Grape-a-hol: How Big Business is Subverting Artisan Winemaking and the Future of Fine Wine

Introducing Grape-a-hol!

Grape-a-hol: How Big Business is Subverting Artisan Winemaking and the Future of Fine Wine, by Michael F. Spratt and Mark L. Feldman

As indicated in the title, this book pulls no punches. In summary, “this book exposes the questionable practices of big business and the regulatory myopia of governments that are subverting artisan winemaking, altering consumer tastes, and sabotaging the future of fine wine”. The book describes “some of the false claims, misconceptions, myths, dogma and questionable business practices that permeate the wine industry”.

The authors make a rallying cry to the wine industry: “authenticity, integrity, and responsibility are the pillars of true artisan winegrowing and the last line of defence against the rising tide of Grape-a-hol”.

I started reading this book with trepidation and excitement that someone has been forthright and articulate enough to point out the elephant in the room. This is not to say that I agree with absolutely everything in the book. My opinions here though are not the point. Highlighting some major issues and addressing them as appropriate is the point.

The authors are deeply concerned about the future of fine wine. They fully admit their own biases as small artisan winemakers, and their focus makes specific reference to NZ and to the US where they both have most experience, but the issues raised apply across the global wine industry, including Australia. The observations are research-based and often astounding.

The chapters are each freestanding essays covering the “nature and scope of the problem, the consequences for consumers, the players who impact the future of fine wine, and three key issues (social responsibility, the environment and language) that influence industry practices”.

Defining Grape-a-hol and fine wine

Grape-a-hol is defined as “an alcoholic beverage made from fermented grape juice and passed off as a substitute for fine wine”.

Fine wine is defined as meeting all of the following criteria:

• free from standard wine faults;

• comes from a specific wine region;

• shows balance, length and complexity;

• acknowledged by several independent and qualified sources as very high quality; and

• carries a significant price premium due to relative scarcity and higher cost of production.

Fine artisan wine is defined as all of the above plus:

• it can be traced to a single estate or vineyard;

• it comes from a small business producing less than 10,000 cases annually; and

• the owner/winemaker is personally involved in the winemaking process.

The blurring of the dividing line…

The authors argue that “the line between fine wine and bulk wine has become dangerously blurred”. There are a number of “influential interests” who have power over the wine industry, namely: corporate producers using wine to make profits; taxing authorities wanting to raise government revenue while also preaching drinking in moderation; wine critics, wine writers and promoters supporting mass-market wines; distributors, arbitrageurs, brokers and agents who “willingly cannibalise a region, variety or brand simply to make quick cash”.

The situation in NZ and US

The NZ wine market, accounting for less than 1% of world wine production, has become a “social and economic Petri dish” to look at this blurring of the wine categories and the impacts. At the other end of the spectrum the US is the biggest wine consumer in the world. Some key statistics illustrating the concentration of corporate power and the trend towards bulk wine:

• Nearly half of the NZ wine industry is owned by foreign corporations; 82% of all shipments of wine from the US are from just 10 companies.

• The number of US wine distributors has fallen from 7,000 to 700 in the past 20 years, with the task of distributing over 250,000 wines.

• Bulk wine has increased from 5% of NZ wine exports in 2008 to over 30% in 2010; some months since then exceeded 50%. Export prices per litre have steadily and significantly declined over the just the last three years.

The concentration of power is into fewer and larger hands, where the driver is market share, fuelled by volume and economies of scale. This business model requires mass production techniques in the vineyard and winery to boost yield and output and compete in the alcoholic beverage market with beer and RTDs.

Changing the tastes and expectations of consumers

Marketing campaigns have been a significant contributor to these market trends: “marketing campaigns of factory producers have taken control of the fine wine narrative… corporate giants dominate the wine distribution system, dictate public choice by controlling shelf space, buy visibility, and mislead consumers with a sales proposition that offers something for nearly nothing”.

“Low-volume artisan wineries offering consumers a different wine experience and a compelling story” generally cannot compete with the corporates and are squeezed out of the market – or ‘drop-kicked’ as the authors put it!

So the message is that consumers are being told that they are drinking fine wine, when in fact they are being sold Grape-a-hol with a fine wine label. An unfortunate impact of this is “driving down consumer expectations of how quality wine should taste”. The fine wine producers cannot compete on cost or in the distribution system, as their costs are higher and they do not have the market power. The consumer learns then to adjust their tastes for a product that is made to a lower quality. The authors liken the tactics to carnival tricks: “This wine marketing ploy is rigged. It has all the elements of a carnival scam, including confusing messages, misdirection, and a low-risk, something-for-almost-nothing offer.” Are we promoting a mass palate? Will fake become the standard?

