Wine - The global wine industry has changed dramatically over the last 3 to 4 decades. Initially being dominated by European countries(old world), the rest of the world(new world) have gradually increased their presence and competitiveness. All indications are that this trend will continue in the next decade as globalisation continues to make our world smaller.
The advantages of consolidating buying power and marketing clout have and will lead to more mergers. The largest wine business in the world, Constellation, sells approximately 102 million cases per year, representing more of less 90 brands. Other well-known companies such as E& J Gallo and St Michelle exhibit similar patterns. However, it is clear that consolidation is happening across traditional product lines, meaning that tobacco companies are buying wine companies and such. Altria, the second largest tobacco company in the world, owns St Michelle.
Wine Farmers – Producing Grapes Only?
The tradition has always been that the wine farmer grows the grapes, makes the wine as well as marketing it. This has changed substantially. Initially, wine marketing companies took over the marketing side, which most wine farmers welcomed. However, recently businessmen have started to buy grapes and employ their own wine makers to produce wine. The advantages to these entrepeneurs are obvious. They can negotiate to buy the best grapes from different regions, thereby they are not tied to one region, which may have a bad year. Furthermore, they can select and employ the best wine makers without being stuck with one who has been with a wine farm for 20 years and will probably remain for another 20. One such wine entrepreneur buys grapes from 650 regions. Another employs 11 wine makers.
An example of the success which this has achieved, was a R20 Chardonnay which won a blind tasting competition against 350 other wines of which the average price was R300 a bottle. These wine businessmen are on the up. Wine Business Monthly reports that Castle Rock ranked is the 25th largest wine seller in the USA. It owns no vineyard and no winery, but more than 90 cellars.
What is even more interesting is that an increasing number of these wine entrepeneurs are buying and selling grape as well as wine. This has started at trend where grapes and wine may end up being traded as many other agricultural products – being sold before actually being harvested or made(which has been done, but on a small scale).
How does this affect you, the consumer?
Mostly in a positive way. Consumer will definitely have a larger variety to choose from in supermarkets. Private liquor stores (not part of a national chain) will become more resourceful and offer scarcer varieties, host more wine tastings and look after consumers in novel ways.
Which all means that wine will stay as interesting a topic as it has been, not to forget the actual reason for getting interested in the first place – enjoying it !
(Article by Elliott R. Morss, Ph.D., edited by LiquorWise)
