Best in the World? Gourmand International Wine Blog Award!

gourmandAs I mentioned back in January, everyone at The Wine Economist was delighted and just a little surprised to learn that we were short-listed for a major award.  The Gourmand International “Best in the World” awards are given annually to recognize excellence in food and drinks writing.  My 2011 book Wine Wars was honored by Gourmand International in one of the specialized categories when it was published.

This year there is an award for best blog. Here are the finalists.


Best Wine and Drinks Blog:

The results were announced on June 8 in Yantai, China. I wanted to be there along with the other nominees in all the food and wine categories, but I was already committed to being in Conegliano, Italy giving a pair of talks at the famous wine school.

Well, the results are in and, to make a long story short, the winner is …

The Wine Economist? Yes! We at the Wine Economist are surprised and deeply honored by this recognition. Many thanks to everyone at Gourmand International for this award and personal thanks to Edouard Countreau for his support and encouragement.



Book Review: Oz Clarke’s History of Wine in 100 Bottles

Oz Clarke, The History of Wine in 100 Bottles: From Bacchus to Bordeaux and Beyond. Sterling Epicure, 2015.

It was a brilliant idea. Select 100 items from the massive collection of The British Museum and then present them, one at a time and in chronological order, to create “A History of the World in 100 Objects.”

Simply Irresistible

It was an instant hit with history-hungry Britain. Never have the artifacts of the British  Museum’s collection been so closely studied and appreciated by millions! And of course the use of physical objects of various sorts was perfect because, as we all know, we are living in a material world and so telling the story of civilization through material goods is simply irresistible. You can see a list of the objects here and briefly view each one in the 5 minute video below.

In another brilliant move, the organizers did not present the series on the television or the internet as you might expect but via one-hundred short  15-minute BBC Radio 4 broadcasts starting on January 18, 2010 and ending on October 22 of that year. Neil MacGregor, the museum’s director, wrote and narrated all the episodes.

The combination of rich language plus fertile imagination inspired listeners to seek out information about the objects  through all available means including visits to the British Museum (which must have been one of the goals of the enterprise). Watch the video and click on the website link — maybe the hundred objects will fascinate you as they have so many others.


100 Bottles of Wine on the Wall

Oz Clarke takes something of the same approach to the history of wine in his new book and the result is very appealing indeed. Clarke’s challenge is to tell the story of wine in 100 short, punchy, chronologically-ordered episodes. Some of the chapters are about actual bottles as promised by the book’s title (1964, for example, is a jug of Gallo Hearty Burgundy), but most are the stories of people, events or forces that shaped significantly the world of wine.

Thus 1855 is the Bordeaux Classification of that year and 1863 is Phylloxera. 1965 marks the invention of bag-in-box containers and 1976 the famous Judgement of Paris.  The story begins with the invention (or was it a discovery?) of wine in about 6000 BC and concludes with Rudy Kurniawan’s wine fraud conviction in 2014.

I think there is something here for all wine-lovers to enjoy and appreciate, although I understand that some will criticize the entries for being too brief  (more of the 2-page landscape given to each entry goes to images than to text) and others will find fault with the particular entries chosen and not.  Regarding the depth of analysis, I think you have to accept this for what it is and, like the BBC/British Museum project, see this as an invitation to further study rather than a much too brief final chapter.

Regarding the topics the Clarke included versus those left out, I think it is inevitable that people disagree about what’s most important — and maybe there’s fun in arguing about it a bit. I was pleased that many of the people, events and forces that I have written about here on The Wine Economist and in my books were important enough to be included in Clarke’s book.  I’ll gladly defer to him where we might disagree because after all it is his book not mine, but I was happy that we agree in so many areas.

For example my chapter on “Extreme Wine People” in Extreme Wine highlights a number of individuals who transformed the idea of wine in one way or another. Almost all of them make Clarke’s list including Robert Mondavi (1966), Angelo Gaja (1968). David Lett (1975) and Nicholas Catena (1994). I highlighted Montana’s Brancott Estate in Wine Wars because that’s where the first Sauvignon Blanc vines were planted in Marlborough, New Zealand. Sure enough, that’s Clarke’s entry for 1983,  And world’s highest vineyards (in the Salta region of Argentina) appeared in the first chapter of Extreme Wine and as the entry for 2006 here.

