Doom-mongering about declining wine consumption has reached fever pitch in the press. Is there nothing more than hard seltzers and mocktails to look forward to?
I've always thought the Geoegians gave done a great job at marketing because they use the small, boutique wines and qvevri wines speak for the country and that then gives the middle level and bigger producers a little more stay in the market since most people aren't going to be spending what the small producer wines cost. But also I think young people just care about source, environment, justice etc. Gallo isn't producing all that cheap wine with workers who are paid a living wage.
Georgia is a really interesting example indeed. Of course it's still the major industrial wineries that do the volume.
I would argue, however, that anywhere in the world it's the boutique wineries that win new advocates for wine. Did anyone ever decide to become a sommelier after drinking a bottle of Apothic, I wonder?
When Kendall Jackson Chardonnay is on the wine list at a cheap diner in the USA for over 20$/glass, no wonder people are turning away.
I personally would love to see this as a the metric
"What about a metric that looks at the number of families who support themselves wholly or partly from wine production? "
for success in the industry. That is true success.
The only rebuttle I'm sure the big guys would give is that they hire lots of employees for their industry. And that might be true, but the small guys are buying boxes, corks, glass and other materials as well. They too employ many by extension.
Absolutely. And I bet that in the cause of efficiency, mass producing wineries employ far less people and put far less back into the economy per bottle produced/sold.
A brilliant analysis. Especially insightful is the list of things small wineries actually do worry about: supply chain, succession, climate change. I've been saying for years that growth of the bigs is toxic to the industry, because it means there is always a small but passionate cadre of newbie ignorami who don't yet "get it," But are merely seeking a pleasant buzz and can't see anything special about wine as compared to, say, hard seltzer. When rookies stop entering in, it means the avarage consumer has been around long enough to despise chocolate Cabernet and hot buttered Chardonnay and begin to explore new experiences and authentic wine producers with fascinating stories. I find we're headed in a great direction.
I am happy if it struck a nerve Clark. And I tend to agree, I can't see what good the volume producers really do for wine. Much is made of "innovations" such as flavoured wine, wine based RTDs and so on, but to me that is a distraction. It would be as if the beer industry depended on shandy/radler/whatever it might be called in the US for its survival. Or if the cheese industry bet the farm on processed cheese slices.
Thanks for your well-reasoned refutation of what has become a misleading memetic refrain!
$20 - $29 retail is almost certainly a sweet spot for fine wine generally, not just natural wine. Its upper bound represents a popular cut-off for what consumers (at least in the U.S. where I observe firsthand) are comfortable paying, while its lower bound reflects the reality of costs-of-production outside of that which takes place on an enormous scale and governed by patterns of manufacturing and mass-production. Too be sure, there are a lot of distinctively delicious wines retailing for under $20 – I give thanks for their existence while consuming them at least one or two days each week, not to mention their being my go-to when there more than six or eight guests to serve. But one has to search to find that sort of value. The combined cost of materials (glass, closures, etc.), taxes and shipping alone amount in most places amounts to three or four dollars per bottle, which, if distributors’ and retailers’ mark-ups have to be factored in, takes one almost half the way toward an eventual shelf price of $20 before even considering what it costs to produce the stuff in the bottle. High quality under $20 retail is frequently predicated on regions and types of wine that are struggling to be profitable, or on bottlings that are designed to be only marginally profitable in themselves but that make sense in terms of a wine estates full portfolio. And if even halfway responsible let alone organic or sustainable viticulture is factored in, staying under $20 is that much more of a challenge.
You’ll find the “youthful cohort” in less hip places like Cincinnati – where I live – too.
But you’ll also find a wealth of tap rooms and specialty spirit bars, and I think it might be fair to conclude that along with an encouraging flourishing of wine bars as come increased competition by other sorts of beverage for the thoughtful and interested drinker’s business.
I’m also concerned that what will have been the gateway for many consumers to enter the world of fine wine – namely the grocery store – is losing influence and that the quality of wine typically on offer in these establishments has declined so significantly under the very pressures of growth and squeezed profits that you cite, that the gulf between commercial grocery store wines and anything that you or I would want to drink cannot be imaginatively bridged. Put another way, I fear that potential future wine lovers, after sampling what is on offer when they visit the grocery store, will conclude that wine is a waste of their money – and on the basis of the wines they’ve sampled, that conclusion will be entirely justified.
There are over half a million wines produced today in the U.S. alone, yet only about 25,000 are in the three tier system. These wines are required to conform to the narrow confines of around 15 expected categories: the expected Chardonnay, the expected Merlot, etc..
