Beyond Wine Boom & Bust: Taking a Closer Look at the SVB Report

svb-2018wine-thumbSilicon Valley Bank recently released their 2018 State of the Industry report on the U.S. wine market and if you haven’t read it you should. It is well researched, written, and argued. Most important, it will challenge your ideas about the U.S. wine industry and make you think.

Most of the media reaction to the report has focused on two “boom and bust” elements: the predictions that (1) the 20-year wine market expansion is coming to an end and (2) that the relentless rise in grape prices and vineyard valuations in Napa Valley will pause or plateau.

Both of these predictions are significant although, as the report notes, calling a “turn” in the market is inherently problematic and will be difficult to assess until a few years down the road. In the short term, for example, the report notes that the U.S. wine market should continue to grow in 2018, although at a slower pace. Value will grow faster than volume due to the “two track” U.S. market with growth in premium wine sales offsetting declining lower-shelf demand.

This Changes Everything?

Boom and bust make headlines, but there are two important points that the SVB report makes that I think should get more attention. The first is the fact that we are witnessing fundamental changes in the retail market environment. Not just retail wine market, retail everything (or just about). Who buys, when, where, and how, who consumes, when, where, why, and how. Even the way people pay is changing.  Amazon is one driving force in this environmental transformation, but only part of it.

This fact was driven home to me a few weeks ago when I read that the Swiss luxury group Richemont (controlled by South Africa’s Rupert family), announced plans to buy out Yoox Net-a-Porter,  an Italy-based  luxury “etailer.” Richemont’s brands include Cartier, Van Cleef & Arpels, Piaget, Vacheron Constantin, Jaeger-LeCoultre, IWC Schaffhausen, Panerai and Montblanc. High end stuff.

You might think that consumers would be willing to buy books and t-shirts online but that they would hesitate to throw down $5000 or more for jewelry or a watch without holding it in their hands. But you would be wrong, or so the Richemont folks believe. The idea kind of takes my breath away.

It’s a new world for wine as for other things, the SVB report suggests. And the patterns and practices that were successful in years gone by, including but not limited to bricks-and-mortar versus online sales, are not guaranteed to work in the future. Time to question and rethink.


Talking ‘Bout the Generations

A second interesting but possibly under-appreciated point that the SVB report raises concerns generational analysis of the wine market. Most of what you read about wine today frames the changing market demographics in terms of baby boomers versus millennials. But, as this figure from suggests, there is a “missing middle” to this analysis. The figure shows 2016 median household income by age of householder.

Lost in the focus on rising younger, poorer millennials versus declining older, richer boomers is the Gen-X generation who are in their 40s now (more or less) and reaching their peak earning (and consuming) years. They are, SVB argues, an important but sometimes underappreciated market for wine. And, as a recent Wine Access study reveals, although Gen-X is a smaller cohort than boomers or millennials, they are willing and able to spend proportionately more on wine.

I think these are very useful insights, although I’m always a bit cautious regarding generational analysis. My years as a university professor taught me that the differences between generations are sometimes less important than diversity within them. Sometimes it is appropriate to generalize about a generation, but not always.

Take boomers, for example. The conventional wisdom is that baby boomers have driven the wine market growth — and this is true — but remember that most boomers don’t drink wine regularly and many don’t drink it (or any alcohol) at all.

The boomer wine boom is driven by a relatively small segment of this generational group. In a way, the boomer wine phenomenon is about a subgroup that is at least somewhat atypical of its cohort — and that difference is key.

The SVB report goes well beyond boom and bust to include these significant insights and many others, too. Highly recommended for anyone who wants to understand the American wine industry today and where it is headed.


Congratulations to Rob McMillan and his team for a thought-provoking report.

David Ricardo to Donald Trump: Global Wine Trade and Its Discontents

5788597-mWhen David Ricardo wanted to make the logic of his famous Theory of Comparative Advantage crystal clear he knew what example to choose: wine. It was obvious that Britain should import wine from Portugal in exchange for cloth rather than trying for vinous self-sufficiency. Any fool could see that!

Make Great Britain Great?

But wine wasn’t really the point of his example. He was more concerned about the Corn Laws, a set of trade barriers designed to choke off agricultural imports and promote higher prices for domestic grain (lining the pockets of rural landowners in the process). If Britain should trade cloth for wine, then why not trade cloth for wheat and other grains as well?

The wine story was good enough to convince Ricardo’s economist colleagues, but not so much those in parliament. The Corn Laws lasted from 1815 until 1846. Economic logic triumphed over vested interests in the long run, but the human cost of the trade barriers to urban workers and their families in terms of higher food costs and lower living standards was very high.