Here’s a selection of other chapter entries to whet your appetite and give you a sense of the variety of topics presented: Pompeii (79 AD), Tokaji (1571), Constantia (1685), Dom Perignon (1690s). Chianti (1716), Louis Pasteur (1860), Vega Sicilia (1915), Mateus (1942), Emile Peynaud (1949), Robert Parker (1978), Canadian Ice Wine (1991) and China (2011).

The History of Wine n 100 Bottles is fun and informative — a great gift for your wine enthusiast friends and a colorful addition to any wine bookshelf.

By the way, if you are interested in projects like these, you might also want to read Tom Standage’s 2006 book A History of the World in 6 Glasses. The glasses, in chronological order, are filled with beer (in Mesopotamia and Egypt), wine (in Greece and Rome), spirits (in the Colonial Period), coffee (in the Age of Reason), tea (the British Empire) and Coca-Cola (in the American Century). There’s a seventh glass that represents the future. What does it hold? Water, of course.

My Hidden Agenda

I was keen to get a copy of Oz Clarke’s book when it was published because I’ve started work on a project that has something of the same flavor. Although  Money, Taste and Wine: It’s Complicated won’t be released until August, I’ve been at work for some time now on the next book in the series, which I’m calling Around the World in 80 Wines. Don’t you think that’s a great title? My challenge is to write a great book to go with it!

I wanted to see what Oz Clarke would do with his hundred wines and, while I can’t fault his use of the BBC/British Museum model, that’s not the way that I’m headed. Clarke and the BBC make a journey through time and I’m traveling through space — around the world, with 20 stops (chapters) and 80 wines. Some chapters search out and find a single most significant wine story wine while others reveal a treasure trove of different wines — or search and search and come up empty. How annoying!

But journey’s don’t reveal their significance all at once or in carefully measured doses. They ebb and flow like life itself and that’s what I’m going to try to capture. I’m sure that some will second-guess my choices and want more depth here and less there but, as with the BBC/British Museum’s series and Oz Clarke’s new book, I think you’ll find the result worth the effort. — fun, interesting. Maybe even irresistible!


Sorry, I couldn’t resist.

On the {Wine} Road Again: Wine Economist World Tour Update

Here at The Wine Economist we are counting down the days until August 4 when my  new book Money, Taste and Wine: It’s Complicated will be released. You can pre-order on, of course! The early feedback (see below) has been very positive, so I can’t wait for August to see the actual book and hear what you think of it.

In the meantime, the Wine Economist World Tour continues. Sue and I have recently returned from Southern California where I spoke about the “Secrets of the World’s Most Respected Wine Regions” to the winegrower audience at the Ramona Valley California AVA “A Grape Day in the Backountry” Symposium.

Later this week we leave for Italy, with the GPS pointed to the famous Scoula Enologica di Conegliano. I will be giving two lectures on June 9 and 10.  The first seminar is titled “Anatomy of the U.S. Wine Market” and the second “Wines of the Veneto: A SWOT Analysis of the U.S. Market.”  Watch this space for a report.

Closer to home,  at the request of good friends, I’m giving an “Extreme Wine” talk as part of the Senior University program at Franke Tobey Jones on Wednesday June 24 at 6pm. Looking forward to seeing familiar faces in the audience at Senior University and  tasting a few wines with “extreme stories.”

Then it’s north a few degrees of latitude to Osoyoos, British Columbia to speak at the BC Wine Institute’s annual meeting on July 6.  We had a great visit to the BC wine country a couple of years ago and look forward to returning and seeing what’s new.

Back home again, I will be on a panel of local bloggers discussing  the blogosphere and its discontents on July 15 from 7-8 pm at the Tacoma Public Library‘s Olympic Room.

The weather is great here in the Pacific Northwest in July so it is hard to get me to leave, but I couldn’t say no to an invitation to speak at the California Association of Winegrape Growers Summer Conference on July 22-24, 2015 at the Silverado Resort & Spa in Napa, California. I’ll be speaking with Wine Market Council president John Gillispie on“Wine Market Update and Insights” on Thursday, July 23.

And then? Several interesting trips in the planning stage. Who knows, maybe I’ll speak at a wine event near you?


In the spirit of “shameless self-promotion,” here are some of the early comments on Money, Taste and Wine: It’s Complicated. 

