Globalization and Wines

Let it be said, on the record, that when it comes to economics I am a free-market advocate with several caveats, some of those being:

1) Producers must be paid a wage that allows them to feed and house their family well, and provide them further economic opportunities.
2) Regulation of the product if said product has a low to moderate probability of harming consumers if it were to go unregulated.

I mention the above, as I’m about to discuss globalization and the wine industry, and it’s best to understand my perspective so you know where my biases are.

There is a wonderful article from the German Magazin Der Speigel, entitled In Vino Vilitas with the by line “European Wine Fighting for Survival”. The article shows the state of the European Wine making community from several perspectives, many of which make it difficult to choose whom one should cheer for or against.

I say the above words with difficulty, because part of me likes the tradition of wine, often more than the wine itself. But when you have the French wineries upset because there are non-French wineries that deliver a consistent product using non-traditional methods(read American methods), it’s difficult to feel sorry for them. It’s even more difficult to feel sorry for them when their own population is turning away from their wine tradition.

And yet, I can’t cheer for the new companies either, who have no problem with developing a postmodern French wine mythology in order to take advantage of the non-European consumer’s ignorance of what French Wine has meant in the past. In reading the following paragraph from Der Spiegel, I couldn’t help but feel as if these companies love to patronize to their audience.

The company is designing his new labels, one for his top-selling cuvee, “La Favorite,” one for his “Château Richelieu,” and one for his third wine, dubbed “Trois Musketeers.” Pen came up with the bilingual name for his US customers — it sounds a little French and yet not completely foreign. On the back label, he’ll write that this wine harbors the kind of tension that existed between the Musketeers and the Cardinal.

Not only do I find the above patronizing, but also offensive to those who know a fair amount of French history, or at least a bit of the book by Dumas.

From my own perspective there are several points which every company needs to understand, specifically in the global economy.

First and foremost, the market can and does dictate what is successful. Yes, manufacturers can influence the consumer (through marketing and advertising and the like), but the end choice falls on the shoulders of the consumer. If you’re selling something that the market doesn’t want, you’re going to have problems.

Second, tastes change. The wine market may be calling out for sugars and oaks now, but in thirty to fifty years, this will most assuredly not be the case.

Also, consistency is a favorable asset. For the longest time, wines have been able to sell themselves as having good years and bad years. With new technologies and the introductions of new enzymes to play with, this aspect is going to change within the industry. Yes, there will still be variation from year to year, but unless a winery can control that variance, they’ll put themselves at risk each and every year.

There will always be a market for high end wines, regardless of the technologies used to get to the results. Or to put it another way, good Bordeaux won’t go away. But several of the wineries who produce good Bordeaux probably will. When people start talking about tradition, that’s probably a good sign that they’re worried about their job.

If I had to guess at what the future holds for the wine industry, I’d take a look to the beer industry for guidance. You’ll have several, if not dozens of big names delivering a very controlled product that tries to deliver the public what that public wants. Then you’ll have smaller wineries that deliver to the public new (or in this case, old) tastes. My only concern is that some wines need massive aging to get those complex tastes, and that the financial risks might be too great for smaller wineries to be able to take them.

Meanwhile, the world wine market is opening up for places in South Africa, Chile, New Zealand and Australia. Europe has to understand that this box is already open and they have to deal with this influx sooner rather than later.

Because later will probably be too late.

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