Britain really didn’t fulfill the promise of its Industrial Revolution until the Corn Laws were repealed. It is fair to speculate that Parliament could have acted to Make Great Britain Great much sooner if they had been guided by the economic logic of wine trade.

Wine is perhaps a good guide to British political economy today, too. Brexit, which was promoted as a way to Make Great Britain Great Again, seems to have instead made British families poorer even though the change in trade policies has not yet been enacted or even agreed.  Rising import prices and stagnant wages have squeezed consumer budgets for wine as for many other items (sound familiar?). Tesco, the upscale supermarket giant, is reportedly planning a discount chain of its own to compete with increasingly popular “hard discount” Aldi and Lidl stores.

Make American Wine Even Greater?

The wine trade has lessons for the United States, too. Or at least that was my takeaway from two speakers at the “State of the Industry” session at the recent Washington Winegrowers Convention and Trade Show. 

Glenn Proctor of The Ciatti Company presented a very interesting survey of global wine market conditions. There are only two big wine markets that are growing in terms of total consumption, Proctor said: China and the United States. The Chinese market is particularly attractive because of the large rising middle class and potential for further growth.  French wines are top of the import table in China, followed by Australia and Chile — two countries that have benefited from free trade agreements with China.

Indeed, China is now the #1 export market for Australian wine, accounting for 33 per cent of exports, ahead of the US (18%), UK (14%), Canada (7%), and Hong Kong (5%). The Chinese market has powered Australia’s resurgence as a global wine power and the free trade agreement is an important part of the story.

The United States? Well, the U.S. has no free trade agreement with China and President Trump pulled the U.S. out of the Trans-Pacific Partnership negotiations — which could have opened up Asian markets — on his first day in office. Partly as a result, I suppose, the U.S. ranks #6 on the China import list. Australia wine sales volumes are more than ten times the U.S. amount.

If recent import trends continue for a couple of years, U.S. sales to China may be surpassed by relatively tiny Georgia. Georgian wine sales to China have surged (up 45%) in part because of the Georgia-China free trade structure that went into effect at the beginning of the year. The U.S. wine industry is clearly handicapped in foreign markets where other producers have preferential access.

John Aguirre, President of the California Association of Winegrape Growers, also highlighted  the importance of trade agreements for the wine industry. President Trump has raised doubts about  U.S. – Korea free trade (the Korean market has lots of potential for U.S. wine) and launched negotiations to revise NAFTA. Since Canada is the largest export market for U.S. wines, it is essential that NAFTA maintain open cross-border access.

The wine industry would suffer if the NAFTA negotiation somehow collapse, although the negative impacts would obviously be less than agriculture generally and the automotive industry, both of which have become dependent on efficient trans-border industrial integration in order to compete with efficient producers in other parts of the world.

I am hopeful that the NAFTA negotiations will be successful at updating the treaty since there is so much at stake. But my confidence is shaken somewhat by President Trump’s actions to block new appointments to the World Trade Organization’s appeals body — the entity charged with enforcing the rules of the trade game.  This will make it more difficult for the U.S. wine industry to pursue its complaint against the British Columbia wine regulators concerning their discriminatory supermarket wine sales policy, which favors B.C. wines relative to imports in clear violation, in my view, of the WTO’s non-discrimination principle.

What’s the bottom line? If President Trump: wants to Make American Wine Even Greater, he might take a lesson from David Ricardo and re-think administration actions and policies regarding global trade agreements.

Economic Impact of California Wine Country Wildfires: Preliminary Analysis

wine-country-fireLike most of you I have been intently focused on the wildfires that have swept through the California North Coast wine region and their tragic human impact. It is difficult to accept that such loss of life and property is possible, but the fires and the winds that drive them have been relentless.

I started getting calls from reporters as soon as a wildfire emergency was declared and, like many others, I declined to comment on the economic impacts. Too soon to know, I said, and not the real story in any case. More important to tell the human story and help people come together and cope with loss.

Still Too Soon

It is still too soon to know the economic impacts. The fire danger continues and the fatality  and property damage reports are still coming in. But I have started to think about the nature of the potential losses to the wine industry. As Tom Wark wrote last week,  we need to think about what happens when the fires are finally out, even if that’s not the most important immediate concern.

Here is what I am thinking now. The direct impact of the wildfires on California wine will very unevenly distributed, because that’s how a wildfire works, but the indirect effects are likely to be even larger and widespread. It is important to get out the message that California wine is open for business.