Mike has the unique ability to look at wine differently and discover facts beyond the mythology. In this fascinating book, he gives the poor consumer overwhelmed by choice and myth an eye-opening look at wine.
Paul Cluver, Paul Cluver Wines, South Africa

Written in Mike Veseth’s ineffable style, Money, Taste, and Wine goes down as easily as the finest pinot, will make you laugh, and will fatten your wallet. If you’ve ever suspected that wine’s pricing is rigged, fumed at stratospheric restaurant tariffs, or want to be amazed at how the revolution in global trade has affected your favorite drink, then look no further than this book. A must for any consumer of the fruit of the vine.

William Bernstein, author of Birth of Plenty, A Splendid Exchange, and Masters of the World

In Money, Taste, and Wine, preeminent wine economist Mike Veseth teaches us how to be a rational, informed wine consumer by better understanding available wine choices, personal tastes and preferences, and common wine buying mistakes. Along the way, he provides fascinating insights into the workings of the wine industry in a fun and interesting way with his engaging and provocative writing style. A must read for anyone who drinks wine or has an interest in the wine market.
James Thornton, Eastern Michigan University, author of American Wine Economics

A remarkable blend of research, history, and examples straight from the heart of a genuine explorer makes this book a must read. Mike skillfully walks his readers through the multifaceted relationship of money, taste, and wine and leads them to a smart, optimistic, and enjoyable conclusion. A perfect fit for those who thirst for more.
Evy Gozali, CEO of Sababay Winery, Bali, Indonesia

With his usual wit, wisdom, and whimsy, the ebullient Mike Veseth (aka The Wine Economist) unravels the complexities of what he calls the ‘unhealthy love triangle of money, taste, and wine.’ For anyone with taste who is remotely interested in discovering hidden, undervalued vinous treasures and willing to learn a little about themselves along the way, this insightful book is a must read. Having fought the good fight in Wine Wars and tickled the imagination in Extreme Wine, Mike’s insights into the vexed relationship between Money, Taste, and Wine could be subtitled ‘choose your wine and those you share it with carefully.’

Michael Hince, HinceOnWine, Australia

I laughed out loud reading Mike Veseth’s Money, Taste, and Wine. He has such a humorous and down-to-earth style when writing about wine, and his new book involves hilarious romps through supermarket aisles, restaurants, and discount stores to find a good deal on wine. It also has its serious points, providing invaluable information for wine lovers in analyzing their own palates and expectations. A definite read for all wine enthusiasts, wine students, and wine newbies.
Liz Thach, Master of Wine, Professor of Wine Business & Management, Sonoma State University

Money, Taste, and Wine is a great read: entertaining, informative, and heartfelt. Like Wine Wars it is packed with economic and historic insights into the world of wine. At times I found myself laughing out loud and also reaching for my notebook to jot down facts and add (wine and non-wine) books to my reading list.
Caro Feely, Feely Wines and French Wine Adventures


World tour? Well, it’s a small world! Enjoy!

The Wine Economist 500

500This is the Wine Economist’s 500th column and a good time to reflect on the wine road that got us here.

The very first post, dated May 29, 2007, reported on “Bottling the 2005 at Fielding Hills Winery,” comparing the hand-bottling process to Adam Smith’s famous pin factory. The division of labor was very efficient, I concluded, and the payment (a picnic lunch overlooking the Columbia River and a bottle of wine signed by all the crew who bottled it with me) quite satisfying.

A lot has changed at Fielding Hills since that day. They remain one of Washington State’s outstanding wineries (and a personal favorite of ours), but 2015 is probably the last year they will bottle using friends, family and wine club volunteers and hand equipment. They’s grown, opening a tasting room facility in nearby Lake Chelan, and are expanding production beyond the level where hand-power makes sense.

Mostly Wrong

The Wine Economist has changed, too. Not many people tuned in for that first column compared with the global reading audience today. Total page views since inception are now more than 1.1 million and rising.

In terms of content, the columns posted here continue to do most things wrong, but a few things right. New columns appear only once or twice a week, which I’m told is too infrequent for a web publication. Gotta constantly post content, people tell me, because readers have short memories and will  wander off unless constantly pulled back.

And the columns are too long, too, averaging between 750 and 1000 words — about the same as a newspaper op-ed piece. Conventional wisdom dictates lots of short, punchy posts because of limited reader attention span. Incredibly, many people seem to read these relatively long  columns all the way through to the end, shattering the myth that no one actually reads anything on the web.

