Italian Wine and the Paradox of Scale: Three Case Studies

Most of the world’s wine is produced by a relatively small number of very large wineries. But most wineries are very small. So wine is both big and small at once. That’s wine’s paradox of scale.

You can see the paradox at work here in the United States. According to the annual Review of the Industry issue of Wine Business Monthly (February 2023), there were 11,691 wineries in the U.S. Eighty-three percent of the wineries, however, produced fewer than 5000 cases of wine in 2022 and 49% produced 1000 cases or less.

Most of America’s wine was made by the less than half of one percent of makers in WBM’s “Top 50” list of wineries that produce at least about 300,000 cases a year. Gallo tops the list with an estimated 100 million cases, about as much as the next four producers combined (The Wine Group, Trinchero Family Estates, Delicato Family Wines, and Constellations Brands).

The situation isn’t exactly the same in other wine-producing countries but the paradox of scale still generally exists. How can small wineries compete in markets dominated by big ones? There’s no single answer to this question, so Sue and I are always very interested when visiting small wineries that seem to thrive alongside much larger and better-financed competitors. Herewith are three case studies from our recent tour of the Lugana DOC and Garda DOC regions of Northern Italy.

Location, Location, Location

Sirmione is a pretty special place, no matter how you look at it. The people are special, or at least the ones we met are. Maria Callas, the famous opera star, was born here 100 years ago. The land is special, too, flat as a pancake right on the edge of Lake Garda, with a small peninsula jutting out into it. The land, with its thick clay soil, and the lake effects mean that the wines are special. Distinctive and intense.

Four generations of the Zordan family have been farming grapes here since 1924, so their roots in this particular location run very deep. As the region has developed, however, the challenges they’ve faced go beyond the usual list of natural and market woes. The land here is terrific for wine growing, but it is also in demand for hospitality and tourism. It is a beautiful location if you are staying in the Garda region. So it was, in fact, a little bit surprising when we came upon the four-hectare vineyard and winery as we navigated through the otherwise fairly built-up streets that surround them.

The family business, Cascina Maddalena, has evolved over the years. The basic business before 1999 was selling bulk wine and that is still a source of revenue today. But it became clear that the family needed to capture more of the value added if it was to sustain the vineyards and the business through more generations. So a few hectares of the land were sold off to pay for a small but useful winery, producing about 35,000 bottles per year, and an attractive agritourism center for tastings, group events, and direct sales. “Cascina” is Italian for “farmhouse” and that’s the warm feeling you get here.

Farming grapes and making wine is hard work. Running an agritourism business is hard work, too, and the whole family pitches in to make it successful and to make the family business sustainable.

Is all the hard work worth it? From our perspective, the answer is a clear yes. The Cascina Maddalena Lugana DOC wines we tasted over lunch were stunning, displaying an intense and memorable minerality. I was especially impressed by the wines they call “Clay,” which are only produced in special vintages (we sampled 2020 and 2018). The wines spend a year on their lees in stainless steel tanks and another year in the bottle before release. Incredible.

Location in terms of both the vineyards and the winery and its hospitality facilities is key to Cascina Maddalena’s success and it is one successful strategy for smaller wineries to consider.

Sharecropper Roots

Cantina Gozzi shares some interesting similarities to Cascina Maddalena along with clear differences from it. Gozzi is also a multigenerational family winery that was founded about 100 years ago. The family were sharecroppers, working the owner’s land in return for half of the crop. This is not exactly the easy road to fortune, but it was a common practice in Northern Italy for a long time.

Somehow the Gozzi family managed to find a way to buy the land to farm for themselves as a mixed agricultural enterprise of cattle and cereals along with wine grapes. The farm is several kilometers from Lake Garda in the rolling hills closer to Mantova. The soil is different here with clay in the lower spots and more stoney and calcareous near the hilltops, the result of ancient glacial action.

It wasn’t until 1985 that the family decided to make wine the main focus, which required new investments in both vineyards and cellar facilities. Given the farm’s history, it must have been a difficult decision to give up the security of diversified production and put all the family’s eggs (I mean grapes) in one basket. But they have made it work through the sort of energy and focus that must have been necessary to buy the land in the first place. Total production is about 120,000 bottles per year.

Gozzi is in the Garda DOC zone, which means that both native and select international grape varieties are permitted. Our tasting, therefore, featured a pair of Garda DOC Chardonnay wines, one fresh and floral after a time in stainless steel tanks and the other, the Garda DOC Riserva Colombara, a richer style from a single vineyard with a year in French oak. There is also a Frizzante Chardonnay that we enjoyed at lunch at Trattoria La Pesa in Castellaro Lagusello which specializes in local cuisine (you should try the stewed donkey with polenta).

Hard work, clear focus, and a generational perspective. These are some of the qualities that impressed us at Cantina Gozzi and I even think you can taste them in the wines if you close your eyes and open your imagination.

Strength in Numbers

Cantina Colli Morenici is a cooperative winery, a type of business organization that we don’t often think about here in the United States. But cooperatives are enormously important in global wine markets, especially in Northern Italy. You may not think about cooperatives when pouring a glass of wine, but you should. You may have poured yourself a glass of wine made here, for example, although chances are that there was a different name on the front label.

Cooperatives tend to be formed in times of crisis, when winegrowers and small producers band together as a protective measure, seeking strength in numbers in the face of unfavorable market conditions. Such conditions existed in Italy in the 1950s and Cantina Colli Morenici was born in 1959.

The “strength in numbers” strategy continues to drive Italian wine to a certain extent and in 2021 Cantine di Verona was formed through a merger of Cantina Collie Morenici and two other cooperatives: Cantina Valpantena and Cantina di Custoza. Together they have three wineries providing both scale (1800 hectares of vineyards) and scope of production (a wide range of wines and styles)  for their 500+ members.

The wines are meant for everyday consumption, not cellaring and investment. The wines we tasted were good and good value. The most memorable was a limited-production Amarone from Cantina Valpantena that sold for €49 at the winery. The shop at the winery sold bottles, bag-in-box, and pumped directly into your container using a machine that looked like it would be at home in a gas station: €1.35 per liter, rosato or bianco. Yes, the wine was cheaper than gasoline.

We were told about 70 percent of production is exported, with most of the wine bound for the U.S. market destined for private label brands. That made sense to me when I tasted one particular wine and had an “ah-ha” moment. I know that wine, I thought. I’ve bought it at Trader Joe’s (or something very much like it, I’m sure) under a different label.

The future? Custoza Superiore DOC is underappreciated in the U.S. market and the winery sees potential to develop the market for this wine. Custoza is the wine region between Lake Garda and Verona and its signature wine is a blend of native varieties. A lot of potential there, I think.

Strength in numbers gives the wineries of Cantine di Verona the volume they need to support export investments and the resources to market their wines at home. We were pleasantly surprised to see an advertisement for Cantine di Verona when we were watching a bit of television at our hotel in Verona during a thundershower. It was during a Food Network Italy show featuring Italian nuns cooking traditional dishes. Cooking nuns? I’ll drink to that!

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