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The struggle of small wineries



This is a sad story, told by the Vancouver Sun, about a small British Columbia winery’s legitimate fear that it may get squeezed out of the market. It’s the same old story: Getting harder and harder to compete with the big wineries in shelf space, distribution and price.

When I read a tale like this, my heart goes out to the proprietors. It’s never been easy to sell wine (in either Canada or the U.S.), but it’s getting more difficult. I can’t imagine how emotionally upsetting it must be to put your heart and mind into building a small family winery, then find yourself in danger of losing everything, through no fault of your own.

There are a couple ways small wineries can fight back. One is, obviously, to focus on direct sales. Everybody I know is doing that, but it’s an uphill battle. DTC is trickier than it sounds. You can’t just build a website, start tweeting and Facebooking, and expect customers to flock to your door. It takes years of continuous effort, and even then, there are no guarantees. Of course, if you’re located on a busy road in a popular wine region, you can sell a lot of wine out the door. But not everyone is, especially in a place like British Columbia.

Nor is getting shelf space any easier, particularly in smaller cities and towns and more rural parts of the country. I suppose there’s some motive for a store to sell the local wines, but there’s probably more profit for them to sell distributor’s wines from large wine companies. Here in California wine country, I know that local markets do try to stock the local stuff. But the fact is that small family wineries generally have to charge more for their wine than a big wine company.

Here’s a shocking statement from the Vancouver Sun article: it costs [small wineries] somewhere between $10 and $12 to produce a bottle of wine. If the price point drops below $17, a lot of them are going to be squeezed out of business.” It’s not clear to me if that “below $17” price point is wholesale or retail, but either way, those little wineries up in B.C. seem like they’re facing almost insurmountable odds against them.

In California, small wineries can get away with charging a higher price than they can in British Columbia, but even so they face a dilemma: Do they go up against the popular premium-priced wines from big wine companies (which is virtually impossible, and would probably mean they’d have to sacrifice quality)? Or do they produce a quality wine that costs more than a comparable wine from a big company? There will always be consumers that prefer to buy a wine from a smaller winery, even if it’s more expensive than they want to pay for, simply because it’s a small winery.

But the majority of American wine drinkers are looking for something affordable, and that’s exactly where the big wineries have the upper hand. With their economies of scale and ability to sink their profits into better farming and technology, the big wineries seem destined to grab more and more of the profits.

The only way out—and fortunately, it’s not a complete fantasy—is this current “artisanal” or “craft” movement we see that happened first in beer, then spread to spirits and, finally, wine. It’s wonderful that consumers, mainly younger ones, are committing themselves to products they sense are authentically made by smaller producers. This is not entirely a guarantee of quality, of course, but there is a sense in which small producers understand that the only way for them to compete with the majors is to make wines so good that consumers will happily pay a premium price for them. Of course, there’s an equivalent challenge for big wineries: they, too, have to be artisanal, or at least present the image of homegrown.

When it comes to wine, why do we think less is more?



In reading about the great Eastern religions, I’m struck especially by the Taoist notion of wu-wei: “inaction.” Joseph Needham, the British sinologist, defined wu-wei as “refraining from activity contrary to nature.”

When I read that I thought of two things: First, it reminded me of the maxim, so popular today in some winemaking and critical circles, of minimalist technique. The allegedly artisanal, or natural, method of winemaking stresses a less-is-more school in which winemaker interventions are kept to a strict minimum. Many wineries promote the concept as part of their marketing. Google “minimalist winemaking” and go through the search results: you’ll see many familiar names.

The other thing I thought was that the concept of “natural law” has been used wickedly by ideologues and religionists for years in order to persecute behaviors which they find objectionable, because they think that such behaviors are “contrary to nature.” Whenever I hear that, it makes my blood boil. Who defines this “nature”? What is the source of this “nature”? Who’s to say what’s “contrary” to it and what isn’t?

Call me skeptical. Many things that are uttered sound good on the surface, but when you scratch below the surface you begin to see the contradictions pile up. A winery may boast of its “minimalist approach” but—not only do we have no real way of knowing what goes on in the cellar—we also have to wonder what’s so minimalist about pruning, using commercial yeast, barrel fermentation and aging, sur lie aging, pumping over, sulfuring, racking, and so on. Tom Wark, some years ago, blogged on this topic, remarking that “Those currently pushing the idea of ‘Natural Wine’ think they may be on to something transformational and important when in fact what they have done is mistaken the tail of the dog for its snout.” (The quote is courtesy of John M. Kelly’s blog.)