Partly Right

What does the Wine Economist get right? Well, I try to keep the tone positive and I don’t think that’s a bad idea. And I think the style, which is explicitly modeled on The Economist newspaper, is pretty effective, too.

There is also a modest Wine Economist social media presence, which is probably a good thing. You can “like” The Wine Economist on Facebook and follow @MikeVeseth on Twitter (@WineEconomist was already taken) or subscribe to the blog (it’s free!).

There would not be 500 Wine Economist columns were it not for loyal readers and their feedback. Thanks so much for your support. Looking forward to the next milestone. As Buzz Lightyear might say, “To 600 posts — and beyond!”


I was looking for a music video about writing 500 blog posts and the result was an epic fail. But I did find this! Just substitute “write 500 posts” in the appropriate places and sing along. Enjoy!

Book Review: Jurafsky on The Language of Food (with implications for wine)

Dan Jurafsky, The Language of Food: A Linguist Reads the Menu. W.W. Norton & Company, 2014.

Dan Jurafsky is a Stanford University computational linguist who is fascinated by the way we talk about food. He’s written this provocative book that tells a series of stories that mainly trace the way that the language of food changes over time and how this is related to global cultural and economic exchange.

Turkey, turkey, sushi and ketchup

One story, for example, explain how the turkey, which is native to Southern Mexico, came to be named for the country of Turkey in England and here in the U.S. while acquiring names associated with India in France and elsewhere.

Another chapter traces the origin of ketchup (or sometimes catsup) back to China and then around the world to the familiar red Heinz bottle buried in the back of your refrigerator.  Great stuff if you are interested in food, globalization, history or language.

Unsurprisingly, I was hoping to read about wine in this book and I did both directly (the origins of the social custom of the  “toast” in spiced toasted bread that was dipped in wine to improve its flavor) and indirectly (vinegar, wine’s close relative, as the unlikely global connection between sushi, the food of Japan, English fish and chips, and a host of other delicacies).

Menu Language and Economics

The most thought-provoking ideas about wine actually came from the chapter of the language of restaurant menus. Jurafsky and his colleagues were able to amass a considerable database of restaurant menus for digital analysis. The data is both broad (there are hundreds of thousands of menus on the web) and deep (the New York Public Library has a historical collection of 10,000 menus dating back to 1843). So it is possible to analyze both how the language of the menu has changed over time and how if has evolved differently for different types of restaurants.

The menus don’t just describe food, they also list prices, which makes them interesting to an economist. What types of words are most associated with higher and lower menu prices? The researchers adopted the necessary control procedures (so that they were comparing apples with apples) and here’s what they found.

Language varied by the type of restaurant. Inexpensive restaurants tended to talk about the choice they provide their customers, which I suppose makes sense. Diners understand that inexpensive cafes often offer long menus and so standardized products are the norm. Choices (eggs as you like them, for example, or a dozen different flavors of dipping sauces and salad dressings) are a way to diminish the industrial quality of the experience.

More expensive fine dining restaurants don’t stress choice and, in fact, sometimes deny choice by having chef-chosen set tasting menus (sometimes even “blind” set menus where the list of dishes is not revealed when the diner maker her order).  Instead of stressing choice, the menus focus on the particular characteristics of the food, the origins of ingredients, and the nature of the preparation. Language literally “counts” here. There is a positive correlation between average word length in the menu descriptions and the price of the item. Each one letter increase in the average word length is worth about 18 cents!

You Said a Mouthfull!

Longer words and more specific terms are associated with higher menu prices. This is correlation not causation, of course, so it isn’t necessarily true that you and I see longer words or detailed descriptions and pull out our credit cards, but it could be true that these characteristics help us justify a higher price because they seem to signal to us higher quality. If wine drinkers have trouble avoiding the assumption that higher price signals higher quality, it’s not impossible that high-end diners respond to sophisticated word play.

Interesting finding: there seems to be a “spicy” or “exotic” tax. Menu items that include these words typically carry a higher average price than similar products without this designation.

So chicken you order at Wendy’s is about choice (do you prefer grilled or fried?) and at a fine dining restaurant it is about specific qualities and longer words (spicy Palliard of vegetarian-fed Draper Valley Farm chicken with exotic accompaniments), what about casual dining restaurants that occupy a vast middle ground?