Uneven Direct Impact

The North Coast region (Napa, Sonoma, Mendocino, and Lake counties) is very important in terms of the value of the wine it produces, but is dwarfed by Central Valley production in terms of volume. The huge quantities of California appellation wines that fill the nation’s retail shelves will not be much affected by the wildfires. This is important to realize since some press reports link the wildfires to the tight global wine market that has resulted from poor harvests in Europe this year, which risks giving a false impression about wine supplies in California.

While some North Coast vineyards and wineries lost everything, others suffered little or no direct damage to cellar, vineyard, or wine stocks. The floor of the Napa Valley, for example, is not much damaged so far. But that doesn’t mean that wineries without direct damage won’t suffer an economic loss.

Wine Tourism Losses

No way to put a dollar and cents  figure on the direct losses until individual assessments of winery destruction, vineyard damage, loss to stored wines, possible smoke taint issues, and so forth are made. But we can already see the indirect cost in one area: tourism.

napa1Wine tourism is incredibly important to Napa and Sonoma these days, both for the high-margin direct sales that wineries there increasingly rely upon to compensate for escalating grape costs and for the hospitality industry that has grown up to serve wine tourists.  The economic impact of wine tourism is very large for the region.

On a typical day in 2016, according to the latest Napa tourism economic impact study, there were almost 17,000 tourist in the Napa Valley who spend more than $5 million. These are not typical days and the income and jobs those numbers represent are nowhere to be seen for now.

The wildfires have obviously interrupted wine tourism even for wineries that are not directly affected by the fires and it is not clear how soon anything like a normal tourist flow will return. This is complicated by a number of factors including the perception that the whole region is badly burnt and therefore closed for business, damage to transportation and hospitality infrastructure, and problems for the workers who support both the wine and hospitality industries.

It’s a People Business

Many of the workers who live in the region are dealing with personal losses or are busy helping those in need. The hundreds of workers who live outside the local area and commute to jobs in Napa face obviously obvious obstacles, too. In the short term I am told that it is actually the shortage of staff more than the direct impacts of the fires that limits winery operations in many cases.

The bottom line is that while the direct damage from the firestorm is large but unevenly distributed, the indirect costs are likely to be even bigger and affect almost everyone in the region, wine people and non-wine folks, too.  It is not entirely clear what normal will look like when the smoke clears and it will take some time to find out. But, as Tom Wark writes, Napa Stands Strong (and Sonoma, too) and it is important to press ahead.

Renewal and Rebirth

The videos I have seen of  the fire damage bring to mind scenes of burning Napa vineyards that appear in a wonderful 1942 book by Alice Tisdale Hobart called The Cup and the Sword (which was made into a terrible 1959 film called This Earth is Mine starring Rock Hudson and Jean Simmons and set in Napa and Sonoma).

Hobart’s novel is about the resilience of the strong women and men who built the California wine industry and the vineyard fire signifies rebirth from the ashes because, with some effort and care, the sturdy vines in the novel do come back to life. It is an image to keep in mind today when recovery, rebuilding, and rebirth are on our minds once again.


How Will Brexit Impact World Wine Markets? A Dismal New Forecast

brexitMy remarks at the Unified Wine and Grape Symposium‘s “State of the Industry” session earlier this year focused on the uncertainty surrounding Brexit (Britain’s choice to exit the European Union) and the great potential it has to damage wine markets in both the UK and other countries.

I called Brexit a “known unknown” because we know (or should realize) that we really don’t know what Brexit will look like when the two-year exit process concludes or what its impact will be when the dust finally clears.

The exit negotiations will begin in earnest after the June 8 elections in the UK, which Prime Minister Theresa May and her Tory party are expected to win although perhaps not by as big a margin as originally conceived.

An Inconvenient Truth

One particular problem for the wine industry is that wine isn’t very important to the overall British economy (so don’t expect it to get much special attention in the trade negotiations), but the British market is extremely important to the global wine industry, both as a major importer and a bottling and distribution center.  The UK market is a top target for many wine exporters, including Australia, New Zealand, Chile, and even the United States.

Kym Anderson (University of Adelaide) and Glyn Wittwer (Victoria University, Melbourne) have taken a first stab at understanding what is at stake in a study that they released earlier this month titled “Will Brexit Harm UK and Global Wine Markets? (pdf). Anderson and Wittwer ran three Brexit scenarios through their econometric model of the global wine market and reported the results.  I encourage you to take the time to study their research.

