I believe that the games we all played when we were younger taught us valuable lessons, both about life in general and life in today’s wine industry in particular. Risk, for example, taught us to be strategic in analyzing any situation. Checkers and chess taught us to think beyond the next move or the one after that, to anticipate our competition’s reaction to each possible action.
Monopoly, of course, prepared us for the wine industry’s continuing consolidation with big getting bigger at every level — retail, distribution, winery, and vineyard.
Up and Down
Chutes and Ladders (or Snakes and Ladders for some of you) is the game to play if you want to get a sense of the premiumization game that is a distinct characteristic of the wine industry today. Chutes and Ladders is a race to get from the bottom of the playing field to the top. You can climb up one step at a time, but ladders sometimes zoom you to a higher level. That’s great, but there are also chutes that send you tumbling down again.
Wine businesses have been encouraged to play the Chutes and Ladders game because the growth in the market has ratcheted upscale with surprising speed since the global financial crisis. Sales of wine at lower price points have languished or declined. The growth zone has shifted to higher and higher price points (which entail lower and lower volumes). The sweet spot in the wine market is a moving target. Talk about Risk!
Sometimes it seems like if you are not climbing the ladder you must be falling down the chute. Growth-seeking wine brands must keep climbing market ladders as the sweet spot shifts, but (to mix metaphors) it is hard for a tiger to change its stripes. Once a brand has established an identity, it is dangerous to cut prices and difficult to raise prices. Climbing the premiumization ladder can be a roll of the dice.
Early Mover Disadvantage
I have seen this with some European wines that entered the US market back in the day when market conditions were different, It is hard for them now to change stripes. Take the popular-priced red wines of Valpolicella, for example. These were once some of the best-selling imported wines on U.S. shelves and still do very well, but the bargain prices that drew attention back then no longer make the same impression.
Montepulciano D’Abruzzo faces some of the same challenges. Buyers may think of good value, not high quality when they see this wine, which is a problem if spending growth is focused on higher price points. When we were doing research for our trip to Abruzzo last year, for example, most of the Montepulciano d’Abruzzo wines we found were in the “good value” category — a legacy of the region’s early successful entry into the U.S. market.
The low point came when we found a popular brand of Montepulciano d’Abruzzo in a Grocery Outlet store selling for just $5.99 per 1.5-liter bottle. Not the image you want to see, especially since the region has so much potential.
Climbing the Ladder
We found excellent wines during our trip to Abruzzo. We were especially impressed by the small wineries of Villamagna DOC, for example, and the Cantina Frentana cooperative showed that quality and quantity could go hand-in-hand.
We’ve recently been sampling the Villa Gemma line of wines from Masciarelli, and they are terrific. The Montepulciano d’Abruzzo Riserva 2017 is an example of a wine that can help redefine the category.
The classic-level Masciarelli wine sells for $12.99 at the upscale supermarket down the street and for just under $10 at a local big-box alcohol superstore. That’s a good price point, but with premiumization moving the ladder, market growth seems to be shifting up a level. Hence a focus on super-premium Villa Gemma and wines like it to take advantage of premiumization without sacrificing the existing profitable market.
North and South
Here in the U.S., we have the tale of Washington state’s Chateau Ste Michelle, which prospered just a few years ago when the sweet spot for wine sales growth was $8 to $10. The wines are very good, but they were pigeonholed by their price point and now the market has shifted higher.
New Zealand wines present the other side of the situation. New Zealand entered global markets at what were then surprisingly high prices. New Zealand’s average export price for still wines was for some years the highest in the world (remember that world wine flows include vast quantities of inexpensive bulk wines, which are not part of the New Zealand portfolio).
Having entered the US market at a higher price point, New Zealand wine (mainly Sauvignon Blanc) has benefited from each upward shift so far. But, seeing the writing on the wall, some Kiwi producers are getting ready for the next ladder climb. For example, we have recently sampled wines from Babich, which seem to be intended to scale the next ladder.
The Babich ladder begins with the classic Babich Marlborough Sauvignon Blanc and then climbs through Black Label, Family Estates, Select Blocks, and Winemaker’s Reserve tiers. Babich is a well-known champion of sustainable wine-growing and this is part of the brand ladder. The classic that we sampled was certified Sustainable and the Select Blocks wine was made with organic grapes.
The classic wine and the Select Blocks were very different from each other when we tried them — as they should be. The classic was a refined variation on the now-familiar Marlborough Sauvignon theme. The Select Blocks wine was even more elegant and perhaps defines a new category — which is great in terms of product differentiation. But it didn’t say “Marlborough” to us as much as we’d liked.
How High is Up?
How much longer will the premiumization game of Chutes and Ladders last? And who will the eventual winner be? The wine market is like a dynamic pyramid and the volume of wine is smaller at the top of each ladder compared with the one before.
Like the housing bubble of a few years ago, this process doesn’t seem sustainable. That means that Stein’s Law probably applies: if something can’t go on forever … it will end.
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Note: Masciarelli has released a special wine, Pecorino Castello di Semivicoli 2022, with proceeds to raise funds to support a charity that assists the parent of autistic children. Bravo, Masciarelli family!
Open That Bottle Night,

Cheese course (Mirforma “Tête-à-tête de Moine” raw cow’s milk, Switzerland; Alta Langa “La Tur” cow, goat, sheep, Italy; Cypress Grove “Midnight Moon” pasteurized goat milk aged Gouda, Netherlands; Papillon Roquefort, raw sheep milk, France):
Opening a bottle of wine is an occasion. Think about the rituals, traditions, and specialized equipment associated with wine and the act of drinking it. I love the traditions, but sometimes finding the right occasion to pull a cork can be a problem.
I spent Friday in the Arizona wine country – south-west of Tucson near Sonoita – with my “research assistants” Michael, Nancy, and Sue. I thought that I would learn something from talking with winemakers here, and I did, but it wasn’t exactly what I expected. Here is my report. …
The economist John Maynard Keynes wrote these words in a 1930 essay called “The Economic Possibilities of our Grandchildren” and I have been thinking about them quite a lot recently in the context of the wine industry. Keynes was writing in the depths of the Great Depression. Is wine in (or headed towards) a Great Depression of its own?
I was talking with a group of California winegrowers just before the
What’s ahead for the wine industry in 2023 and beyond? Speaking at the
Well, of course, board games are better with wine (for those of legal drinking age). Wine and social gatherings are perfect parings. There are even board games for wine enthusiasts. Did you know that there is now a special Napa Valley
It seems to me that the wine industry, following the board game analogy, needs to continue to innovate, to reach out to consumers with different interests and lower specific levels of commitment than before. But in doing that, it is important not to forget the values and virtues that have made wine an enduring part of life.
There is a chapter in my new book
To the Heights
If you look closely at the label of this wine you will see a group of sheep. The McNab Ranch, an east-to-west box canyon up in Mendocino Country, was a sheep ranch before the folks at Bonterra looked closely at its vineyard potential. It became one of the original American biodynamic vineyards and helped propel both biodynamics and Bonterra ahead.
Show Horse
Andreas Viestad,
But there’s a problem. Taken as a food book or a history book or a cultural guide for anyone who loves Italy or Rome, it is hard to deny Dinner in Rome‘s charm. But from a wine perspective it is hard not to be disappointed.
Would it be possible to write a history of the world that framed wine and the civilization of the glass in a different way? Yes, I know it is possible because it has already been done. Economist editor Tom Standage’s 2005 book
What do we talk about when we talk about wine? How does the way we talk about wine affect the way we think about it? Does the language of wine create a barrier to entry for consumers?