I think most people would agree that “doing nothing” is a silly idea, both in winemaking and in one’s life in general. Wu-wei has, of course, been exaggerated in the Western mind over the last century or two (ever since sinology arose as a serious pursuit) into the image of the robed monk sitting in full-lotus on some Himalayan cliff, subsisting on a teaspoon of rice a day. (Who cooks the rice anyway?) In order to live, you have to do things, and doing implies making judgments about what you ought to do, what’s the right thing to do, and how to prepare yourself for the consequences of your action.

These things are obvious. So why are we so attracted to this idea of “minimalism” in winemaking? We would not trust an automobile manufacturer that bragged of its minimalist approach to production. We might have a taste for minimalist art, but we would not condemn a highly-articulated painter—Renoir, say—for his acute detailing. I, myself, enjoy a film or television show that is decidedly not minimalist: True Detective, for instance. And minimalist restaurants that charge $150 for a decorative configuration on a huge plate? Not my style.

But when it comes to minimalist winemaking, people get all wet. I wonder why that is?

Not all small wineries are cool. Not all big wineries aren’t. Read on.



When is a “big brand” not a big brand? Is Apple a “big brand”? Sure it is, but everyone loves it. We don’t hear complaints about Apple not being “craft” enough to satisfy the most demanding of users. Somehow, Apple has managed to be a financial behemoth while still retaining the allure of the brilliance of the garagiste creativity that the two Steves, Wozniak and Jobs, embodied.

I think about such things because for a long time I’ve thought that some critics and tastemakers celebrate “small” for the hell of it, and by the same token bash “big” because they think anything big has to be corporate junk. Well, as I just tried to point out, Apple lends the lie to such thinking. Now, I get paid by a big wine company, Jackson Family Wines, that occasionally comes under criticism from some gatekeepers who say that a big wine company can’t produce fine artisanal wine. I think you know where I stand on that. Then I read this article in The Spirits Business talking about Diageo’s contention that consumers are not necessarily rejecting spirits produced by big companies (such as Diageo) just because they’re produced by big companies! Diageo makes such spirit brands as Barterhouse, Old Blowhard [love that name] and Lost Prophet which, I suppose, their marketing people want customers to think are made in a garage by a couple of bearded wild guys who take no prisoners and insist on the most artisanal processes, which, to judge by the impression I get from the coverage of wineries, breweries and spirit producers in magazines like The Tasting Panel, is all the rage these days among Millennials who insist on “authenticity.” The designation “craft,” whatever that means, seems to imply just this sort of little guy David fighting against the gigantic monster of corporate Goliaths. What Diageo replied is this, in the words of their CFO: I don’t think Millennials are that bothered [about craft labels], but they do want authenticity. I do not see people rejecting big.”

Nor do I. Purists and ideologues might reject “big” for its own sake; consumers clearly don’t. A “big” wine company can also produce limited-quantity “artisanal” wines; what’s so intellectually indefensible about that? This raises the question of “transparency” which, alongside “authenticity,” is one of the two reigning monarchs of our marketing era. If somebody buys Old Blowhard, do they know it’s from Diageo, which also owns Smirnoff, Tanqueray, and Ketel One? I don’t know and I don’t care. What should Diageo do, put a giant skull and bones warning label on the bottle and say, “Beware, this is from Diageo”? If consumers care about such things, they can find out anything they want to know about anything in about 30 seconds using the Google machine. But most people want simply something great to drink that they can afford.

Which leaves us with the definition of “authenticity,” as used by Diageo’s CFO. What is “authenticity”? I don’t know. Do you? I like this quote from a Diageo guy who works on the spirits side: “As for what is or isn’t a ‘craft spirit’, that’s up for debate… not all small distilleries are craft, and not all craft distilleries are small.”

Amen. I’ve had awful wines made by tiny little producers. I’ve had fabulous wines made by wineries owned by giant corporations. I think this distinction between “artisanal” and everything else is a fabrication concocted by some people with agendas, and picked up by a gullible media looking for something cool to write about.

Wine, beer, spirits? Take your pick

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For the first time ever, wine, beer and spirits are equal in the eyes of the public, at least here in San Francisco and, I think, throughout coastal California. This is where cultural trends begin, so there’s no reason not to think this equality will not shortly apply throughout the country.

I make this claim because, as I keep my finger on the cultural pulse, it’s obvious to me that no one of this trio of alcoholic beverages can any longer claim cultural or culinary supremacy. For many years, wine was in the driver’s seat, due, no doubt, to San Francisco’s location as gateway to wine country. The fashionable people—those in the know, the ones who set the trends—preferred wine. Beer was for frat boys, while spirits were for boozy traveling salesmen at hotel bars imbibing Mad Men-style martinis.

