My new book Wine Wars II has just been released — you can order it in paperback or e-book format from Rowman & Littlefield, Amazon.com, and other online and bricks-and-mortar book sellers. The audio version will be released in a few days. How exciting!
Rowman & Littlefield is offering US and UK customers a 30% discount on Wine Wars II publisher-direct purchases for a limited time. See details below.
This week’s Wine Economist offers you a taste of my new book in the form of two brief excerpts from the first chapter. Cheers!
It was the best of wines, it was the worst of wines (apologies to fans of Charles Dickens). The global wineglass, it seems, is both quite empty and full to the brim. We live today in the best of times for wine if we evaluate the situation objectively, as economists like me are trained to do. Never before has so much good wine been made and so many wine choices offered up to consumers. For someone who loves wine, the glass is very full, indeed; it is hard to imagine better days than these. The global markets deliver a world of wine to your door. Drink up!
And yet many enthusiasts are anxious about the future of wine. The good news we find in our wineglasses and on the supermarket shelves is often accompanied by disturbing rumors, feelings, and forecasts. It is the worst of times, too, you see—especially if you are a maker of cheap wine in France, Italy, or Spain, the largest wine-producing countries. Everything about wine is wrong for you. Consumption at home has been falling for decades and squeezing your market share, and import competition has increased. The rise in global wine drinking that you counted on to power your export business has unexpectedly stalled at exactly the wrong moment. You find yourself making the wrong wine in the wrong style from the wrong grapes at the wrong price and trying to sell it in the wrong places. You are betrayed at every turn by the markets that once treated you so well. You hold an empty glass, or so it must seem.
Times are troubling in Australia, too, where a wine boom was followed by a wine bust, when consumers around the world have seemingly turned away from the muscular Aussie wines they enjoyed so much just a few years ago. So the Aussies turned to China and, through lots of hard work, turned it into their number 1 export market, bigger that either the United States or the United Kingdom. Then the lucky country’s luck turned again. Driven by political disagreements that have nothing to do with wine, China imposed tariffs of more than 200 percent on Aussie wine, choking off this promising market.
Wine producers are optimists by nature, but they face serious challenges. Recession, pandemic, falling consumption, rising antidrinking lobbies, water shortages, global warming, and even raging brush fires all threaten the livelihoods of winegrowers and producers in many parts of the globe.
It is the worst of times for consumers, too, if they seek that special taste of a place that wine geeks like me call terroir. The wine in your half-empty glass is free of any technical flaw, but so what? Does it have a soul? Does it express any particular place or any producer’s distinct vision of what wine should be? This is the age of McWine, I have heard people say: wine that is all the same. When everything is the same, then it is all nothing! And what’s worse than that?
These are good times and bad ones, too, for the world of wine—what a contradiction! What about the future? Will wine’s tale of two glasses have a happy ending? Or will our (excuse the Dickensian pun) “grape expectations” be crushed? I’m an optimist about the future of wine, but as an economist, I am trained to pay close attention to the dismal side of any situation. I wrote this book to try to find out just how empty or full the global glass really is and how the world of wine is likely to change.
The first thing to understand about wine is that it is many things, not just one, in terms of both wine itself and the economic forces that drive the wine industry, so the story of the future of wine will necessarily be a complicated one. Although hundreds of factors will come into play as the wine world evolves, three big forces will almost certainly shape the overall pattern: globalization; brand-driven commodification; and resistance to these powerful winds, which I call the revenge of the terroirists. Globalization and commodification are economic push forces that are transforming the world of wine. The revenge of the terroirists is all about pushing back.
WINE’S TRIPLE CRISIS
The global wine industry is in the midst of a triple crisis, and I am not really sure how it will end. The climate change crisis comes first. It affects everything if we consider both direct and indirect effects, so it may seem odd to think of it as a wine crisis. Wine grapes generally can be made to grow under quite extreme conditions; in some colder regions, they actually bury the vines in the winter to protect them and unearth them each spring so that they can come back to life (you might call this Lazarus viticulture). But specific wine grape varieties thrive in only very narrow bands of average temperature, and wine regions defined by particular grapes or wine styles are threatened by relatively small changes in environmental conditions. Wine is, therefore, the canary in the coal mine when it comes to climate change. It will feel the impacts before many other industries, and so it is not a surprise, as I explain later, that wine businesses are among the strongest advocates for progressive environmental action.
