Is the wine industy heading for trouble? NO.
It all depends on how you define ‘the wine industry’. I agree that there are plenty of symptoms that suggest the industry as we know it today may well struggle to survive.
The recent news that a third of Britons under 24 do not drink any kind of alcohol is worrying, as are some of the implications of climate change that could lead to the permanent flooding of many premium coastal wine regions from Bordeaux to Margaret River in Western Australia. But, to be honest, if we get to that point, the state of the wine industry may be the least of our concerns.
So, optimistically, while acknowledging that many of the wines we know today are almost bound to change – who’s for a Cabernet Sauvignon/Touriga Nacional Bordeaux blend? – I’m going to set climate change to one side. And I’m going to argue that, like other forms of agriculture that face challenges, the wine sector is overdue for a shake-up – which, when it passes, will have been a positive thing.
Scarcely a year goes past without a report being published about the lack of financial viability of a region or an entire country. Most recently, it was South Africa’s turn to be the subject of this kind of discussion but, with bulk prices still hovering around the €1.50/litre level, Bordeaux is hardly an attractive prospect for anyone looking to make money. In Europe and North America, in particular, agriculture has been feather-bedded by state subsidies and technology that has effectively reduced the cost of producing a kilo of beef or a litre of wine. It has also existed within a retail environment in which consumers have become accustomed to buying the farmers’ wares at unrealistically low prices.
That process is due for a change. The days of generous government handouts will soon be over. Efforts to combat climate change will certainly involve reducing the amount of animal protein we all consume. In the US, the race is on to see whether cattle and poultry will be replaced by plant-based food or substitute ‘meat’ produced from stem cells. This will not end beef and poultry farming, but sooner or later it will probably call a halt on the most industrialised branches of agriculture that have been responsible for cheap burgers and chicken sandwiches.
The same will apply to wine. The days when it is considered normal to consume half a bottle of wine a day are almost over. But wine is not going to die – any more than beer or whisky. As daily consumption falls and the price of beef and wine and whisky goes up, the attention paid to what people are eating and drinking will grow.
People who are unrealistically looking for ‘terroir’ and ‘authenticity’ and ‘stories’ in bottles selling for less than $10.00 will find that quest increasingly fruitless. They will spend more for more pleasurable but more occasional wine. For all sorts of reasons, big supermarkets and self-service stores will become a thing of the past, unless they offer non-shopping experiences consumers really enjoy. This means the end of the scary ‘wall of wine’ that so many shoppers find so daunting. In the future people will simply scan the labels of wines they are already happily drinking with their friends and hit a ‘Buy’ button.
In the US, the success of highly alcoholic red blends may strike some traditionalists as evidence of vinous decadence, but it is also associated with a readiness to pay more for beverages that purchasers actually enjoy. More importantly for the wine industry, it breaks the traditional appellation-focused stranglehold over pricing. In France, the phenomenon of premium-price wines without regions is represented, at least in part, by the growing number of natural wines and innovative blends that are now being sold as Vin de France because they fall outside the AOP system. Such wines are helping to shake up a complacent, conservative industry.
It’s all about relationships
But so, to an even greater extent, are the changes in communication and distribution. Historically, especially in the Old World, most wine producers have preferred to delegate both of these activities to others. Today, we’re seeing something like the switch from Sinatra and Presley to Dylan and the Beatles. Just as the songwriters of the 1960s and 1970s moved to singing their own songs, and in a few cases, setting up their own record labels, the 21st century wine producer has to focus on addressing consumers directly, through wine tourism, social media and events, and on overseeing or managing their own distribution.
The wine industry of the future will almost certainly be smaller, more profitable and, I hope, even more exciting. There will be fewer people growing grapes and making wine simply because their parents did so, and a greater proportion doing it because they are passionate. And they won’t be cogs in a giant machine, as so many are today. They’ll be selling the wines they make directly to customers with whom they have a real relationship.
This debate first ran in Issue 5, 2018 of Meininger's Wine Business International. You'll find Felicity Carter's YES response here.