Major Impact on Wine

Anderson and Wittwer’s conclusion, to cut to the chase, are that there would be substantial Brexit impact on UK wine imports:

In our ‘large’ Brexit scenario, as compared with the initial baseline scenario, the consumer price of wine in 2025 would be 22% higher in the UK in local currency terms (20% because of real depreciation of the pound, 4% because of the new tariffs on EU, Chilean and South African wines, and -2% because of slower UK income growth). The volume of UK wine consumption would be 28% lower (16% because of slower UK economic growth, 7% because of real depreciation of the pound, and 5% because of the new tariffs). Super-premium still wine sales would be the most affected, dropping by two-fifths, while sparkling and commercial wines would drop by a little less than a quarter.

The authors examine three Brexit scenarios, judging that the most likely general outcome (the “large” Brexit model) is that the UK would adopt the same tariff barriers as the EU27 in the short run and then work eventually to restore free trade arrangements with Chile and South Africa. This makes sense to me if for no other reason than that Britain lacks the time and staff necessary to negotiate Brexit and to work out its own detailed tariff regime and also to negotiate detailed free trade agreements to replace those that will be lost.

Losers and Winners?

Brexit will obviously have high costs for UK wine consumers and retailers and for the bottling and distribution industries as well. Who will suffer the most among countries that export wine to the UK?

Australia, New Zealand, and the US will have to deal with the negative income growth rate effects of Brexit and the exchange rate impacts, too, but won’t see an increase in tariff rates under the “large” Brexit scenario, since their exports to the UK are already subject to EU rates. They will gain a little form a more level playing field with respect to European wine producers in the UK market.

Chile and South Africa are more vulnerable to Brexit woes because they currently have preferential access to the EU (and thus British) market. Their wine exports to the UK will be subject to tariff at least until they can reach new free trade agreements.

European wine exports (France, Italy, Spain and others) previously had tariff-free access to the UK market and so will face new barriers to trade. But, as Anderson and Wittwer note, the likely tariff rate of 13 pence per liter is dwarfed by Britain’s domestic excise tax of nearly £3 per liter and 20% VAT.

No Rising Tide

Does anyone win in this analysis of Brexit? Well you would think that the small but growing UK wine industry would gain from the various hurdles that imported wine faces — and they will. But Brexit is also likely to make imported winemaking and vineyard equipment and supplies more expensive and restrict or increase the cost of migrant seasonal labor, so it is unclear if Brexit will be truly beneficial.

And of course the declining overall wine market is bad news — the opposite of the idea that a rising tide raises all ships, if you see what I mean.

The devil is in the details of scenario forecasts like this and we won’t really know what to expect until the May government announces its intentions (and even then we might not know because the government has developed a recent habit of reversing itself on economic policies and, of course, the final outcome depends on the EU negotiating stance, too). Until then, however, this forecast is a very good place to start your thinking.

This column is just a summary of the new research with a few thoughts of my own. I encourage you to read the Anderson-Wittwer paper and note your own thoughts and reactions in the Comments section below.

What Next? Wine Industry Mid-Year Report & Preliminary Brexit Analysis

economist-cover“What next? was the question I asked to open my report at the Unified Wine & Grape Symposium‘s “State of the Industry” session in January. Risk and uncertainty were my forecast for 2016.

Bernie, Donald, Zika, Brexit. Look out! Anything can happen, I told the audience, although I ended with a Frank Sinatra theme. It could be a “Very Good Year” if we can dodge the many potential hazards.

I wasn’t the only one who was worried. Four speakers in a session on wine industry investment were asked about their expectations for 2016. All four said that the prospects for the U.S. wine industry were bright … unless something happened to the economy.

Cautious Optimism?

We are halfway through the year and the cautious optimism expressed earlier seems justified. The U.S. remains one of the few large economies to be growing, for example, and unemployment rates are low. The June jobs report offered evidence of further recovery. But confidence in economic growth seems very fragile and the Federal Reserve has hesitated repeatedly to raise key interest rates.

One worrisome indicator is the yield curve, which tracks the difference between short- and long-term interest rates. The yield curve has become unusually flat recently, a pattern that is sometimes associated with economic slowdowns. A  recent Deutsche Bank analysis of the yield curve forecasts a 60% chance of a recession in the U.S. in the next 12 months. Yikes!

Interest rates around the world are so low (and sometimes even negative) that policy makers are worried. What if something goes wrong? How can we push interest rates even lower? Would it make any difference if we did? With fiscal policy handcuffed by political chaos in many countries and monetary policy seemingly out of ammunition, there is concern that a crisis in one country could easily spread to others.