Casual dining restaurants like TGIFriday’s, Applebee’s and Ruby Tuesday have a menu language all their own, stressing how the food tastes or is prepared, but in very broad general terms. Chicken is tender. Steak is juicy, Crab is … real (because you might think it could be fake crab). Interestingly, terms of this type are all associated with lower prices! It isn’t that you are thinking that tender chicken is worth less, it’s just that a higher quality place wouldn’t need to tell you that the steak is juicy or the crab is real, but a less expensive restaurant would.

Jurafsky calls these “filler words” and they are the types of things you say when you have to say something but there isn’t anything better or more specific to say. The more filler words on the menu, it seems, the less distinctive the actual food items and the lower the price. Interesting, isn’t it?

The Language of Wine

So what does this have to do with wine? Well, it seems to me that the same sort of research could be done on the language of wine, both how it has changed over the years and also the way that certain types of terms are associated with different categories of wine. I’m going to start paying more attention to wine advertising, wine label text and wine reviewer descriptions.

Some off the cuff observations are inevitable. If box wines are the vinous equivalent of fast food, then it makes sense that they would talk about convenience the same way that inexpensive restaurants talk about choice. No sense dwelling on low cost since that’s obvious. It’s the way that the product can be made to accommodate your desires that matters.

Very detailed descriptions reign at the top of the wine food chain just as they do for restaurant food — and this is perhaps because indicators of place and craftsmanship are now almost universally seen as indicators of quality and authenticity. It’s not just food or wine, it is pretty much everything that consumers look for.

Maybe this is why so many AVAs have been created in the U.S. — having an AVA associated with your wine is important to its credibility even if the consumer doesn’t really know what or where it is (and even if it doesn’t really mean very much in terms of quality or style of wine). Sue and I enjoyed a nice Vioginier recently that got my attention because it came from the Clarksburg AVA. Clarksburg? You don’t see that every day. Interesting! Gotta try it (and it was indeed interesting).

I’ve inserted an image of the back label of that Viognier above so that you can read the text. Pretty upscale messaging, don’t you think? Even the average word length is impressive.

What about the wine equivalent of casual dining — branded wines selling in the $8-$12 range?  A quick look at some labels suggests that the descriptors are just as vague (“juicy,” “delicious”) as on the casual dining menus and they probably fill the same function — fillers to provide a little (very little in some cases) textual weight when more specific terms don’t apply. Sometimes, I have noted, the labels can have very little to do with wine at all — simple but perhaps effective filler.

Robert Louis Stevenson said that wine is bottled poetry, but I think there is even more to it than that! The language of food and the language of wine seem to have something in common. Food for thought for wine marketers and consumers both!

The Curse of Corporate Wine-Think?

When I wrote about the global financial crisis in my 2010 book Globaloney 2.0: The Crash of 2008 and the Future of Globalization, I focused on three forces that I saw as both key to the crisis and limits on global finance: misperceptions of risk, the excessive use of leverage and the resulting moral hazard, which produced the boom and then the bust.

Now, as I think about the reasons why corporations are not more dominant in the wine industry, I find myself returning to those same themes. Is this an important insight, or am I just a broken record? You be the judge!

Note: This is the final column in the current series on family wine businesses. This column is more speculative than the earlier ones — as many questions as answers! — reflecting the fact that it is difficult to generalize about either corporate wineries or family and private wine firms.


Asking the Right Questions

Last week’s column ended by questioning the question of the curious success of family wine business. There are good explanations for the success of family-owned wine businesses, I wrote,  but sometimes they feel a bit ad hoc, tailored to explain a particular case and less capable of generalization.  And they often fail to fully account for the fact that many family wine businesses  either fail or, like the Taylor family, end going over to the dark corporate side.

The question of why family wine businesses are successful isn’t easily answered. But maybe we are asking the wrong question. Maybe the issue isn’t why family-owned wine businesses are surprisingly robust and instead why corporate owned wine businesses are sometimes ineffective? Is there something about wine that turns smart corporate brains to mush (not all of them, but a few)?

Protecting Assets versus Leveraging Them

One difference that I have noticed about family wine businesses versus some of the corporations regards the role of key assets such as brand and reputation.  Many family wineries that come to mind seems to see their role as protecting brand and reputation so that they will continue to provide benefits well into the future. Some corporations that come to mind, on the other hand, seem to focus on leveraging brand and reputation in order to increase short run returns.

