Globalization has brought the world of wine to our front door, offering endless choices for consumers and great opportunities for wine producers. But the global mass market of wine also brings challenges of quantity over quality, a lack of confidence by the consumer in making choices, and threat to the place or terroir of wine.
Today’s wine market is complex and interconnected, pitting Old World and New World wines and producers in a fierce battle for consumers and the future of wine, says Mike Veseth, global economist and professor at the University of Puget Sound in Tacoma, Washington, and author of The Wine Economist, a leading wine industry blog. Veseth is also author of several books, including the recently released Wine Wars.
Veseth was the keynote speaker at a wine industry workshop in November sponsored by the Washington Association of Wine Grape Growers. The workshop provided market and financial information to growers and winemakers to help them plan future planting and production decisions.
In drawing the battle lines for the future of wine, Veseth shared highlights of his book Wine Wars, which chronicles the market forces that are redrawing the world wine map and challenging the “soul” of wine, as he calls it. “This is the age of McWine where wine is all the same,” he said, adding that he fears a loss of wine’s special qualities (terroir) that come from the place and people connected to it.
Blue Nun curse
Germany’s Blue Nun Liebfraumilch wine was the first global mass market wine, according to Veseth. Liebfraumilch is a style of semisweet white German wine mostly produced for export. Though Blue Nun’s roots go back to 1857 when Hermann Sichel started a wine business in Mainz, Germany, Veseth said that Blue Nun’s global emphasis began with the 1921 vintage, which was said to be one of the best. The Sichel family then began exporting the wine abroad, especially to Great Britain.
“It became one of the most successful international brands for awhile,” he said. “But it was a blessing and curse for Germany because of the demand and need to fill the pipeline.” Eventually corners were cut, wine grape production was moved to the Rhine Valley, and the Liebfraumilch wine style became known as the “kitchen sink” for white wines. As the Blue Nun quality went downhill, Veseth said it dragged many German wines down with it and left a bad taste in the consumer’s mouth for Riesling wines.
“The curse of the Blue Nun continues today and is telling of how global markets can work,” he said. “Filling the pipeline with wine can be difficult.”
Veseth sees his wine glass as half full because of all the wine choices available today at the grocery story. But he notes that his glass is also half empty because of the challenge in making sense of all the choices. With wines from Washington, Oregon, California, and around the world, the wall of wines available at a grocery store is intimidating to most consumers and a land mine for many, he said. For a class assignment, his students counted 800 types of wines for sale at a local Safeway market, ranging in price from $2 to $200 per bottle.
“Consumers stand in front of the wine wall and they’re afraid,” he said. “Some grab a bottle, others read the labels before choosing, but the most common behavior is they look here, look there, and then walk away with nothing. That’s why many stores pay an employee to help in the wine aisle. They never do that in the milk aisle, do they?”
The wine industry has a lot of work to do in building the wine confidence of consumers and helping them overcome their fear of buying a lemon, he said.
Two Buck Chuck miracle
While some believe it was a miracle that Fred Franzia of Bronco Wine Company in California could make and sell Charles Shaw wine for $1.99 per bottle in California through the Trader Joe’s chain, Veseth said the miracle was that people would buy it.
Wine producers know that with the right wine surplus, making inexpensive wine is very doable, he said. The hard part is getting people to overcome beliefs equating quality to price and to try the cheap wine.
Total sales of the first five years of the Charles Shaw brand, from 2002 to 2007, were 300 million bottles or the equivalent of 25 million cases.
“Two Buck Chuck gave an amazing number of people in our population the confidence to buy cheap wine,” he said. Part of the confidence came because of the reputation that Trader Joe’s has developed in selling upscale products for a bit less, providing relative value.
“But that is important because it gives them more confidence to move up and buy better wine,” said Veseth.
However, there is a dark side of developing confidence to buy global wines. He warns that producing an international wine often involves a “dumbing down” of the wine to make it appeal to the masses. The global wine then loses a sense of place and focus on quality.
Revenge of terroirists
Veseth uses the word “terroirist” to describe those who care about conserving the special qualities of wines and who connect wines with place, people, and experiences. “Terroirists see globalization as threat to the particular sense of place we associate with wine. Most globally produced goods could be made anywhere; they are defined by their nowhereness. Terroir is all about somewhereness,” he writes in his book.
He’s counting on terroirists to educate and promote wine in a way that keeps people from falling into the global wine market trap.