The climate change crisis dwarfs everything else in the long run, but because the long run can seem far away and we often misjudge how fast it is approaching, climate concerns do not get the attention they deserve. Indeed, as the global reaction to the coronavirus pandemic crisis has demonstrated, climate change generally isn’t treated with the “drop everything” or “operation moonshot” urgency that real crises warrant. But even if the climate change threat were to disappear tomorrow, wine would still be in trouble.
The second crisis is economic. Wine is magical beverage, but it is a crazy business. Wine’s economic environment is characterized by cyclical, structural, and “wild card” forces that make it difficult to prepare for or successfully execute a business plan.
Global wine consumption grew steadily for the twenty years that ended in about 2008, the date we associate with the global financial crisis. Rising wine sales were important because they slowly soaked up a surplus of wine. Too much wine? Well, for many years the European Union in effect subsidized wine
production to stabilize agricultural economies, especially in France, Italy, and Spain. Wine farmers were paid to grow grapes and to make wine that could not be sold, so some of it was distilled into industrial alcohol. Yuck! Those policies are history, and European winegrowers turned from government subsidy wine to wine aimed at global markets. This is a good thing, but it happened just as wine production increased in other parts of the world, too. The result: a lot of grapes, a lot of wine, and a lot of jobs and incomes at risk.
Rising global wine sales were most welcome in this context, and when sales dropped a bit in 2008, no one was very concerned. “It’s just the economy, dummy,” they said. “Wine will spring back when the economy improves.” But it didn’t, and the next ten years were what I have called “wine’s lost decade.” Why did wine lose its mojo? There are many possible reasons (I explain them later), but the sudden loss in momentum changes the nature of the game from a positive-sum fight, where a rising tide raises all ships, to a zero-sum fight for market share. And the battle isn’t just between Old World and New World or among the growers and producers in these regions; the opponents are now more diverse and unexpected than ever before.
The reason? Wine’s identity crisis. Wine has never been just one thing. It is, after all, both that fancy French Champagne at the top of the wine wall and that big box of Franzia at the bottom. Wine is healthful (think Mediterranean diet) and dangerous (read the government required warnings on wine labels in the United States). It is culture to some and just another commodity to others.
The cartoon character Pogo famously said, “We have met the enemy, and he is us,” and this is true in a way for wine. The biggest threat to wine’s identity is something inherent to wine’s existence: alcohol. You might think that wine is just grape juice with alcohol, but wine doesn’t taste much like the grapes it is made from except for in a few specific cases. Fermentation doesn’t just add an alcoholic kick; it transforms the product in complex ways. It’s the same with the way that fermenting yeast makes bread different from flour and water. So wine as we know it is impossible without alcohol, but it may also be impossible with it if antialcohol forces have their way.
Wine’s identity crisis is significant because it seems like those who see wine as a social or health problem, not an essential element in our culture, have seized the momentum. If wine doesn’t know who it is and what it is and cannot tell its story to the world, then how can it survive?
Wine Wars II 30% discount offer. Many thanks to Rowman & Littlefield for making this discount available.
US Customers: Order Wine Wars II here and use code RLFANDF30 at checkout to receive your discount.
UK Customers. Use the code RLFANDF30 to order from Rowman & Littlefield International
https://www.rowmaninternational.com/shop?q=wine+wars# or IPSUK: https://store.ingrampublisherservices.co.uk/checkout/025/?isbn1=9781538163832
Good stuff, as usual, Mike. The next 5 years will, IMHO, pivotal in the wine industry. We’re now seeing consolidation at the top of market (LVMH acquisition of Phelps) to match what’s been occurring at the lower end for years. I’ll be watching and reading a lot as these changes unfold.
So exited to learn of Wine Wars II. Just ordered our copy!