What’s the problem with leveraging a brand? Leverage has the potential to increase returns in any business, but it also increases risk. And one risk is that the integrity of key assets can be undermined by the leverage process itself.

An example? Well, I hate to pick on Treasury Wine Estates because they have seen enough bad news in the last few years, but one of my readers emailed me in dismay when a news story appeared about Treasury’s latest market strategy. I’ll use this as an example, but Treasury isn’t the only wine corporation that I could pick on and maybe not even the best example

One element of Treasury’s plan is to develop brands for the “masstige” market segment, which means taking a prestige brand and levergaing it by introducing a cheaper mass market product that rides on the iconic brand’s reputation. 

Masstige? Sounds like something from a Dilbert cartoon, which means of course that it is a totally authentic contemporary business term. Prestige fashion house Versace, for example, seems to have developed a masstige product line for mass market retailer H&M. The line was launched in 2011 and I’m not sure where it stands today. Maybe it was a big success? If  masstige  worked for shoes and dresses, how could it be a bad idea for wine?

I’m sure a prestige association helps sell the cheaper mass market products, but I can think of some examples in the wine business (Paul Masson? Beringer?  Mondavi?) where it might have undermined the iconic brand itself a little or a lot, which seems self-defeating. I know that has happened in the fashion field (think about how the Pierre Cardin brand was diluted by cheap logo products) so I imagine it could be a factor in wine, too.

Think Global, Source Global

Here’s another example. Regional identity is more important in wine than in some other industries and Treasury owns some famous “wine of origin” brands — wines associated with particular regions, which are valuable assets.  But my worried reader was concerned about Treasury’s plan to source globally to expand the scale of some of these regional brands.

“Building scale via sourcing breadth is one of the most critical platforms necessary for the globalization of wine brands,” according to the report. Gosh, that even sounds like corp-speak, doesn’t it? Logical, I suppose, but maybe locally-defined brands need to be locally sourced to maintain authenticity? Maybe consumers would be suspicious of a Stags Leap wine, to make up an example, that is sourced from Australia or some other distant place as a way of leveraging its brand power? I wonder just how flexible these terroir-based brand concepts are in the real world where consumers are the ones who decide what is authentic and what is bogus.

Cupcake Vineyards, a Wine Group brand, is an example of a multi-regional strategy that has been astonishingly successful, so it is clearly possible to build a globally sourced brand and perhaps this is Treasury’s model. But I’m suspicious of the idea of leveraging a place-specific brand through global sourcing. Does it make sense to try to turn icon Penfolds, for example, into a Cupcake look-alike? Maybe! But I worry that you’d lose what’s important about Penfolds in the process.

Treasury has no doubt studied this thoroughly and they are probably right about their strategies and I am probably wrong, but it seems problematic to me. I wonder if family firms are more likely to resist corporate wine-think and  try to protect key assets like a prestige brand or a regional identification while corporations are driven instead to try to leverage these assets to expand their market share? I am sure there are counter-examples to this theory and I can think of a few myself. I’d appreciate hearing from readers in the comments section below.

Global Market Moral Hazard

What about moral hazard? Some big wine corporations that have had troubles in recent years seem to have made the mistake of thinking that big global markets will soak up all that they (and the other big firms) can produce. It’s a matter of global-think. The global markets are huge. There’s always a market for another dozen containers somewhere in the big world of wine, or so it might seem, and so the risk of failure is misunderestimated, to use a GW Bushism.

In finance we would say that the false sense that the global market is always there to bail you out  leads to moral hazard and this is probably true in wine, too.  Moral hazard encourages excessive investment and promotes booms and the busts that often follow. What seems to be true for an individual company is not necessarily true for an industry and misunderstanding this sort of risk is downright dangerous in an industry like wine, which is by its nature subject to cycles and booms and busts.

If private- and family-firms avoid the tendency to think global when their markets are local and thus avoid misunderestimating risk and if they really do work to preserve rather than leverage key assets it might help explain their lasting power and influence. Lots of “ifs” there, but its a theory. What do you think?


Thanks to everyone who has followed this series. Next up: what wine can learn from the analysis of the language of restaurant menus.

The Curious Dominance of Family-Owned Wine Businesses in the U.S.

