Does Big Business Control the American Wine Industry?
In honor of the great Michael Broadbent's 400th column for its magazine, Decanter Magazine today ran a story touting this achievement as well as giving us some insight into Mr. Broadbent's current and highly educated view of the world of wine today. One comment in the story struck me:
"He [Broadbent] mourns the demise of the smaller players. 'Big business seems to be taking over and I don't like the way things are going' "
Does "Big Business" really have a grip on the wine industry? I'm not so sure. And I'm not so sure that Broadbent is speaking about the American wine marketplace. But I will.
There are a few ways of looking at this issue.
From the PRODUCER's Perspective
There's simply no way to argue that the producer sector of the wine market is controlled by BIG BUSINESS. While the vast majority of wine in America is produced by 50 wineries, the vast majority of wineries are small, family-owned, artisan affairs. And their numbers keep growing year after year. Add to this the enthusiastic American importers who seem to find new and interesting small ventures from the Old World and the Newer World and you start to get the picture that despite the big producers that dominate wine sales, the small producers just keep on coming like there is no one in their way.
From the RETAILER'S Perspective
The largest producers of wine in the world do tend to have greater access to the brick and mortar retail sector of the wine industry. In fact, if you look at the four shelves at grocery stores, the bottom two, and a lot of the third will be holding the wines from the largest of the world's wine producers. This is not always so of the top two shelves however, where smaller brands have a distinct foothold, particularly in metropolitan areas where demand for quality and higher prices wines is greatest. But then you have to ask to what degree BIG BUSINESS Retailers control the retail sector. It goes without saying that consumers can if they like shop for wine at the big grocery stores and the Costco's of the world…and they do, in huge numbers. Yet when you look around the country, there is no dearth of small, independent retailers who provide consumers with a remarkable selection of wines from both big and small producers. Finally, the Internet provides consumers looking for diversity and looking or the those wine producers hanging on to the Long Tail unprecedented selections of wines produced in the tiniest amounts and produced by wineries located in every region of the world. In fact, there has never been anything like the selection of wines now available if you look at the marketplace from the perspective of the Internet retailers. It is the Golden Age of the wine consumer. Across the Internet you find all sorts of smaller retailers that specialize in a region's wines, in wines of a particular price and in wines of the highest quality. While wine retailing probably is big business heavy, it isn't dominated by bigger businesses. And with the Internet, the barrier to entry is lower than it ever has been for prospective retailers.
From the WHOLESALE Perspective.
Certainly when two wine distributors control 20% of the U.S. market and five control 50+% of the wholesale market you have to admit this sector of the wine market is controlled by big business. Consolidation among wholesalers continues at breakneck speed even as smaller wholesalers try to get into the business. Here, Mr. Broadbent, were he looking at the American marketplace, would be correct.
The American wine marketplace has issues. An often inflexible three-tier system. Trade barriers. Often absurd restaurant pricing. Consumers that still think wine is for the Tuxedo-Class. However, Big Business I don't think is our biggest problem here.