What next? That’s still the right question, both in general and when it comes to wine. While the U.S. wine market continues to grow and attract the attention of international competitors, the Nielsen figures reported in the July 2016 issue of Wine Business Monthly suggest caution. Off-premise wine sales increased by a rate of just 1.1 percent overall in the four weeks ending April 23, 2016, indicating a possible deceleration of earlier more healthy growth.

Brexit’s Many Potential Impacts20160702_cuk400

The list of potential challenges and threats is very long but the U.K.’s vote to leave the European Union (a.k.a. Brexit) is at the top of most lists. What does Brexit mean to the wine business? The answer is that it is too soon to be sure, but here is a quick guide to what to look out for and the impact on wine.

The biggest impacts of Brexit to far have been political, with the heads of the Conservative Party and the nationalist UKIP group both resigning (for very different reasons) and Labour’s leader under sharp attack from his own members. Since British tax policy has been a significant burden on wine sales there in recent years, the uncertainty about the who will lead and where she (Theresa May will take over as Prime Minister in the next day or so) will want to go is significant for wine.

The partial political vacuum in England has seemingly increased the influence of Scotland’s talented leader Nicola Sturgeon, who suggests that Scotland might once again consider leaving the U.K. (a Scexit?) in order to remain closely linked to the E.U. Sturgeon has taken strong anti-alcohol positions, which could affect wine policy, although this is way down the list of things to worry about if Scotland breaks away and the U.K. breaks apart.

Financial markets react to news more quickly than the “real” economy and the rise of the U.S. dollar and fall of the British Pound are the most visible effects so far. The Pound has tumbled dramatically as the graph above show and some observers believe that it will continue its descent although this is far from certain.newfx

Short Run: Exchange Rate Effects

The falling Pound is important because, as this table of U.S. exports for the first quarter of 2016 from Wine by Numbers indicates, the U.K. has become a more important market for U.S. wine exports in recent years. The U.K. is second to Canada in U.S. bottled wine exports and first in the bulk wine market.

The falling Pound makes imports from the U.S. and other wine nations more expensive in the U.K. U.K. consumers are notoriously price sensitive, so the falling Pound could produce substantial wine demand impacts, especially if there is a U.K. recession, as many expect, due to falling investment (see below).


The exchange rate effect will hurt U.S. exports to the U.K., but the biggest impacts will be on other countries that rely upon the British market to a greater extent than we do. Australia, South Africa and of course European wine producers will take a bigger hit.

The problem is compounded by the fact that supermarkets are a critical sales vector in the U.K. and much of the food they sell is imported and will therefore be more costly to source. Supermarket margins are likely to be squeezed as they attempt to pass on higher costs to consumers with uncertain economic prospects.

Don’t be surprised if this puts pressure on foreign wine suppliers to cut their wholesale prices to British supermarket buyers and thus absorb some of the exchange rate impact. That is an incentive to develop alternative markets … such as the U.S. The margin wars are just getting started.

So the wine news is not very good in the U.K., where wine prices are likely to rise, incomes could fall, wine taxes may also increase, margins come under attack, and prohibitionist forces may be strengthened. Bad news for the British who drink wine and bad news for others including U.S. producers  who want to sell it to them.

Long Run: The Vultures Circle

But the biggest impacts are likely to be the long-term structural changes that will be required if and when Britain or England or whoever is left leaves the European Union and the single market. The U.K. is an important wine center both because of the large British domestic market and also because of its essentially unrestricted access to European markets and resources. It is too soon to know how this will change for wine, but it is instructive to watch other sectors to get a sense of the dynamic.

There is already concern about disinvestment in British steel and automobile manufacturing, for example, if resources are shifted into other E.U. zones. Much of British auto production is exported and would be disadvantaged if the U.K. loses its open access to E.U. markets. Voters in Sunderland may eventually rue their strong Brexit support if Nissan moves production (and some of the current 7000 factory jobs) away from its big plant there to new homes in the E.U. heartland.

And everyone in The City, London’s big financial center, is openly concerned, too. London residents voted overwhelmingly to remain in the E.U. in part because of their desire to protect The City’s economic standing (and their jobs), which would diminish if movements of capital and skilled workers to and from the continent were restricted.

Any major disruption in The City will have widespread impacts on wine, especially the on-premise trade but not limited to that. The vultures (in the form of European cities hungry for those high-paying finance jobs) have already started circling.

I am still cautiously optimistic for the U.S. wine economy and for Britain, too, but there are lots of risks to consider. That question — What Next? — still applies.

