Wine’s Future: Tight, Fat, and Uncorked

Hot, Flat, and Crowded was the title of New York Times columnist Thomas Friedman’s bestselling 2008 book about the future of globalization (Friedman released an upgraded 2.0 version of the book in 2009 — times change, I guess).

Global climate change, the rising global middle class and population growth were the three key issues that he identified in the book, which advocated a “green revolution” that would renew America.

In an interview with Fareed Zakaria (excerpted on the book’s home page), Friedman exlains that

There is a convergence of basically three large forces: one is global warming, which has been going on at a very slow pace since the industrial revolution; the second–what I call the flattening of the world–is a metaphor for the rise of middle-class citizens, from China to India to Brazil to Russia to Eastern Europe, who are beginning to consume like Americans. That’s a blessing in so many ways–it’s a blessing for global stability and for global growth. But it has enormous resource complications …

And lastly, global population growth simply refers to the steady growth of population in general, but at the same time the growth of more and more people able to live this middle-class lifestyle. Between now and 2020, the world’s going to add another billion people. And their resource demands–at every level–are going to be enormous. I tell the story in the book how, if we give each one of the next billion people on the planet just one sixty-watt incandescent light bulb, what it will mean: the answer is that it will require about 20 new 500-megawatt coal-burning power plants. That’s so they can each turn on just one light bulb!

Recently I’ve been thinking about the “big picture forces” that are shaping the future of wine and Friedman’s unholy trinity keeps coming to mind. If the world is becoming hot, flat and crowded, then obviously these forces will affect the world of wine, too. But what other forces are involved? What are the key wine-specific factors that should be considered when looking to the future?

After giving this question some thought, I’ve settled on a trio of trends that are inspired by Friedman’s book and in fact overlap with his list just a bit. Over the next few weeks I’ll explore the the implications of a wine world that is Tight, Fat, and Uncorked. Here is a brief introduction.

Tight [Markets]

Wine markets go through the sorts of cycles that are so common with agricultural products. The Turrentine wine brokerage firm has formalized wine’s particular cycle in its famous “Wine Business Wheel of Fortune.”

The period of low and falling wine prices, which brought so many consumers into the wine market (and pushed some growers and makers out of it) has come to an end here in the U.S. and prices are on the way up. Markets have already started to tighten up and some are close to seizing up. The low price part of the cycle was unusually long (for reasons I’ll discuss in my next post) and the cycle’s tight turn may be long, too.

Tight markets will affect the whole wine supply chain and impact different parts of the market differently. We haven’t seen wine markets this tight in a while and it’s going to be interesting to see what happens.

Thick Around the Middle

The World is Flat is the title of another Thomas Friedman book and when it came out I boldly declared it Globaloney (which is the title of one of my earlier books).

Friedman’s “flat” back then referred to global competition and the mythical “level playing field” where everyone competes with everyone else. Geography didn’t matter any more, Friedman seemed to suggest, because some smart guy in Bangalore could take your job in an instant by offering to do it better or cheaper or while you are asleep. The book was really a call for America to invest in itself — in education and technology — and the flatland analogy was supposed to motivate politicians and policymakers to take action.

When Friedman says the world is flat today, he means it in the sense of flat organizations. He specifically argues that the rising middle class around the world is a powerful force for change and this I believe is not globaloney, although I wonder if he would say exactly the same thing today, with the “occupy” movement still active and the gap between the 1% and the 99% so prominent in the public mind.

The world wine market isn’t getting flat so much as fat.  Even though the prices of some “1%” wines have fallen, there is still a gap big enough for the 99% to want to “occupy.” The impact of the growing global middle class will be very important in the long run. The wine market is becoming “fat” in the sense of being “thick around the middle” — middle class, middle market, middlebrow. That’s global trend #2.

Now Lose the Cork

The cork in question is a symbol of the practices and traditions associated with an aristocratic view of wine that will not be swept away but that will be joined by many other, more “democratic” practices as the era of tight and fat unfolds.

Generational transition, the adoption of wine by new global middle class consumers, the lingering impact of the economic crisis and America’s continuing recover from its Prohibition hangover will all play a part in this story.

Tight, Fat and Uncorked: if this sounds terrible for the future of wine, please relax. It’s not all bad (or good either), it won’t all happen at once or in the same way and it it’s not [just] about the wine.

I invite you to read along over the next few weeks as I try to work out these ideas in Friedman-esque style. I hope to benefit as I usually do from the comments, critiques and creative ideas of my readers.

One response

  1. Hi Mike, Thanks so much for sharing those interesting thoughts. In analogy to your mentioned societal in balance of 1:99 I also witness an in balance in the wine value chain. Most of the value is captured by few powerful distributors whilst bodegas see their margins shrinking. Rather sooner than later this in balance facilitated by technology and social media will induce change! The law of entropy says that any system out of equilibrium will adapt eventually!

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