Thursday, April 24, 2014

Small and giant wineries are squeezing out the mid-sized

Small wineries and large wineries are plentiful in northern California, but mid-sized wineries are unusually rare, according to a statistical study published last week.

The authors, from Brock University in Canada, published their near-impenetrable report in this month's Journal of Wine Economics, which was also responsible for a fascinating article about how Algeria's wine industry led to Europe's appellation laws.

This study uses statistics from Wines & Vines' Annual Directory of the Wine Industry in North America to establish how many small, mid-size and large wineries there are, then compares it to other industries -- including Portuguese manufacturing firms and service industries in Luxembourg -- to say, "Is this normal?"

I'm reminded of one of sex columnist Dan Savage's complaints about straight men: he sometimes writes that while gay men write in to ask complex questions like whether their lover can be considered unfaithful for taking a shower with a neighbor, straight men often ask, "I'm really turned on by (insert unusual fantasy, perhaps involving diapers or a TV talk show host). Is this normal?"

This report is so dry that I had to literally sex it up. That's what bloggers do! Believe me, you don't want to read the entire actual report, and I'm not just saying that to make you feel better because it's not online. Here's a crucial sentence, not even one of the longer ones: "Our kernel density estimates indicate that the size distribution has changed from positively skewed to bimodal." (Hehe, hehe, he said "bimodal.")

Anyway. The nut of the issue is that graph. Unlike in 1984, when the wine industry had a normal size distribution, as you can see, there's now a bunch of small wineries and a few big ones, and very little in between.

From the article: "Consumers appear to prefer the more expensive boutique wines or the cheaper large mass-produced wines."

Thanks to study authors Don Cyr, Joseph Kushner and Tomson Ogwang, and apologies for making fun of your superior vocabulary. The full article is not available online but you can read the abstract here. (And if you want to ask if something other than bimodal size distribution is normal, you can read Dan Savage here.)

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Dan Fishman said...

That kind of makes sense to me, based on the types of wine drinkers (geeks and non-geeks basically). It would be interesting to know more about the dip between what looks like EXTREMELY small and kinda small. I would wildly guess that would be the difference between custom crushers and small labels that own their own facility.

Unknown said...

Agreeable. Hedges is the last of dying breed. But, we will fight this trend and turn the masses into geeks. Its possible when your Estate Grown and Bottled. Because we have control of land and fermentation. The proliferation of the small tasting room winemakers is massive, but old crusty wineries like us will survive. We just need to out-think the big guys in distribution, and out-terroir the tasting room dudes.

W. Blake Gray said...

Christophe! Long time no see. Nice comment, I give it 92.74 points.

Unknown said...

I give it 48 points for wit, and 42 points for clarity. Yes, you have not seen me, but I see you. FYI, I've reached out to Asimov to join the revolution, but he does not reply. Strange....

FYI, the rebellion is strong good man, and I feel the force within you! Just let yourself be freed. Don't give the consumers what they want, give them what they need.

A scoreless world.

Mark said...

I couldn't agree more based on what I've seen-a winery like Copain which makes incredible wine, for the price especially-struggles more than it should for it's place.

If they were smaller, they could sell whatever they made D2C-bigger gives them easier distributor access. Is the 15k-75k case winery dying out? Seemingly it is