The “Demolition Man” Syndrome: A Vision of the Future of Wine in America?


I’ve been catching up on my wine industry reading and one report that grabbed by attention is Rabobank’s May 2016 Industry Note,  “The Premiumization Conundrum”.

The gist of the analysis is that the premiumization trend in the U.S. wine market isn’t simply a case of what Paul Krugman calls “up and down economics” — in this case demand for $10+ wine is up, demand for cheaper wines is down –but rather it needs to be understood in the context of a broader set of wine market changes.

Not Just Up and Down

The Rabobank report examines five important tensions that are part of the premiumization syndrome:

  1. Demand for premium vs. basic wine grapes
  2. Securing long-term premium grape supply vs. managing return on capital
  3. Wholesaler consolidation and retail “chainification” of wine vs. premiumization
  4. Traditional retail vs. DTC vs. NIMBY
  5. Domestic wine vs. imports

As I was reading the Rabobank report I began to wonder how these trends might unfold if continued at their present rates  well into the future. In other words I was doing exactly what economists are trained not to do, which is engage in straight line projection. The future is out there somewhere, but it is almost never on a straight line that connects the last few dots on your time-series chart and then continues on out to infinity … and beyond.

But humor me with a little thought experiment. What might the future look like under the admittedly unlikely “straight-line trend projection” circumstances? Take today’s trends as Rabobank reports and fly them straight out to wherever they take you.

Pondering this thought, I unexpectedly found myself channeling a 1993 Sylvester Stallone, Wesley Snipes, and Sandra Bullock film called Demolition ManStallone plays a police officer named John Spartan who was put into suspended animation only to be awakened 36 years into the future in 2032 in order to catch Wesley Snipe’s bad guy character.

All Taco Bell Now

Stallone’s updated Rip Van Winkle encounters a lot that surprises or shocks him including, as in the film scene above, the inconvenient truth about retail consolidation run amuck. Invited to dinner and dancing at a Taco Bell, he can’t help but think, Taco Bell? Really?

But it really is, as Bullock’s character explains. Taco Bell was the only chain to survive the franchise wars and now all restaurants are Taco Bells. “No way!” Way!

Rabobank’s report notes a number of important trends that, if taken to a ridiculous Taco Bell kind of extreme, might produce something that Demolition Man would recognize. Here are three that I can’t help pondering.

All MoVin Now

The fictional John Spartan goes shopping for wine in 2032 San Angeles and the first place he sees is a big box MoVin store, bigger than the biggest wine-beer-spirits stores of the past, but recognizably the same concept. He continues on in search for a small, specialist shop, but soon runs across another MoVin. And then another and another and slowly it comes to him that just as all restaurants are Taco Bell, all wine is now retailed by MoVin.1353026500232-577831165

How did this happen? Well, as the Rabobank report notes, all of the growth in off-premises retail sales of wine in the U.S. in the last couple of  years has come through retail chains, not independent shops and stores. Take away BevMo, Total Wine, Costco and other multiple retailers (I assume Kroger fits here, too) and Rabobank’s data show off-premises wine sales would be flat.

Follow that trend to its illogical extreme, with the chains seizing market share each year, add logical pressure to consolidate and — hey, presto! — you have a retail wine monopoly.

How did MoVin win this fictional competition over other chains? Because, in this made-up universe, they drew upon the growing consolidation in distribution channels (another Rabobank finding).

Yes, all wine is sold by MoVin in 2032 because they are a wholly-owned subsidiary of NSEW (North-South-East-West),  the only company to survive the vicious distributor wars of 2021.

All Kiwi White Now

There are lots of different super-premium brands on offer at the big box wine store of the future, but the vast array of colorful labels and fictional names actually disguises a certain sameness. Much of the wine comes from the same few large producers, the ones who were able to able to secure reliable quality grape supplies in the grape wars back before 2022, when the last independent North Coast vineyard was swallowed up.

The imperative to lock up vineyard resources is another of the trends that Rabobank spotlights and it is natural to wonder where it will all end. But that isn’t the only source of concern.affiche2

When John Spartan looks closely at the super-premium white wines that he favors (because they pair so well with his favorite Taco Bell fish tacos), he slowly realizes that they are all made by a few large multinational firms in New Zealand. Just as Taco Bell conquered food, the Kiwis were the victors of the white wine wars.

The one constant of U.S. wine import statistics in recent years has been that New Zealand Sauvignon Blanc imports will grow, often faster than any other import category. I keep waiting for the run to end (and I know Kiwi producers who hold their breath and cross their fingers because they are worried, too). But nothing has stopped or even seriously slowed down New Zealand wine imports so far. And you know where that can lead!