It takes skill to make wines into this industrial category, I elected to stay small so I don't have to. I don't make a single wine that has any business on a grocery store shelf: not my Norton, not my St. Laurent, not my Faux Chablis (100% Chardonnay, but 2005 is the current vintage and the 2006 isn't quite ready). The invisible long tail has 98% of the SRPs and fully 100% of the interesting wines. No wonder everyone is bored.
I completely agree that craft beer and craft spirits are part of the same dynamic movement that will - I hope - keep driving wine forward too. We should probably include third wave coffee, as I know that many a barista develops parallel interests in craft beer and natural wine.
The point about grocery stores seems important too. That said, I am curious about what 'turns' a consumer from wine-neutral to wine-curious or even wine-obsessed. I would hazard a guess that the spark is most often either a) holidaying in a wine region, more likely Europe although conceivably within the US b) an eye-opening experience in a wine-focused restaurant or c) exposure to exceptional wines thanks to a friend or family member.
I´d love to know what you think the basic economics of your small winery might be. What would the costs of a basic winery be and hence you can then say something about volume and price to achieve that.
Kind of an impossible question, because there are so many different parameters. For example, a family winery where the vineyards, cellar etc were all passed down over generations and there are no loans or rents to pay can clearly operate on much smaller margins/much less revenue than a newly created project where someone started from scratch.
Some other anecdotal observations:
1. I know of wineries producing as little as 5,000 bottles of wine a year which support the full-time livlihood of their owner/operator. The key here is that the winery will have no employees and the price per bottle has to be premium. At this scale (and a bit larger) the harvest is probably achieved with family and friends, rather than a paid team of pickers.
2. The model that I see most often, all over Europe is where production is around 30 - 50K bottles a year, and the wines retail between 10-20 EUR in the country of origin. Successful examples of this type of business (usually with a decent export profile) are generally selling their wines wholesale (Ex-works) for between 8-12 EUR. That is 2-4 times more than you'd expect at the bottom end, I guess.
This size and price bracket seems to support a family unit fairly comfortably. Although again, there are so many other factors: sometimes one partner has a separate job, sometimes not.
3. It's hard to generalise, also because vineyard and grape variety yields can vary so dramatically. Not to mention catastrophic weather events. If you are a small grower in the Jura these days, your harvest may be between 0-100% of what you expect. Hail could, and does, wipe out the whole lot in some years.
Does this help? Or tally with your own experience? Just to restate it, I'm an observer not a practitioner in this space. So I don't entirely know what's predicated your question.
I've always thought the Geoegians gave done a great job at marketing because they use the small, boutique wines and qvevri wines speak for the country and that then gives the middle level and bigger producers a little more stay in the market since most people aren't going to be spending what the small producer wines cost. But also I think young people just care about source, environment, justice etc. Gallo isn't producing all that cheap wine with workers who are paid a living wage.
Georgia is a really interesting example indeed. Of course it's still the major industrial wineries that do the volume.
I would argue, however, that anywhere in the world it's the boutique wineries that win new advocates for wine. Did anyone ever decide to become a sommelier after drinking a bottle of Apothic, I wonder?
Excuse typos. Old phone.
When Kendall Jackson Chardonnay is on the wine list at a cheap diner in the USA for over 20$/glass, no wonder people are turning away.
I personally would love to see this as a the metric
"What about a metric that looks at the number of families who support themselves wholly or partly from wine production? "
for success in the industry. That is true success.
The only rebuttle I'm sure the big guys would give is that they hire lots of employees for their industry. And that might be true, but the small guys are buying boxes, corks, glass and other materials as well. They too employ many by extension.
Absolutely. And I bet that in the cause of efficiency, mass producing wineries employ far less people and put far less back into the economy per bottle produced/sold.
A brilliant analysis. Especially insightful is the list of things small wineries actually do worry about: supply chain, succession, climate change. I've been saying for years that growth of the bigs is toxic to the industry, because it means there is always a small but passionate cadre of newbie ignorami who don't yet "get it," But are merely seeking a pleasant buzz and can't see anything special about wine as compared to, say, hard seltzer. When rookies stop entering in, it means the avarage consumer has been around long enough to despise chocolate Cabernet and hot buttered Chardonnay and begin to explore new experiences and authentic wine producers with fascinating stories. I find we're headed in a great direction.
I am happy if it struck a nerve Clark. And I tend to agree, I can't see what good the volume producers really do for wine. Much is made of "innovations" such as flavoured wine, wine based RTDs and so on, but to me that is a distraction. It would be as if the beer industry depended on shandy/radler/whatever it might be called in the US for its survival. Or if the cheese industry bet the farm on processed cheese slices.
Thanks for your well-reasoned refutation of what has become a misleading memetic refrain!
