“Globalization versus Terroir” after 20 Years

September 23, 2025 By Mike Veseth in globalization, Shameless Self-Promotion, wine markets 3 Comments

“Globalization versus Terroir” is the title of my first published essay on wine economics. It appeared as a chapter in my 2005 book Globaloney: Unraveling the Myths of Globalization, which was the third in a four-volume series analyzing globalization and its discontents. (See list of books below.)

The wine world has changed a lot in 20 years and my thinking about the wine economy has changed, too, so I thought it would be interesting to re-read that first essay and see what I think about what I thought then. Here is a brief report.

Globalization versus Globaloney

The book Globaloney was conceived as a collection of case studies of how globalization was playing out in different industries. I had noticed that much of what we were told about globalization was based on a few vivid stories from specific industries, boldly generalized to global dimensions. So globalization is McDonaldization, for example, or Coca-Cola-ization. Globalization was almost always a bad thing and almost always centered in the United States.

I was suspicious that something as complicated as the global economy could be understood in such a simple way. And I knew from previous research that the search for counterexamples would be interesting. An earlier book, Selling Globalization, had argued against the prevailing wisdom that globalization was unstoppable. Global economics is built on global finance, I argued, and finance is fragile by nature. Critics doubted this conclusion until the Asian Financial Crisis and then the Global Financial Crisis. And then they didn’t doubt so much.

What’s really true about globalization? And what’s just “globaloney?” That’s what I was trying to figure out.

Globalization versus Terroir

I would like to say that everything I know about terroir I learned from Adam Smith’s Wealth of Nations, which is almost true. It is probably hard to imagine Smith, an austere Scot, sniffing, swirling, and droning on about vineyards and microclimates, but he did develop both knowledge of and appreciation for fine wine in his mature years and recognized the importance of what we call terroir.

Significantly, because after all he was Adam Smith, he noted the economic value of terroir, real or imagined, in establishing a winery’s or a region’s reputation. There was money in terroir then as there is today.

How does globalization affect wine terroir? Is it a McDonaldization situation, where the incentive to expand globally leads to homogenized products? Does the global mean the death of the local when it comes to wine?

I argued that while wine is a global industry, there really are not many truly global wine firms or dominant regions. Even Gallo, the largest wine producer in the world, has only a tiny share of total output and sales. Most wine-producing countries drink mostly their own products (a significant home-court advantage), limiting global effects.

Up the Wine Ladder

The impact of globalization on terroir seemed to me to depend on which step of the wine ladder you consider. At the bottom, basic commodity wine, there isn’t much terroir to lose (because that’s not what consumers are looking for). But globalization has had a big positive impact in raising the standard of quality of these wines by spreading winemaking knowledge and techniques and forcing bad local wines to compete with better wines from other regions.

The situation might be different at the top of the wine staircase. Winner-take-all global markets have the power to push the price of the best wines to stratospheric levels that Adam Smith could not have predicted. Great terroir wines are traded or collected, but not necessarily opened and enjoyed. A shame!

I also cited the Parkerization argument, which was very popular when the book was written. The growing global market put more power in the hands (and palates) of famous critics like Robert Parker, providing a powerful incentive for upwardly mobile winemakers to make at least one high-scoring “Parker wine.” If the top wines are all trying to please one critic, then won’t they all start to taste the same? That’s an unexpected globalization consequence for sure.

What about the wines in the middle, the ones that are neither commodities nor investment-grade icons? That’s the interesting question! I thought that product differentiation would be the key here because undifferentiated wines would sink toward the commodity bottom. Successful differentiation would allow for higher prices and margins. Looking back at this part of the essay I can see indicators of the premiumization trend that would gather force only a few years later.

Land versus Brand

What’s the secret to differentiation? Here’s where I made a mistake. Because I framed the chapter as globalization versus terroir, I naturally look to an increased emphasis on terroir as the key. So I was very hopeful about how things would turn out.

But, of course, terroir isn’t the only strategy. I should have paid more attention to branding as a strategic response to premiumization forces in the middle market tiers. I just wasn’t thinking land versus brand at this point. But I got there eventually (with the help of many wine people), which led to The Wine Economist and the five wine business books, starting with Wine Wars.

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Here are the books in my globalization series.

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Globaloney 2.0: The Crash of 2008 and the Future of Globalization (2010).

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Globaloney: Unraveling the Myths of Globalization (2005).

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The New York Times Twentieth Century in Review: the Rise of the Global Economy (2002).

