As a wine publicist, I almost always am dealing in minutia, not Big Picture thinking. It's the nature of the job. What's the best way to deliver this message? How to define this niche? What's the import of this particular marketing practice. Minutia.
For some reason, the past couple weeks I've been thinking about "Big Pictures" in the wine industry. Defining and determining what the Big Pictures are isn't as easy as one thinks. But no matter how you define the Big Pictures, in order for an issue to rise to that level and the way an issue unfolds going forward, it must impact huge numbers within the industry and it must result in changing the way people in the wine industry think about their industry and how they do business.
What are the Big Pictures in the Wine Industry today?
1. Wholesale (middle tier) Consolidation
Very little is more important to the wine industry than how the product is actually moved across the country and how it is sold. The consolidation among wholesalers over the past 20 years has been huge, leaving really 5 or so big wholesalers that control a vast swath of the marketplace. This places tremendous power in a small number of companies' hands that, when wielded carelessly, can change the dynamic of the marketplace for many brands and for consumers. In addition the power consolidation that comes with market consolidation in just a few ends up concentrating political power in a few. This ongoing consolidation in the Wholesale tier of the wine industry will have the effect of spawning tremendous innovation by producers and retailers as their own marketing choices are limited.
2. Consumption
The recent news that America is the largest wine consuming country in the world is really just a commentary on the size of the country's population, the wealth of the country and the amount of population increase in America. It's not a commentary on consumption. The real important statistic is per capita consumption. The U.S. falls in the middle of the world pack in this category. The Big Picture question is what will happen with American per capita consumption over the next 20 years and whether the industry can have an impact on this kind of macro trend. Per capita consumption of beer continues to go down. Spirits and wine per capita consumption is on the increase, but slowly. The wine industry has done nothing to try to effect or speed up this upward trend. Whether it will take a whack at affecting it and if it can be successful is a real Big Picture question.
3. Regulatory Change
The past 20 years has seen significant regulatory change in the wine industry driven by increased consumption of wine, new technology, a changing economy and an increase in the number of brands in the United States. Reform of alcohol regulations has a huge impact on the Big Picture. We are currently living through a moment when great changes to the regulatory structures in a number of states is being contemplated due to the impact of the recession and the general trend and perceived need to contract government services. Will state control of alcohol sales and distribution wane? Will access to alcohol in the various states be liberalized. How these questions are answered over the next ten years will profoundly impact the Big Picture.
4. Critics and Sales
The importance of big critics to sales over the past 25 years can't really be under estimated. The impact of the likes of Robert Parker's Wine Advocate, The Wine Spectator, Wine Enthusiast Magazine, Wine & Spirits Magazine and critics at large daily newspapers has been profound. There is great discussion right now whether this source of authority will continue to drive the marketplace, particularly for mid and high priced wines. Will the social internet and mobile technology lessen the impact of critics? Will the turmoil in the publishing market have an effect on their power to move the marketplace? Will professional wine critics and wine publications increase their power to move the marketplace as they consolidate power amidst the decentralizing impact of social media. Very Big Picture questions that will be answered over time.
5. Brand Proliferation
The increase in the number of wine brands in the U.S. marketplace over the past 20 years has been profound. Despite the claim that corporate interests more and more control the wine industry, the fact remains that consumers have more choices of brands than ever before. Can this continued increase in brands be sustained? How will a consolidating wholesale tier impact these brands? Will regulatory changes help sustain all these new brands by giving them more ways to get their wines to market? Or will we see what we have not seen yet: a reduction in the number of brands available to the American wine consumer. How these questions are answered will have a monumental impact on the whole of the American wine marketplace.
I know how I'd like to see these Big Picture questions and trends answered and go forward. I have strong opinions on how I think many of these questions need to be answered in order to create a vibrant, successful and profitable wine industry in America going forward. But I have no idea whether things will fall out the way I hope they do. Big Picture questions are notoriously hard to guide or predict.
However, I do know that great sums of money and individual examples of success will be achieved based on whether individuals bet correctly on how these issues will evolve over the next ten to twenty years.