“Grape-a-hol purchased from discount brokers is branded with the country of origin and a label with a cute animal or pastoral image featuring the name of a non-existent but intriguing-sounding bay, cove, ridge, region, or road. It is sold to unsuspecting customers as a bargain representation of a real place.”

Of course, no one wants to feel like they were fooled into making a bad purchase – so the consumer then self-validates their shopping prowess by stating that their selection was a good one – an observed behaviour known as dissonance reduction.

What do the authors want from this exercise?

The authors clearly point out that (a) they are not looking for special treatment and (b) they are not saying there is no place for Grape-a-hol – it serves a market and in itself is a good value product.

(a) “Artisan winemakers are not looking for special treatment, subsidies or protectionist trade barriers. However, when tax, regulatory and industry association policies conspire to exclude them from markets, burden them with punitive costs, and undermine the provenance on which their individual brands stand, they have a legitimate grievance.”

(b) “the overall quality of Grape-a-hol is at an all-time high compared to the ‘jug wine’ choices of the past. Artisan winemakers frequently drink and occasionally enjoy it”… “Few people honestly expect Grape-a-hol to offer a sensory experience. For many consumers, it’s simply an inexpensive alcoholic beverage for washing down dinner and relaxing with a light buzz. It’s what they expect and what they get.”

A key solution that the authors propose is to relate fine wine to the region and sets standards, as with the AOC (appellation d’origine contrôlée) in France, which they say “may serve as a useful model for the global wine industry”. The French appellation system restricts yield, sets a range of quality standards and penalises brand-damaging practices. They do however note that this it is not a easy task: “trying to organise artisan producers is a real challenge. It is like trying to herd cats”.

The call for regionality is backed up by a recent poll of 1,000 US wine drinkers which found that:

• 79% consider the region where a wine comes from an important factor when buying wine

• 75% would be less likely to buy a wine if they learned it was not from where it claimed to be from

• 84% believed that the region is extremely important in determining wine quality

• 96% said that consumers should know where grapes are grown and this should be accurately stated on the label

• 98% support establishing world-wide standards to require all winemakers to accurately state the location where wine grapes were grown on the wine labels.

When regionality is compromised

Working in the Australian wine industry, there are parallels with what the authors are calling for. Wine Australia is active in promoting the regionality of Australian wines – see the Wine Australia Goegraphical Indications page. A strong message from this book is that the steps need to be firm and with enforced rules to back them up. Good intentions are not sufficient. It would be a wonderful world where trust was enough. But where there is money to be made, someone will always be prepared to bend the rules to line their pockets. If a wine brand is burned, so be it.

There is a very serious concern among NZ winemakers in 2012 as there has been a recent decision to relax rules over quality standards, which helped to establish NZ’s ‘clean and green’ image. To date, in order to get certification from Sustainable Winegrowing New Zealand (SWNZ), wine must be 100% made in NZ, part of a certified sustainable winegrowing programme and free from standard wine faults as defined by the NZ Food Standards Authority. It was a quality mark. The decision has been made to relax the rules to allow SWNZ certification of wine bottled offshore.

My readers will be aware that tampering has plagued the wine industry for centuries (I will not name names but do an internet search for wine scandals – there have been many!). This opens up not only huge opportunities for cost-cutting by shipping wine in bulk and bottling overseas and then giving it the SWNZ certification (a huge win for the large producers), but has alarmed NZ winemakers who therefore lose control over what happens to wine once it leaves their shores. A number of middle parties will have access to the wine and will have the incentive to meddle with the product for a quick buck. The assurance of quality is no longer valid. Mike Spratt says this is a catastrophic decision.

The Waiheke Island example

The winemakers on Waiheke Island have set an example that the authors see as a good template to be followed (and improved upon) for fine winemakers elsewhere. Waiheke Island is a small island a short ferry ride from Auckland, New Zealand, with 7,000 residents and 92 square km of land – and an expensive place to make wine. Therefore “Waiheke producers can’t afford to make even average wine, which is why the local industry association took a bold step a number of years ago to protect the reputation, quality and branding of Waiheke wine.” Their economic platform must be quality and distinctiveness.

