How Big Wine Producers Dominate the Marketplace

Whatever happened to the artisanal goods of years past? Where have the locally grown and produced products gone?

In spite of all the talk these days about farm-to-table and farmers markets, the vast majority of products we purchase and consume are controlled by mega companies.

When you walk into your local grocery store, what brands do you see? The evolution of food production and marketing changed from hyperlocal products through the 1960s to dominant national brands in the 1990s. Today, that evolutionary process has resulted in more store shelves dominated by private label brands (Shoprite eggs, CVS toothpaste, Costco meats, etc.). The economics are simple: store brands are less costly to sell, carry lower prices and are more profitable to stores than local or national brands.

Across the United States, wine shops are evolving in a similar fashion. Small producers and national brands compete for shelf space. A number of shops sell wines that are private labeled, produced by mega wine producers, sans a mega corporation label.

All of this change makes for a dynamic and changing wine market. As Americans consume more wine and develop brand loyalty, the wine industry is feverishly seeking to carve out their distinct niche and to capitalize on this growing market.

Here’s my view of the state of the wine industry today. It’s influenced primarily by two 21st century phenomena – polarized supply sources and micro-focused marketing.

Polarized supply sources

  1. More so than in other industries, wine market share is a battle between small producers and industrial giants. There are less hand-crafted wines and significantly more mass-produced wines. Fewer than 2 percent of all wineries in the United States account for 84 percent of all wine production.
  2. Last year Americans consumed 900 million gallons of wine (nearly 15 bottles per year per capita), most of which is domestically produced. This is more than any other country. This huge demand is impossible to satiate by small producers. The arithmetic: the average small winery production is less than 5,000 cases. The number of wine companies in the United States is about 10,000. Nearly 75,000 small producers would be required to meet the current demand. This huge void can only be filled by the behemoths, as noted above.
  3. Where do the 2 percenters source such a vast volume of wine? Domestic production is insufficient. Increasingly they rely on bulk wine juice purchased in the open market. Chile and Australia export huge vats to United States docks in mega barrels and bulk tankers; only bottling and labeling take place stateside.

 

Micro-focused marketing

  1. The universal tenet of marketing across all products has always been branding. Establish a name, build a reputation and then work incessantly at maintaining loyalty. In the American wine industry, consistency and price have been the benchmarks of marketing efforts.

Consistency: Americans are creatures of habit. They want the same fast-food burger wherever and whenever they travel in the United States and they expect no less from their wine. They expect a consistent product that is available wherever they purchase their favorite wine and a consistent taste from vintage to vintage. Mega producers go to great lengths to deliver sameness.
Price: We don’t like to pay a lot for our favorite wine. At the local wine shops in our home towns, 80 percent of all wine purchased is priced under $11. Many of these labels on store shelves are ubiquitous whether you walk into a wine shop in Portland, Maine or Portland, Ore.

  1. Labeling has become the mantra for marketing wines. Cute pet names or pictures (Barefoot, Dancing Bull), sexual connotations or images (Marilyn Merlot, Ménage a Trois) and sensationalized names (Fat Bastard, Arrogant Frog) all seek to tantalize consumers and stand out from the competition, regardless of quality.

We all have an image of a bottle of wine being produced in a bucolic setting by a family winemaker, nurturing each bottle of wine to perfection. We all need to change our perception.

Nick Antonaccio is a 40-year Pleasantville resident. For over 25 years, he has conducted wine tastings and lectures. Nick is the co-chairperson of the Wine Media Guild of wine journalists. He also offers personalized wine tastings and wine travel services. Nick’s credo: continuous experimenting results in instinctive behavior. You can reach him at nantonaccio@theexaminernews.com or on Twitter @sharingwine.

 

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