Are Boutique Wineries Really Better Than Big Producers?

Photo: Elevate (via Pexels)

An online kerfuffle ensued after wine writer and author Jamie Goode posted an eye-opening article on his blog detailing the massive size of some of the wine worlds largest industrial-size producers. They are, interestingly (and in a sort-of-capitalism-run-amok fail), all owned by one company: Gallo.

Goode’s take on the situation in more on the informational side, but the online reactions were mostly pitchforks-and-torches negative, with the ire planted squarely in the “Big = Bad!” mindset.

My friend Fred Swan penned a cogent, even-handed, level-headed piece in response to the online outcry, in which he extols the virtues of industrial-scale wines in consumer terms:

“Aficionados of “fine wine” may find …affordable, high-volume, big-brand bottlings too bold, too sweet, too simple, or not varietally representative. The wines aren’t made for those people. They’re made for specific, but very large. audiences, are made with intention, and made after considerable research and development by highly-trained people.”

My response today, on the other hand, will be neither level-headed nor even-handed, though hopefully it will be cogent enough for the detractors of industrial-scale wine to understand that they are acting like morons when they lash out against high-volume, low-cost wines as having no place in a modern wine market. The truth is that those high-volume, low-cost wines make up the majority of the fine wine market, and without them the high-end market would likely be in severe economic dire straits…

Before I lay down the truth slapping, however, a clarification is in order.

Industrial scale wines are, on the whole, nowhere near as good as their (often) more expensive, (almost certainly) lower-production, (is this even really a word?) artisanal, and (usually) higher quality counterparts. I know this both from the standpoints of practical experience (in tasting thousands and thousands of wines per year in critical settings) and, more importantly, rational logic. For the latter, industrial wines are more likely, by necessity, to include less complex fruit, use more additives, and employ lower-cost methods of production.

A comparison will likely help here: there’s no shame in, say, enjoying a burger from McDonald’s; where we would make a huge mistake is in insisting that a McD’s burger is on the same quality level as a Kobe beef burger where the cows are massaged multiple times an hour and fed only hormone-free, wild grass species grown from rare seeds imported from Japan. You can prefer the McD’s burger, but you make a serious mistake if you consider it a better overall burger than the Kobe, all other things being equal.

Similarly, in wine we can get a tasty, clean, varietally-correct bottle for something like $5-$7 USD. It will not be made by farmers who wake with the dawn, go outside to feed the chickens, and then tend lovingly to their vines by hand. That’s the myth that fine wine markets to us, but the reality is that the costs of that kind of hand-tendered farming automatically would put the wine into a price category at least four times the entry-level cost above. Any other interpretation is simply an act of deluding yourself as a consumer, for which (in today’s age of instantly-available detailed information) there is little excuse.

Now that we have that out of the way, I can tell you that having a low-end market, in general, actually benefits the higher-end market in most economic cases, so the idea that the industrial-scale wine is somehow bad for the future of craft-level winemaking is probably a straw-man argument. to wit – a study by Ikuo Ishibashi and Noriaki Matsushima published in Marketing Science found that the competition level caused by lower-end products can be essential for maintaining the quality of higher-end products in the same market:

“The existence of price-sensitive consumers who care little about product quality intensifies competition among the high-end firms. The existence of low-end firms functions as a credible threat, which induces the high-end firms not to overproduce because price-sensitive consumers buy products from the low-end firms.”

Additionally, higher-end products may actually benefit at the expense of their lower-end competition, simply because the lower-end competition exists. That’s the finding of a London Business School and Georgetown University McDonough School of Business joint market study, anyway:

“…a consumer who is exposed to a dense set of alternatives (think now of the choice of coffee or yogurt at your local supermarket) concludes instead that like-minded consumers must care about even small differences in quality, so this consumer should follow suit.”

So… while their are undoubtedly issues with how wine is distributed in the USA due to largely unchecked capitalism and outdated laws, the mere existence of lower-end wines – which are essential for meeting consumer demand for such products, and provide an economic market base upon which the higher tiers of craft-level wine production relies and from which it organically grows what is likely a not insubstantial portion of its consumers – does not appear to hamper the high-end market anywhere near as much as its detractors claim, if it does so at all.

TLDR version (which, yeah, I unfairly stuck at the bottom): The high-end wine market needs the low-end wine market; without the latter, the former would probably not be as successful as it has been, and it probably actually benefits from the situation. Get over it.

Cheers!

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