How that has changed! Suddenly, beer became craft, not Bud Lite, and the most interesting people—the tattoo crowd of artisans, musicians, code writers, jocks—started adoring it. All you read about anymore were craft breweries, which were uber-cool. Stores such as Whole Foods and even Safeway vied to find the latest little microbrewery. Prices for individual bottles skyrocketed to $10, $15, $20. Beer labeling turned into High Art, the 21st century equivalent of the psychedelic rock and roll posters of the 1960s. Beer gardens opened featuring food as interesting as in any wine bar. Even women—traditionally not beer drinkers—turned to this newly fashionable drink.

And then spirits graduated from the preferred drink of the cigarette and “quicker liquor” crowd to the province of the mixologists, the coolest crowd there ever was. Bartenders became as famous as NFL quarterbacks or guitar-thumping thrash rockers. Magazines like The Tasting Panel featured hot, handsome, sexy mixologists in tatts and Panama hats: it was no longer unusual for an aspiring, up-and-coming kid to want to pour in a club. The top restaurants expanded their wine lists to include beer and every kind of spirit there is. In San Francisco, the Valencia Corridor sprouted almost overnight from being a dull stretch of used clothing stores and cheap apartments to the hottest, trendiest neighborhood in San Francisco, largely due to the bars and restaurants where new cocktails were invented overnight, using the weirdest new ingredients.

And so the stage was set, in the Recessionary years, for us to re-emerge from that awful darkness into a new time where you can no longer define which cultural club someone belongs to based on what they drink. Everybody drinks everything. It’s simply a matter of how they feel at the moment. The die-hard Cabernet drinker discovered trendy infused-vodka cocktails, or rediscovered the retro gimlet. The burly Giants fan discovered that Chablis—the real stuff—isn’t just for girls. The ladies turned to Sierra Nevada or Lagunitas to drink with their charcuterie. And we’re all the happier for it.

This is good news, of course, but it also means that all producers are going to have to compete that much harder. The drinking population of this country always will have its limits due to a variety of factors that inhibit some people from imbibing. So it seems to me that creativity is going to be the je ne sais quoi that sells products. This, of course, reverts to marketing, that mysteriously opaque religion which everyone professes to understand, but doesn’t.

What Prosecco tells us about the future of wine



Prosecco, as you know, has been on a roll lately, but when you read headlines like this:

“PROSECCO OVERTAKING CHAMPAGNE AS SPARKLING WINE OF CHOICE”, you know that something far more important than the ephemeral popularity of a particular wine is happening. Why is Prosecco so hot?

Two things:

  1. Millennials coming of age
  2. The Great Recession

Concerning Millennials, they “aren’t earning as much money as their parents did when they were young,” a situation that’s even worse for Millennial women. Saddled with student debt, they’re unable to afford homes, and in general are feeling financial pressures in a way their parents (my generation) never did (at least, until the Great Recession struck). So when it comes to discretionary spending, Millennials are spending downward.

Speaking of that Great Recession, it impacted all of us. Trillions of dollars went down the drain. “The wealth of most Americans down 55% since recession,” CBS MoneyWatch headlined in 2013. We’ve made some of that back since then, but Americans of all ages still are feeling the pinch, which is why U.S. economic growth has been so sluggish.

Under the circumstance, you have to consider two things concerning sparkling wine: quality and price. Simply put, Champagne is expensive, Prosecco isn’t. The average price of a bottle of French Champagne on a restaurant wine list is $117. I couldn’t find anything online concerning the average price of Prosecco, but on Snooth, they list many Proseccos, mostly below $20 a bottle, so even if you double that for a restaurant wine list, it’s only about $40.

And qualitatively, as we all know, a good Prosecco is as satisfying as Champagne. So why would anyone choose to buy Champagne, except for image and perceptions?

For me, the issue here isn’t about Prosecco per se, it’s about the average American looking for less expensive wines than perhaps her parents used to. I was up in Napa Valley yesterday, and we were chatting about expensive wine, and how and if these pricy bottles of Napa Cab will continue to exist into the future. Someone asked me my opinion, and I replied that I’ve been wrong in my prognostications so many times in the past that I’ve basically given up on the prediction game. But still, a part of me just can’t see folks who are, say, in their twenties today spending $50 or $60 per bottle retail as they hit middle age, or spending $100-plus for a bottle in a restaurant. I just think some things in America have fundamentally changed: the Great Recession, as I said, but something else: We’ve become a more frugal country, less apt to consume conspicuously. The outrages of the super-rich have changed our sense of right and wrong; our moral compass has swung back to what it was at this country’s beginnings: living simply.

