We live, as the old curse goes, in interesting times. Between populist unrest and dramatic political changes in key markets, it’s hard to make economic predictions.
Some things are clear. The precipitous fall in the pound means that the UK market, which had already become a tough place to do business, is getting tougher. The major retailers are, apparently, trying to keep their prices the same, which means they’re asking their suppliers to cut their margins and supply the same wines at a lower cost. This may be a very unwise strategy for producers to follow. The pound will, one day, bounce upwards again, and when it does, there will be no negotiating room. Retailers will have learned that wineries can continue to supply wines at lower and lower prices, so they won’t want to return to the prices they used to pay.
For many producers, the great hope has always been the US market, where margins can be a lot more comfortable. Unfortunately, there are signs that even there, things are going to get tougher. As Jeff Siegel reports, the great wine boom of the past couple of decades may be slowing to a halt. This doesn’t mean consumers will stop drinking wine, just that new wines entering the country will have to compete harder with the wines already on the shelves. The silver lining is that there are still vast sections of the country that are still to become part of the wine culture, and they may be the right places to head for, rather than the big coastal cities.
Late last year I visited South Africa to look at how it’s tackling sustainability, and I came away deeply impressed with what I saw. In the first of several stories, I have recorded what I saw on my visit to Spier Wine Farm. It’s a farm modelled on Joel Salatin’s famous Polyface Farm in Virginia, where the plants and animals are managed in such a way that they help each other’s growth and well-being. It’s not the only wine producer in the world to follow this model – a number of South Africans are also working to solve their pest problems by bringing in beneficial animals and insects, as are producers elsewhere. But this type of enterprise is probably the true future of wine – a return to mixed farming, simply because it may be a better way to farm. The old mixed farms of our ancestors disappeared because they didn’t produce enough of one crop to be financially viable, but in a world where consumers are literally hungering for authenticity in their food, the pricing might finally be right.
There’s plenty more in this extra-large ProWein issue, including a look inside the fabled Domaine de la Romanée-Conti and an in-depth interview with Rob McMillan, founder of Silicon Valley Bank’s Wine Division.