Macro economic trends and their impact on global wine markets: effects and challenges for small wine companies
I read an interesting article today written by Raphael Schirmer, who explains very clearly the dynamics and the causes of the present globalization in the wine world.
According to the author, huge investments in the New World’s wine sector during the past decades have caused a general globalization that has dramatically changed the structure of wine production and marketing.
1) First necessity: wine standardization.
Standardization is necessary in order to produce simple wines that are as homogeneous and as uniform as possible whatever the bottle and whatever the year.
Using wines produced from a single grape variety is a doubly interesting strategy, as it simplifies things for the producer who no longer has to prepare hard and perilous blends and enables the consumer to easily recognize particular aromas that are put forward in wine promotion and selling strategies. Grape variety is the first message conveyed by the label on the bottle. The choice is made all the easier for consumers as they can buy a bottle without knowing much about wine, apart from the names of the few basic grape varieties.
2) Second necessity: industrializing the wine sector.
Huge firms need to produce wine in considerable volumes. That is why they rely on an array of high technology equipments to produce as much and as well as possible: they use numerous thermo-pneumatic presses, and non-standard wine-making equipment and storing facilities, which enables them to deal with formidable volumes. Also bottling processes have been standardized and are today faster than ever.
3) Third necessity: modernization.
The sector is being modernized in all directions, from production to wine marketing. It is supervised by powerful firms that hold an oligopolistic position in their respective countries.
One of the most obvious aspects of the evolution of the wine sector is its financialization. These big firms are quoted on stock exchanges, or use finance to buy other firms. They integrate the whole production, from upstream to downstream. As the role played by stock exchanges is getting prominent, they have to make quick, substantial returns on investments. Therefore they are bound to produce high volumes and sell their wines quickly.
At the end, those big firms had no choice but to transform wine into a commodity that can be sold and bought like any other product in the market, reducing the duration of the production processes as well as their cost, and shaping the final products in a way that they can be accepted everywhere and by everyone (taste homogenization).
Although these firms keep top-quality wines in their catalog, top-quality wines are not directly profitable for them and are rather used as campaigning and advertisement tools, to give them a good-quality aura on international markets.
A key role in this process has been played by wine critics like Robert Parker, who belongs to a train of thought that regards “terroir” as unfair, and excessive income sources as a hindrance to the liberalization of world trade, and maybe even as an intellectual swindle.
Scary, isn’t it?
You can read the full article here.
Credits: ph. courtesy wine-searcher.net