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Selling Globalization: The Myth of the Global Economy (1998).

How Will We Know (When the Wine Market Finally Turns Around)?

September 16, 2025 By Mike Veseth in economic crisis, popular culture, Supply and Demand, wine, wine markets 1 Comment

If only wine were as simple as love.

How Can You Tell?

How can you tell if someone really loves you? The answer is simple, according to Betty Everett’s 1964 hit tune “The Shoop Shoop Song.”

Does he love me, I want to know
How can I tell if he loves me so
Is it in his eyes, oh no you’ll be deceived
Is it in his eyes, oh no you’ll make believe
If you want to know, if he loves you so
It’s in his kiss
That’s where it is, oh yeah

The truth about love is not reliably revealed by objective observable indicators such as hugs, smiles, or longing looks. It is too easy to fool yourself into thinking these mean more than they do. No, it is the subjective emotional response that matters. I’s in his kiss.

The message must resonate with a lot of people because the song has been covered by many artists, including Cher, Aretha Franklin, and Linda Ronstadt and the Muppets.

Love and Wine: Both Mysterious

The Shoop Shoop Song comes to mind because a friend writes that he is trying to figure out how he will know when the U.S. wine market finally turns up. Turning points, where momentum shifts decisively from one direction to another, are devilishly difficult to call in the economy in general and financial markets in particular. Making even a single correct turning point call can be enough to make a fortune or a career.

Everyone is hoping for a turning point in the wine business. Bad news has dominated the industry landscape for the last several years to such an extent that we’ve had to invent a few creative new categories of “good news” to justify hope. For a while the good news was that wine sales weren’t falling in all categories (hey, Sauvignon Blanc is still selling OK). But now even Sauvignon Blanc is struggling a bit, so that kind of good news is harder to swallow.

This is Good News?

Last year at this time the good news was that the bad news was getting worse at a slower rate. (You might want to read that again slowly.) Wine sales were falling but at just, say, five percent instead of seven percent. Slower decline isn’t the same as an increase, but maybe it’s a step in that direction. That was the hope.

Now the focus for many is on hitting the bottom in the hope that what follows will be a bounce (because markets often overshoot and then rebound when they change direction), a turning point. It will be difficult to know when that happens because of the complicated nature of the wine business.

The turning point, when it comes, is likely to be different for wines at different price points and from different countries. And it will be different depending upon where we take the market’s pulse: retail sales, wholesale inventories, producer shipments, bulk wine balance, winegrape demand and prices, or international trade flows. All of these indicators might never show a green light all at once. How will we know? And how can we avoid fooling ourselves as the Shoop Shoop Song warns?

Another Missed Turn!

Chances are that most of us will zoom right past the turning point without realizing what we’ve done. The only thing harder than spotting a turning point in real time is realizing when it has already happened. Here are a couple of charts from the OIV’s April 2025 global wine market report that show what I mean.

When did global wine consumption make the turn toward fewer bottles sold? Not many of us realized that’s what was happening during the global financial crisis, but here (above) are the OIV data. Since then we have had ups and downs (and regional variations, of course) that disguised a worldwide downward trend that only became obvious in the wake of the COVID pandemic. I didn’t call it at the time. Did you?

The global wine production graph above shows a situation that is even harder to forecast just because the dips are often followed by peaks, so it is always dangerous to forecast further decline. The current dip looks bigger than most of the others. Will the peak be bigger, too? If so, when will it show up?

That’s Where It Is!

Which brings us back to The Shoop Shoop Song because it applies a version of the Sherlock Holmes method to the question of love. Holmes advised to systematically eliminate all the logical possibilities and whatever is left, no matter how unlikely, must be the answer. It must be his kiss, the song explains, because nothing else is a sure-fire answer.

When it comes to calling the wine industry’s eventual turn, data won’t necessarily be the best guide (although I will sure be watching it closely). It may be that subjective, emotional factors (it’s in his kiss) will be the best we can do. Will we know when our feelings for wine are reciprocated? Fingers crossed we don’t have to wait too much longer to find out.

Trading Places in Rioja? White Wines Rising in Red Wine Regions

September 9, 2025 By Mike Veseth in wine, wine markets 2 Comments

Will white wines replace red as the defining wine of the Rioja region? No, probably not. A recent Decanter tasting of more than 700 wines included only about 150 white wines. That’s many fewer than the red wines, of course, but probably more than you expected, given the dominant identity of Rioja wine.

Look for more and more white wines from Rioja as well as other areas where red wines have previously taken center stage. Here’s the story.