So they developed the Waiheke Certified Wine programme – in order to sell a wine with Waiheke on the label, “it must be made from 100% Waiheke Island-grown grapes, be part of a certified sustainable grape-growing programme, and have been independently verified as free from standard wine faults as defined by the New Zealand Food Safety Authority as a condition of export.”

A final comment from Tigchandler…

This book is well-researched and argued and offers many insights into the operations of the global wine industry. It promotes full information and raises a number of important issues, the responses to which will affect the nature and development of the wine markets in Australia, as well as the US, NZ and elsewhere.

There are a number of chapters I have not discussed in this review which address wine competitions, wine writing, biodynamics, sustainable practices and other aspects of the wine market. Instead I urge wine consumers and wine industry stakeholders to get a copy and make sure they are aware of what is happening, whether they support the arguments or not. Power comes from knowledge, understanding and collaboration. The authors are clearly concerned that people in general are not aware of the practices in today’s industry. What we each then do with that knowledge is a whole different discussion!

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About tigchandler

English-born, lived several years in Wellington, NZ, then in Adelaide, South Australia, and recently moved back to New Zealand. With an economics background, I have worked in researching wine consumption patterns, marketing, economics and social media at the University of Adelaide. I also worked a vintage and in wineries in McLaren Vale so have seen both the research/analytical side of the industry and the practical/hands-on side. I have retail experience and many ongoing industry links all around Australia and overseas. This blog reflects my ongoing passion for everything related to the wine industry.
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5 Responses to Grape-a-hol: How Big Business is Subverting Artisan Winemaking and the Future of Fine Wine

  1. Will seek the book out. I have felt for some time it is the responsibility of each Artisan producer to stand up and tell their story and not rely on the New Zealand bulk marketing exercise that promotes one view point. As long as the industry is presented with this singular story consumers lose because finding the alternatives is almost impossible.

    I doubt regulation will cause consumers to seek out Artisan wines from anywhere – I encourage you to read this memo about what happens when someone else tells your story – it is my opinion this is where the solution will be found. http://www.mondaymorningmemo.com/newsletters/read/1641

    The Artisan producers in New Zealand might begin by never using the initials NZ – the brand is New Zealand – it amazes me to see how casual the use of two such important words has become.

    • Mike Spratt says:

      Ron,
      You will be pleased to know that we always use “New Zealand” in the book except when it is referencing currency (e.g. NZ$ vs. US$) and one other time when the proofreading missed it. Couldn’t agree more with your comments.

  2. Certainly sounds like an interesting read, Amazon has been contacted, a copy is in the post even as we speak. Thanks for the review

    There appear to be some misconceptions about the AOC system and its role in life: it is a system to protect the producers of a region (say Chateauneuf du Pape) from having producers in other regions passing their wines off as Chateauneuf du Pape. Certainly the AOC laws include manifold other provisions but few of them relate to the consumer directly and few relate to quality. Hence the old joke that AOC = Any old cr@p.

    I’m struggling to believe that the data about regionality is representative of the market in the USA or anywhere else. How, one wonders, were the respondents selected? Wine Intelligence did some valid sampling some years ago and found, for instance, that to the majority of wine drinkers in the USA Marlborough was a brand of cigarette.

    I am fully behind truth in labelling, consumers deserve to be respected and fully informed about a wine’s provenance and its ingredients but let’s acknowledge that many consumers are happy to drink an attractively branded wine which meets their taste expectations. If we complicate wine buying and wine drinking any further we risk alienating even more potential drinkers.

  3. tigchandler says:

    Thank you for comments both directly to me and through this blog. However, while I have tried to fairly represent the book, it is unfair to the authors for comments to be based purely on my review. I urge interested parties to obtain a copy of the book – very cheap from Amazon – and read the whole thing, with my article heightening your curiosity! Best regards, Tigs

  4. Tigs

    This is a great subject and thanks for adding to the global wine conversation. Pleased to see Mike’s comment and would like to add one additional one too. For some time I have felt consumers get the difference between buying fresh fruits and vegetables from the farmers markets. They get to meet the people, get a sense of place and quality is easy to see.

    Wine is a mystery and one way to combat the difference in the scale of operations is to add to the back label a simple statement that identifies ” # of cases produced” — this is a clear indicator to consumers something is different about this wine. Does not mean better – just different.

    There are plenty of consumers with both the budget and philosophical commitment to supporting the “the little guys” — they just need the facts.

    Best wishes

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