At the height of the Great Recession, there was much talk of “The New Frugality,” as for instance here and here; everyone agreed it was a reality, and the only question was whether it would continue once the Great Recession lifted. Well, the Great Recession now has lifted (the country actually hasn’t been in recession for years), but, as Forbes noted just last year, an enduring ‘New Frugality’…has Americans of prime working age, mainly 25 to 55, spending less, working less, and buying cheaper.” That, it seems to me, is likely to mark this nation for many years to come. It’s why people are preferring Prosecco to Champagne, and why we’re likely to see a similar switch in other wine types, if it hasn’t already happened.

Bloggers: stop the insults, now.



There used to be sexism in the wine business. I know, because I know some wonderful women winemakers who began their careers in the 1970s and told me their stories. Even though they had winemaking degrees, they couldn’t get hired anyplace but the laboratory, because the white men who owned the wineries thought they’d be incompetent as winemakers.

Well, we don’t have sexism anymore, thank goodness. But we have another form of prejudice that’s just as pernicious: ageism.

Read, for example, this piece, from Snooth, that refers to “old white guys.” The author of the Snooth piece, James Duren, is quoting Jeff Siegel, the proprietor of a wine blog called In the Snooth piece, Duren is writing about the demise of the point-scoring system (yes, again…yawn), and apparently came across something Siegel had written on his blog (I tried to find it but couldn’t, so I will trust that Duren is quoting Siegel accurately). Siegel was going on about how social media is changing wine is such fundamental ways that the entire sales and distribution chain is being upset, which, he claimed, is “something the old white guys can’t even begin to understand.”

Okay, let’s break this down.

First of all, Siegel isn’t exactly some cool young dude. Here’s a picture of him from his website

SiegelPhoto credit:

that makes it clear his younger self is fast disappearing in the rear view mirror. So words of wisdom, Mr. Siegel: Be careful whom you disparage. What goes around, comes around, in this world of karma.

But even worse than Siegel’s uncalled-for rudeness is its absolute incorrectness. I’ve worked with plenty of “old white guys” in the wine industry who are a lot smarter and more successful than Mr. Siegel will ever be. In fact, the winery owners and executives I know understand precisely how social media, online buying and all that is rocking their world. They’re trying to deal with it the best they can, the same as everyone else: the problem, as I’ve pointed out for years, is that there are no easy solutions.

Look: When you’re a little blogger, it’s easy to pontificate. That’s what some bloggers do: From the ivory tower of their desktops they type the most vapid absurdities into their computers, then hit the “Publish” button and think they come across like Einstein declaring the Theory of Relativity.

But not a single one of these bloggers actually runs a wine business! (If I’m wrong, let me know. But I don’t think I am.) They’ve never sold a damn bottle of wine, never had to hit gridlocked roads visiting with on-premise or off-premise accounts, never had to come up with a marketing campaign, never had to develop a winery website, never sent a wine sample off to a critic, never lived with the fallout of a bad review, never hosted a winemaker dinner, never had to meet a payroll for field workers and secretaries, never had to fix a tractor on a cold rainy morning, never stayed up for three days and nights doing a harvest. None of that, nada, zero, zilch. And yet they think that being a blogger puts them in a position to criticize older winery owners and tell them how to run their business.


What is this fear and loathing these not-so-young bloggers have for “old white guys” anyway? Their psychological hangup obviously is connected to their hatred of point scores, and of wine reviewing in general, which they claim is elitist. But then these same bloggers turn around and review wines (from free samples, of course), just like older critics do—and yet without the experience, without the chops, without the context.

Perhaps they’re just acting out subconscious frustrations they feel towards their own parents. Whatever the cause, their anger, rudeness and vitriol is not only ugly, but will hurt them in the long run, because one thing that doesn’t change about the wine industry is that it’s a small town where everyone knows everyone else, and people value respectfulness and kindness. You want to succeed in this business for the long run? Do your homework, learn your stuff, play nice in the sandbox, and wait your turn. You don’t have to tear others down to boost yourself up.

And as for social media completely disrupting the traditional sales model and replacing it with a bunch of “friends recommending to friends,” if you believe that, I’ve got a bridge to sell you. Ain’t gonna happen anytime soon. Social media has become a useful tool in the overall tool kit with which to market and sell wine, but it’s just that: a tool, and not even a very good one, if we’re going to be brutally honest. We’ve been having this conversation now for eight years and social media still hasn’t displaced traditional marketing and sales approaches. If it worked as well as people like Mr. Siegel claim, don’t you think proprietors would have dismantled their sales and marketing departments—thereby saving tons of money—and simply depended on social media? Of course they would have. But they know something that Mr. Siegel doesn’t: Social media doesn’t work as advertised by its adherents. Are these proprietors simply “old white guys who can’t even begin to understand” how the real world works? Or are they savvy businessmen who require proof, not simple, self-serving assertions, that something works? The latter, methinks. No, meknow.

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