You Want Grapes with that Wine?

What about inexpensive wine? Glad  you asked because that’s where John Spartan had his harshest shock — it made him want to give up wine altogether. It seems that as grape supply became less and less secure and falling prices pushed basic grape producers to other crops like almonds and pistachios, wineries were forced to weaken links to particular regions and then to grapes themselves.

Appellations and geographic designations generally are an expensive luxury if you’re not sure if you can buy the grapes you need to maintain a region-specific brand, so they had to go. And then wine companies gave up specific grape variety designations for the wines for essentially the same reason. All inexpensive wines in 2032 are now proprietary blends. No one knows what might be in the bottle, box or can or where it might have come from. Not many seem to care.

Absent place of origin and clearly-identified grape variety components, inexpensive wines evolved into branded alcoholic beverages and, once consumers accepted that, there wasn’t any reason why they had to be made out of grapes any more. The laws were re-written to allow inexpensive wine-like products to be made and marketed and people lapped them up. Wine for the masses endured, but in an ersatz Taco Bell kind of way.


Or at least that’s where bad economic analysis (and not enough sleep) takes you if you follow recent trends to ridiculous extremes, which I have done here just for fun, but the Rabobank report definitely avoids.

The future? Taco Bell? No Way! That’ll never happen. Don’t worry. Go back to sleep. G’night!


Thanks to New York Times columnist Thomas Friedman, who indirectly inspired this column. He told the story of the “Demolition Man” Taco Bell scene in his best-selling 2000 book about globalization, The Lexus and the Olive Tree.


Five Things I Think I Learned at the Napa Valley Wine Writers’ Symposium

wine-words1Sue and I are back from the Professional Wine Writers’ Symposium at the Meadowood Resort in the Napa Valley and it is time to reflect upon the experience. Herewith some notes and a list of five things that I think I learned about the wine writing business.

Anatomy of an Amazing Experience

The wine writers’ symposium has been going on for about a dozen years and it is an amazing experience. The idea is that you bring together a faculty of experience professional wine writers to teach, coach, mentor and help network a group of rising star wine writer participants. (This year’s “student” group was so well qualified that the student and faculty roles sometimes reversed — a good thing.)

The setting is fabulous. Classes and accommodations are at the Meadowood Resort, which is also one of the sponsors along with the Napa Valley Vintners association and the Culinary Institute of America’s Greystone Napa Valley campus. Bill Harlan of Harlan Estate wine fame co-founded Meadowood and actively supports this initiative. The CIA’s sponsorship derives from its wine education program for budding hospitality professionals.

People come to the symposium to learn to be more effective wine writers and especially to find ways to be more successful on the professional side of things — career development and income generation being important factors. Sue (who was a career and writing coach) and I (one of the speakers) came to learn more about how the wine writing business fits into the wine industry generally and of course to meet all the talented participants.

Reflecting upon four days of intense activity at Meadowood, the CIA Greystone and a tasting at the historic Charles Krug winery, I have come up with a list of five lessons we took away from this experience.

Lesson One: An Industry in Transition

The wine writing business (Jamie Goode would correct me here — the wine communicating business) is an industry in transition. Ironically, although wine is more popular and integrated into popular culture than ever, the number of traditional media outlets for wine writing has declined. There are fewer newspaper wine writing jobs, for example, and fewer newspapers, too.

There is more wine content available to consumers than ever before, but much of it is on the web and provided for free by both professional and amateur authors. Some of the amateurs are highly qualified, of course, but their freely provided content makes earning an income in this field more difficult.

The internet and the move to mobile communications are disruptive technologies generally and the wine writing business is no exception. That said, disruption creates both challenges and opportunities and the key lies in choosing a strategic response.

Lesson Two: How Wine Writers Are Like Actors

Wine writers are a little like actors from an economic point of view.The most commonly repeated line among aspiring actors, it is said, is something like “My name is Robert and I will be your waiter tonight.” Day jobs may suck, but having a secure source of income is very useful. Being an actor is hard. Making a living acting is even harder. Ditto wine writing.

A small number of wine writers do very well indeed! They work very hard and earn good incomes, achieve a certain level recognition and even celebrity. Most wine writers, however, work very hard and scramble to scrape together a living with multiple jobs and non-wine writing projects — the economic equivalent of an actor’s waiter gig.

