Wine Doesn’t Innovate
In fact, it's fair to say that the wine industry trails most others when it comes to adapting to change and new ways of thinking. And it has been this way as long as I can remember observing it—almost 20 years: the industry plods forward using past-due and antiquated processes, techniques, paradigms and tools to get their product to market while most other industries move forward into new territory with a head of steam and not too far away from the curve.
Many folks will explain that wine is about agriculture and farmers are among the most conservative of business people, meaning change always comes slow. That's not true, at least not where wine is concerned.
The glacial pace at which the wine industry adapts to new worlds of technology, process, logistics, business models, business paradigms, selling tools and communications is due primarily to it being tethered to the 3-Tier System.
When folks talk about the information and communications dislocation and revolution we have been experiencing since the beginning of the 1990s, they forget that it has also been a logistics revolution. We've gone from moving things physically to moving things electronically.
However, the three-tier system largely prevents the wine industry from taking advantage of the great logistical relocation that has produced huge efficiencies in moving things around. Wine, by most laws in most states, must take a very specific path to market. No time saving detours here! No direct communications with buyer and seller! All bow to the middleman's path. Who needs new communication technologies and money saving logistical maneuvers when the very same path from producer to wholesaler to retailer or restaurant and then to consumer is mandated—by 70 year old laws?
The restrictive coil that is the state-mandated 3-tier system not only deters adoption of new ways of doing business—let alone "innovation—but it also deters adopting new ways of thinking. That guarantees a lack of innovation in sales and logistics and even deters new ideas.
I know a winery that would like to sell wine directly to restaurants and retailers in other states, put the wine on a low cost carrier and sell a case or two at a time. But the costs and barriers to doing this have been erected with such strong mortar that they choose not to do it. So, their wines don't get to market in these states in some cases because the state mandated wholesalers won't represent them or because they know they can make more by selling it more slowly direct to consumers in consumer-friendly states and environments. Yet they sell out much faster and develop new markets and customers faster if they could sell directly to restaurants and retailers in these states. They'd even be willing to reap less profit for the trade off of making new customers other states.
But they are stopped by the three tier system. They are deterred by the cost and work it takes to go around the system legally. This simple innovation, this simple and progressive idea of not giving away money to a company that is unnecessary to them, is thwarted.
Why think Big? Why think Different? Why change?
In my estimate, the size and vibrancy of the American wine market is greatly retarded by these institutional barriers to change and innovation. The real excitement and passion that might exist among a far larger number of Americans where wine is concerned is diminished from what it really could be because of the degradation over time of the relationship between reality and the three tier system.
The solution to this real problem is unfortunately blocked by the self rewarding and self empowering results of the three tier system itself. The longer it is in place the more effort it takes to move; the more trouble and hardship and money it costs to right this industry's ship.
The wine industry's farmers are just as smart as the Travel Industries engineers and tour operators. They could move fast. They are capable of understanding the spoils that can come with adopting new ways of thinking, acting and selling. Unfortunately they have the 3-tier system straight jacket wrapped around their mind and movements.