$20 - $29 retail is almost certainly a sweet spot for fine wine generally, not just natural wine. Its upper bound represents a popular cut-off for what consumers (at least in the U.S. where I observe firsthand) are comfortable paying, while its lower bound reflects the reality of costs-of-production outside of that which takes place on an enormous scale and governed by patterns of manufacturing and mass-production. Too be sure, there are a lot of distinctively delicious wines retailing for under $20 – I give thanks for their existence while consuming them at least one or two days each week, not to mention their being my go-to when there more than six or eight guests to serve. But one has to search to find that sort of value. The combined cost of materials (glass, closures, etc.), taxes and shipping alone amount in most places amounts to three or four dollars per bottle, which, if distributors’ and retailers’ mark-ups have to be factored in, takes one almost half the way toward an eventual shelf price of $20 before even considering what it costs to produce the stuff in the bottle. High quality under $20 retail is frequently predicated on regions and types of wine that are struggling to be profitable, or on bottlings that are designed to be only marginally profitable in themselves but that make sense in terms of a wine estates full portfolio. And if even halfway responsible let alone organic or sustainable viticulture is factored in, staying under $20 is that much more of a challenge.
You’ll find the “youthful cohort” in less hip places like Cincinnati – where I live – too.
But you’ll also find a wealth of tap rooms and specialty spirit bars, and I think it might be fair to conclude that along with an encouraging flourishing of wine bars as come increased competition by other sorts of beverage for the thoughtful and interested drinker’s business.
I’m also concerned that what will have been the gateway for many consumers to enter the world of fine wine – namely the grocery store – is losing influence and that the quality of wine typically on offer in these establishments has declined so significantly under the very pressures of growth and squeezed profits that you cite, that the gulf between commercial grocery store wines and anything that you or I would want to drink cannot be imaginatively bridged. Put another way, I fear that potential future wine lovers, after sampling what is on offer when they visit the grocery store, will conclude that wine is a waste of their money – and on the basis of the wines they’ve sampled, that conclusion will be entirely justified.
There are over half a million wines produced today in the U.S. alone, yet only about 25,000 are in the three tier system. These wines are required to conform to the narrow confines of around 15 expected categories: the expected Chardonnay, the expected Merlot, etc..
It takes skill to make wines into this industrial category, I elected to stay small so I don't have to. I don't make a single wine that has any business on a grocery store shelf: not my Norton, not my St. Laurent, not my Faux Chablis (100% Chardonnay, but 2005 is the current vintage and the 2006 isn't quite ready). The invisible long tail has 98% of the SRPs and fully 100% of the interesting wines. No wonder everyone is bored.
I completely agree that craft beer and craft spirits are part of the same dynamic movement that will - I hope - keep driving wine forward too. We should probably include third wave coffee, as I know that many a barista develops parallel interests in craft beer and natural wine.
The point about grocery stores seems important too. That said, I am curious about what 'turns' a consumer from wine-neutral to wine-curious or even wine-obsessed. I would hazard a guess that the spark is most often either a) holidaying in a wine region, more likely Europe although conceivably within the US b) an eye-opening experience in a wine-focused restaurant or c) exposure to exceptional wines thanks to a friend or family member.
I´d love to know what you think the basic economics of your small winery might be. What would the costs of a basic winery be and hence you can then say something about volume and price to achieve that.
Kind of an impossible question, because there are so many different parameters. For example, a family winery where the vineyards, cellar etc were all passed down over generations and there are no loans or rents to pay can clearly operate on much smaller margins/much less revenue than a newly created project where someone started from scratch.
Some other anecdotal observations:
1. I know of wineries producing as little as 5,000 bottles of wine a year which support the full-time livlihood of their owner/operator. The key here is that the winery will have no employees and the price per bottle has to be premium. At this scale (and a bit larger) the harvest is probably achieved with family and friends, rather than a paid team of pickers.
2. The model that I see most often, all over Europe is where production is around 30 - 50K bottles a year, and the wines retail between 10-20 EUR in the country of origin. Successful examples of this type of business (usually with a decent export profile) are generally selling their wines wholesale (Ex-works) for between 8-12 EUR. That is 2-4 times more than you'd expect at the bottom end, I guess.
This size and price bracket seems to support a family unit fairly comfortably. Although again, there are so many other factors: sometimes one partner has a separate job, sometimes not.
3. It's hard to generalise, also because vineyard and grape variety yields can vary so dramatically. Not to mention catastrophic weather events. If you are a small grower in the Jura these days, your harvest may be between 0-100% of what you expect. Hail could, and does, wipe out the whole lot in some years.
Does this help? Or tally with your own experience? Just to restate it, I'm an observer not a practitioner in this space. So I don't entirely know what's predicated your question.