Even the most successful contemporary wine writers pursue multiple disciplines, however, generating content for newspapers, television, the web and organizing sponsored tastings, wine classes, consumer programs and much more. Jancis Robinson used to jokingly refer to her wide-ranging set of activities as “the empire” although an economist would recognize it as a diversified business model built around a core expertise.

Hong Kong-based Jeannie Cho Lee MW’s “empire,” for example, includes books, university teaching, her food and wine website, a job advising Singapore Airlines on their wine selections, a television series, magazine articles and much, much more.

Support yourself with a single type of work (magazine editor? wine book author?)? Yes, it is done — Eric Asimov, the chief wine critic of the New York Times is an example — but that’s the exception not the rule. Need to create that diversified empire. And then hope for some luck, too.

Lesson Three: No Single Path

There is no single sure path to success in wine writing. Some of the top people in the field are Masters of Wine or Master Sommeliers, for example, but others like Asimov are self-taught. That said, I noticed that a great many of the talented “students” were seeking WSET credentials. The detailed wine knowledge is important, of course, but this is also a way to signal potential clients of serious commitment, which is useful in a crowded and competitive marketplace.

It seems to me that many of the successful writers leveraged specific assets effectively. Jamie Goode was a successful science editor, for example, and the scientific foundation of his writing clearly differentiates his product. Decanter contributor Jane Anson’s deep knowledge of Bordeaux gives her a comparative advantage.

The day of the generalist (I am thinking of our fantastic keynote speaker Hugh Johnson, who seems to know everything about wine) seems to be passing or perhaps has passed as a business model.

Specialization is important, whether by market segment, winemaking region, or wine issue area. But, as noted above, the ability to make connections and to communicate across several platforms is also critical to success.

Lesson Four: Passion is Not Enoughpassion-portugal-red-blend-77x300

The writers we met who seem to have the greatest success share drive and passion, but they are also strategic in the way that they invest their time and other resources, entrepreneurial in seeking out and making their own opportunities, and multidisciplinary. They leverage their core comparative advantage effectively to make themselves valuable to clients and readers, not simply to be more visible to the public.

Let me repeat part of that. They think about their clients and audiences and what they can do to create value for them. Then, of course, they have to persuade their clients of the return on investment and convince them to share some of those returns with them.

More work is needed to measure the value created by high quality wine communications and to distinguish it  from freely available web content, for example. The statistics we heard about low and stagnant “dollars per word” freelance writing rates suggest that  professional wine writing has low value, that its value is not widely appreciated, or perhaps that professional writers are in a weak negotiating position when it comes to writing fees. (Alder Yarrow argued that this is due to an over-supply of wine writers.)

Lesson Five: The Value is There

Ironically, even as the average return to professional wine writing has declined, its importance to the industry has actually increased as the wine industry becomes more competitive with other sectors that compete for sales and attention.

Wine writers tell wine’s story and story-telling is a valuable skill. Consumers do not just sniff with their noses and slurp over their tongues. Lots of things smell good or taste good. The key, it seems to me, is to engage the imagination and take wine enthusiasts on a journey and the people we met at Meadowood and others like them are skilled and valuable guides.

Or at least that’s the lesson I take form the substantial investment made by the symposium sponsors. Napa Valley Vintners, Meadowood and the CIA will  get some direct publicity from the symposium itself (this column, for example) but the real payoff comes down the road as all the participants become more effective in their work and better able to tell the Napa Valley story and the story of wine more generally.

The sponsors actually kicked up the investment a notch this year. In the past most “students” paid symposium expenses while a small number received fellowships to offset cost. This year a new “all fellowship” model was rolled out, with fewer “students,” high admission standards, and full-tuition fellowships. Plans are coming together to build an endowment to sustain the full fellowship model into the future. I like the forward thinking behind this.

There was a lot to absorb at this conference and I am only scratching the surface here, but these are some of the things I think I learned at Meadowood.


Thanks the symposium’s organizers for inviting us to take part and to the sponsors for their generous support of the program. Thanks, as well, to all the Napa Valley wineries who donated the wines we used in classes and the meals and receptions. Shout-outs to so many including especially Jim Gordon, Julia Allenby, and Antonia Allegra.

Sue and I also want to thank Cain Winery for inviting us to an intimate dinner they hosted at Terra Restaurant in St Helena where we had a glorious meal and tasted Cain Five wines from 1986, 87, 97, 98, 2006, 07, 10, 11 and 2012. It was an awesome experience. Thank you!


Say, when is someone going to write a song about wine writing? Try substituting “wine communicator” into the song at the appropriate place and see if it works. Cheers.