Thursday, May 21, 2009

Wine is a commodity

I'm not feeling romantic about wine today. I'm thinking about Constellation closing RH Phillips.

The brand will continue, but there won't be a winery. A few hundred people will lose their jobs as Constellation centers production at its facility in Lodi.

Will buyers of Toasted Head and RH Phillips even notice a difference? Probably not. If there was a difference in wine quality, it would have happened years ago when the company was still independent and needed to ramp up production. Constellation is not in the business of making bad wine; sometimes its products taste generic, but to quote a beer ad I can't escape from, they always offer "drinkability."

This closing was set up 9 years ago, when the Canadian company Vincor bought RH Phillips. Once you're a commodity, you're a commodity from then on -- whether you're a luxury Bordeaux brand purchased by LVMH or a Dunnigan Hills brand that a Canadian distributor wants to make its flagship.

Constellation bought Vincor in 2006 because it wanted better access to the Canadian market. RH Phillips came along with the deal. The brand had some value -- it's on the wine list at some chain restaurants, for example. So Constellation kept it going.

I never tried RH Phillips wines before the Vincor era, so I have no romanticism about them -- they always seemed generic to me. Closing the winery makes good economic sense.

It's just a little reminder that we can write all we want about some Austrian Dornfelder we tried in a wine bar, but the reality of the wine industry is that millions of people will drink Toasted Head this year. This is what wine is to most people -- a commodity.

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