Last week’s column about the rise and fall of the Taylor Wine Company of New York raises a number of interesting issues and one of them is the singular importance of family-owned and privately-held businesses in the U.S. wine industry and the very mixed record of publicly-listed wine corporations. In retrospect, a case can be made that Taylor’s downfall began when they made the initial move from family ownership to public corporation.big10

The conventional wisdom holds that family-owned and privately held firms can be very successful, but their scale and scope are necessarily limited. Corporations, it is said, can have better access to capital and may be able to negotiate risk more successfully because of limited liability structure. You might expect the largest firms in any given industry to be corporations and this is true in some industries, but not in others.

Wine Exceptionalism

Wine is one exception to the dominant corporation rule. Here (above) is a table of the ten largest wine businesses in the U.S. market (measured by estimated or reported volume not value of sales) for 2014 and 2003. The data are from Wine Business Monthly, which publishes an analysis of the 30 biggest U.S. wine firms each February.  I’m looking at just the top ten to keep the analysis simple, although I should note that these ten firms collectively account for about three-quarters of all wine sold in the U.S. You can find a link to the whole list at the end of this column.

Looking at the 2014 data, you will note that only four of the top ten firms (those in italics) are public corporations or subsidiaries of public corporations. The other six are family-owned or, like The Wine Group, privately-held and together they produce more than half of all the wine sold in America. The bias towards private- and family-ownership is even stronger if we look at the next 20 wineries where only a few corporate names like Pernod Ricard make the list.

The picture becomes even more interesting if you look at the list for 2003, the first year that Wine Business Monthly released its Top 30 report. Many of the players remain the same, but the names of three public companies (shown in boldface) that were in the top ten a dozen years ago have disappeared by 2014: Beringer Blass Wine (now part of Treasury Wine Estates), Robert Mondavi Winery (now part of Constellation Brands), and Brown-Forman Wines, which sold its big Fetzer wine business to Concha Y Toro in 2011 so that it could focus on spirits. Concha Y Toro is #11 on the 2014 list.

Looking closely at the 2014 numbers it is hard not to be impressed by the growth of family firms Delicato and Jackson Family Estates and also the success of Ste Michelle Wine Estates, which seems to behave like a privately-held firm even though it is a subsidiary of a public one, albeit in a different line of business (Altria specializes in tobacco products, not drinks).

All in the Family

Family- and private-owned wine companies are if anything more important today than they were before the Great Recession. Why are family-owned wineries so vibrant despite their structural economic limitations?

The conventional answer to this question — and there is in fact a substantial academic literature dealing with family businesses and even family wine businesses — stresses the ways that family businesses take a multi-generational approach and are able to negotiate the trade-off between short run returns and long run value. Corporations, it is said, are sometimes driven too much by quarterly returns and end up sacrificing the long term to achieve immediate financial goals.

When business requires a long run vision, it is said, families gain an advantage. Wine is certainly a business where it is necessary to look into the future if only because vines are perennials not annuals like corn or soybeans and successful brands are perennials, too.

Another school of thought examines issues of trust and transactions costs within the firm and the ways that family ties can reduce internal barriers and make interactions more effective.  It is commonplace to say that wine is a relationship business and family firms may have advantages in this regard. I have knows some family wine businesses that even go out of their way to work with family-owned distributors and so forth.  I think one author saw family-to-family links (the Casella family and the Deutsch family) as keys to the success of Yellow Tail brand wine.

Maybe the Real Question Is …

There are good explanations for the success of family-owned wine businesses, but sometimes they feel a bit ad hoc, tailored to explain a particular case and less capable of generalization.  And they often fail to fully account for the fact that many family businesses (and family-owned wine businesses) either fail or, like the Taylor family, end going over to the dark corporate side. Family relationships can be good, bad or ugly — you cannot think of the Mondavi family story without channeling an episode of Family Feud) and not every new generation wants to stay in the business. So there must be something more here than simple families think long-term. But maybe we are actually asking the wrong question.

Maybe the question isn’t why family-owned wine businesses are so strong and instead why corporate owned wine businesses are sometimes so ineffective. Is there something about wine that turns smart corporate brains to mush (not all of them, of course, but maybe some of them)? Come back next week for some thoughts on this provocative question.


You can view the February 2015 issue of Wine Business Monthly here. The story on the Top 30 wine U.S. wine businesses begins on page 40.


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