Don't Worry About Winery Consolidation

(This column appeared originally in the 2/4 issue of Dan's Papers)

Don’t Worry About Winery Consolidation
HP and Compaq have merged, AT&T recently acquired Cingular Wireless and Verizon is buying WorldCom. Mergers and acquisitions are a part of every day life in the business world. And, no matter how romantic an image it might have, wine is a business. Big business.

So, it should come as no shock that the big fish in the wine pond are gulping up smaller fish all the time, including many producers of the wines you see at your local wine shop every day.

Fairly recently, Constellation Brands, already owners of the ubiquitous Franciscan Estates, Ravenswood, Simi and Estancia brands, acquired Robert Mondavi. Similarly, Diageo Chateau & Estates Wines, which is responsible for Beaulieu and Sterling wines, gobbled up Chalone Wine Group.

But what does this all mean for you, the wine lover? That really depends.

As fewer, larger corporate wine producers start to make more of the wines we see every day, some worry about the “watering down” of these once-proud brands. They worry that quality is going to suffer as the “art” of winemaking is lost and replaced by dollar-driven efficiency and techniques.

Should we worry?

Heck no. I think this consolidation is a fact of life, and it only has positives in the wine world. Here’s why:

For the average wine drinker – someone who drinks wine regularly but doesn’t want think too much about what goes in his or her glass – consolidation is actually a good thing. Because of the vast quantities of wine and brands involved, there is increased competitive pressure on these large producers. Increased competition means better prices and better values for the consumer. Sounds like a good thing to me.

How will consolidation affect the people who do want to think about the wine they drink, the real hard-core oenophiles who drink fine wine? I don’t think we’re going to be affected much at all. Sure, Constellation runs Mondavi, Franciscan Estates, Ravenswood, Simi and Estancia – all solid, sometimes good producers – but these aren’t the wines wine geeks drink anyway. These were, for the most part, large producers even pre-Constellation, not the artisans crafting the most interesting wines Serious wine drinkers probably aren’t cellaring cases of Ravenswood’s 12-dollar Zinfandel, are they?

Wine will always be a diverse industry. For every huge conglomerate, there are hundreds of small chateaux in Bordeaux. On Long Island, we’re lucky enough to be surrounded by several producers that are committed to crafting fine, delicious wines. Sure, some are better than others, but that’s true anywhere. The best Long Island pours are interesting and take full advantage of our unique microclimate.

And, as our region matures and grows into an even more important winemaking area, we’ll reap the benefits, regardless of who buys what winery in California.

So, relax doomsayers. Consolidation is a good thing at best and a non-issue at worst. Have a glass of wine, whatever you enjoy, and think about more important, perhaps truly threatening, things.

                  

Lenn Thomson is a contributing wine writer for Dan’s North Fork. Email him at [email protected]

Comments

[Jassmond]

I have to strongly disagree. Consolidation in agriculture is an inherently bad thing, prcisely because of the free market system. The same market pressures you speak of also force the overcropping of vineyards, irrigation, chemical additives, material manipulation and the overall industrialization of wine. It is true in all of agriculture, so wine is no exception.

You speak of the average consumer, and it is precisely the average consumer we should be afraid of. Because they do not make their livings from thinking and knowing about wine, it is our responsibility as professionals to be on hand to educate them about the consequences of their purchases and to maintain "politically correct" inventories for them to choose from. Might there be some yummy wines I am missing out on? Yes, but as someone who has chosen to eat only sustainable, locally grown foods whenever possible, I would feel like a hypocrite if the selection of wines I put together for customers did not match that philosophy.

Upon finding out about Gallo's labor violations, I have stopped purchasing from a local distributor owned by gallo.

I will not do business with the Henry wine group.

The store I work for intentionally stocks as many esoteric wines as we can find, choosing to support small farmers maintaining a diverse library of indigenous varieties than wines that would sell simply for their international flavors.

It is important to realize that your position is dangerous, both for its indifference to the farmers that most deserve our support, and for the damage that consolidation does to the diversity of wine styles that makes this business so interesting.

Jassmond

[Lenn]

Thanks for your thoughts, Jassmond.

I don't neccessarily disagree with what you are saying, but I think we're talking about different things. Overcropping, irrigation, additives and the "overall industrialization" of wine is a fact of life. There will ALWAYS be wine produced that way and there will always be wine produced in the way that you and I both consider the "right way" too.

Do you think Mondavi wasn't doing any of that stuff BEFORE being purchased by Constellation? I think that would be a silly statement.

Your choices in what you eat and drink are great...and I commend you. However, I think you'll agree that most people aren't like minded. Your personal crusade against large producers is great too...I too prefer to drink "esoteric" wines. However, you and I aren't most people. If people want to drink mass-produced, industrial wine (and they do) that is there right. This is America after all :)

If my column were written for a wine magazine...with readership that included mostly wine geeks...my piece would be a bit different. But, my readers are very very diverse...and audience is something I'm very aware of in anything I write.

Lastly...I'm not indifferent toward farmers at all...and I don't think is fair at all for you to say so. Most of the grape growers I know personally aren't particularly worried about consolidation either. They feel as I do...there will ALWAYS BE THE WINES YOU AND I BOTH APPRECIATE AND LOVE TO DRINK.

Again...thanks for your comments. I like it anytime someone challenges what I write and makes me think. You've done that. Well done.