostications for more than a quarter-century. He’s a well-respected predictor of trends – a preponderance of which have helped its wineries flourish. But with his reports, through the auspices of the vintner’s financial bank-of-choice, and whose loans have bolstered their wineries – there was something in McMillan’s report of 2018 that needed their attention.

He warned then, “We began alerting the industry to an approaching demand correction that would require a response. The business was otherwise doing well so a prediction of that type wasn’t gratefully received. But we were out ahead of trends as a thought-leader should be.”

He’s been beating the drums – literally – all this time, alerting an industry, so bloated with good times, it didn’t heed his rim shots and the tapping of his high-hat. Until about a year ago. Whether or not mothballing or even ripping out vineyards; or adding to the demands of a younger generation by producing canned sweeter wines, will help it climb out of the hole it finds itself, is to be told?

Nonetheless, Rob McMillan keeps banging on his drums, sorta like a financier’s Grateful Dead’s enduring percussionist Mickey Hart. Those in the wine industry likely really don’t know who Rob McMillan is, beyond a person with a suit and a treasure trove of statistics.

He really is a drummer!

He tells me, “I’ve been a percussion musician since 5.” He even plays in the bank’s band (Silicon Valley Bank, in January it will officially become, First Citizens). He mostly loves jazz to which he says, “I used to put headphones on and try to figure out what was going on in the background. ‘He’s gotta be making that noise with his left hand’, so I tried to deconstruct (it).”

McMillan is always looking into the future

Now, he’s deconstructing something else, as his annual reports – since 2000 – reveals. Beginning with his account of nearly nine years ago, he clearly saw the indicators that has led to this moment – the worst downturn in the wine industry in the last 90 years!

“I saw declining sales volume. You could see the long-term trend went from up to flat, and it was starting to turn down,” says the 70-year-old McMillan and dad of two. “By the next year that trend became more embedded; it was increasingly evident.

“I kept warning: ‘Unless you change what you’re doing, and adapt to a new consumer, you won’t recognize the business.’ That’s when I was, “hey, hey, hey!’ (And I) had my big share of naysayers. The wine industry was going fine at the time. Sometimes you can be too early to a party and nobody can see it. If you’re going to be a predictor, you’re going to have to shorten up your time frame.”

THE DEMAND RESET WAS ALREADY UNDERWAY IN 2019

“While we explicitly warned of the oncoming consumer shift in the 2019 report, there was no industry discussion or response that followed,” he says. “(The industry was) wanting to believe that large harvests were the exclusive cause of oversupply in 2019 and it kept the industry from going deeper into the data. It prevented us from recognizing that the demand reset was already underway.

“By February 2022 the writing was on the wall and was too hard to ignore. The only question was how deep and how long this particular situation would last. How did we answer those questions as an industry? We did what we had learned through 25 years of increasing demand.

“We decided to do nothing.”

Wow!

THE INDUSTRY WON’T BEGIN TO SEE AN UPTURN ‘TIL ‘29

As a result, McMillan is now forecasting that the industry won’t bottom out until next year through ’28; and won’t begin to turn around until 2029-2030!

“I put together a model (predicting) a changing of the guard, i.e. rotation of our (Millennial) generation going out and a different generation coming in,” estimating that it took him about 200 hours of sweat equity over three-to-four months to complete. “… We’re close to that point where others (consumers are coming). That was the basic premise.”

What about right now? Are they listening now?

“Now that we’re here, there’s no need to tell you about the threat that has arrived; everyone now knows and understands,” he believes. But then adds, “It’s hard to tell (though). Everybody is singing from the same hymnal. We’re here, you don’t have to guess. Now, you can do something about it.

‘WHAT HAS BEEN NORMAL WILL NOT BE NORMAL AGAIN’

“I worry about all the people who I’ve spoken with that are holding on by their fingernails and waiting for a bottom as if ‘everything will go back to normal.’ To those, I have to be plain spoken: What has been normal will not be normal again. The rising tide won’t lift all boats after we bottom. You have to evolve now to be relevant and take advantage of what’s coming.”

From where I sit: ‘They’re going to have to find out-of-the-box thinking to reinvent themselves.’

So, what are they doing?

“They’re trying things. That’s what I want to see.”

On sweet wine: “I don’t think people are paying attention very much. If you’re looking for another channel, plenty of wine, plenty of people are in front of you. … But they’re going to have to find out-of-the-box thinking to reinvent themselves.”

SOME GOOD NEWS

But hold on, McMillan the drummer, the predictor, the futurist and the thought-leader sees some positive signs: “There is good news as the steepest part of the downturn appears to be waning and our analysis suggests we are entering a new phase in the correction. Yes, 2026 will still be a challenging year, but the industry is at least approaching a point of stabilization.

“Those who continue to do what they’ve always done will find their strategies failing as they watch from the sidelines, clinging to the fraying belief that their way has always worked before.”

And thus, Rob McMillan concludes with this: “I’m a futurist; a forward-looking person. I’m curious about outlining things. This industry is shockingly complex but yeah, and so I try and figure it out.

“It’s the way I’m wired. I always want to know where things are headed. If you can figure out where they’re headed, you can take action. This one is so interesting.

“But this is me. It’s just the way my mind goes.”

So, who appointed you king of the thought-leaders of an industry?

“People liked what I said. It stimulated their thinking. Somebody said to me, you are the oracle of the industry. I said, ‘that’s just weird.’ People voted by reading what I write. Thought-leader? Absolutely, but I have to have thought-followers. … “My dad was a TV repairman; repairmen became obsolete. …”

One time, he relates, as he was addressing a symposium years ago about the looming wine depression, “Someone shouted, ‘Bullshit,” he says, laughing. What McMillan is saying is no laughing matter and what he’s puttin’ down ain’t no bull.