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“Is White Wine the New Red?” That’s the question we asked here at the Wine Economist last fall. OIV data cited in that article suggested that white wine sales were overtaking red wine sales both globally and also in key markets. Why? micro-level data suggested that the global trend was playing out differently in different markets.

White Wine’s Rising Market Share

Recent U.S. wine market data (as reported in the current issue of Wine Business Monthly) suggests that a relative persistence in white wine’s momentum. Total U.S. wine sales (by value) declined 4.8 percent in the most recent 52 report weeks, for example, but white wine’s decline was just 2.5 percent versus a 6.4 percent fall for red wine and a 6.8 percent decline for pink wine.

The market pie has shrunk, but white’s share has increased by value. (Cold comfort for white wine producers, I know.)

Although Cabernet Sauvignon outsold Chardonnay by dollar value in the same reporting period because of its higher average price, Chardonnay’s 28.3 million case total sale was bigger that Cabernet Sauvignon’s 25.9 million, reversing a persistent trend. Overall white wine sold 72.9 million cases versus about 68 million for red.

Adjusting to the White Wine Trend

Sales data are backed up by anectdotal evidence from France (white wine now replacing rosé in supermarkets, which previously crowded out red wine sales) and even China, where white wine has long suffered from an overwhelming preference for red. Although people are buying less wine, more of what they do buy is white.

These trends have lots of implications. I suspect that many vineyard owners are thinking about grafting over their red wine vines to white wines, for example, and wineries are busy revising their product mix. Just makes sense. Sue and I know one winery that producing nothing but red wines for years, but now has a nice lineup of white wines, which sell out quickly.

At the regional level, the shift to white wines can conflict with existing signature wines or regional identities. Jancis Robinson, for example, recently asked if “Is it too late to save Sauternes?” More and more producers are switching from the lucious (but hard to sell) sweet wines to market-friendly dry blends of Sauvignon Blanc and Semillon.

The White Also Rises in Rioja

Times are hard in Spain’s Rioja region, as The Independent recently reported, burdened with a surplus of wine even before the implemention of U.S. tariffs. Rioja makes both red and white wine, but red has for decades been the defining color of Rioja. That historic strength is a liability in today’s marklet environment.

So some Rioja producers are giving more attention to their white wines, which are undiscovered territory to many wine drinkers but well worth exploring. The most-planted white grape variety in Rioja (and in Spain generally) is Viura, also known as Macabeo. You might know Macabeo from its role in Cava, the famous Spanish sparkling wine. It makes fine still wines in Rioja and could be a reason for white wine lovers to revisit this region.

Indeed, Rioja’s Viura wines are having a moment. White Rioja can be young and fresh, aged and oppulent, and even fashionably orange. If your idea of Spanish white wine was Verdejo from Rueda or Albarino from Rias Baixas, maybe it is time to take a closer look.

Discovering Viura

It’s not your fault if you haven’t heard of Viura. I am not sure we tasted Viura even when we were in the Rioja region. Rueda white wines were more commonly served, as I recall.

The Rioja region has been so focused on its red wine identity that planting new white grape vines was forbidden between 1992 and 2003, except for Viura, which was banned until 2007! Much of the Viura made today comes from old pre-1992 vines.

We were fortunate to recveive two excellent examples of these white Rioja wines, both attractively priced in the $15 to $20 range. The CVNE Monopole Rioja Blanco Seco 2024 was fresh and flavorful, with some complexity developing as the wine warmed up in the glass. It wasn’t a copycat of anything else and went very well with Sue’s fresh cherry tomato and white bean ragu with fried haloumi cheese. Easy to enjoy and appreciate.

The Ontañón Viura 2021 was an example of the more oppulent style, showing the effect of lees contact and some time in American oak. A delicate balance of richness and freshness that showed the versatility of this type of wine. It was terrific paired with a salad of garden tomatoes and Dungeness crab. I wonder how Viura would respond to even more time on the lees? We are looking forward to finding out!

As noted before, I think these were our first Viura wines but I don’t think they will be our last. The movement to white wines in red wine regions like Rioja is both a defensive move in the light of changing market conditions and a creative opportunity for producers who embrace the challenge. Congratulations to the creative producers of Rioja Blanca wines like these.

The rise of white wines in regions best knows for their reds will no doubt creaste some problems for producers but also opportunities as seen in Rioja. Adventurous consumers will discover (or rediscover) the declicious white wines that have been hiding in plain sight all along.