The Bulk Wine Industry Is Struggling To Survive. Maybe That’s No Bad Thing

And it’s not just because people are drinking less

Big wine brands, you okay hons?

Because it seems like y’all are not doing so well.

If you’ve not heard, one of France’s biggest alcohol producers — Pernod Ricard — is selling off many of its big wine brands because, apparently, no one is drinking wine these days.

It’s not just them. The Californian bulk wine industry is having a “grape apocalypse” with big names like Gallo cutting back on their vineyard land.

And the Spanish wine region of Rioja is distilling 30 million litres of wine because no one wants to buy it.

The news has resulted in both hand-wringing and happiness, depending on where you lie on cheap wine = good vs. alcohol is the new tobacco argument.

Then there are people like me. The ones who advocate for small, independent, quality wines. The ones who have been expecting this downfall for a while.

For the bulk wine industry, the writing has been on the wall for years. Their market demographic — typically a price-sensitive older person — is being replaced with a younger market happier to indulge in quality over quantity.

The wine industry has known this for a long time. And now it seems the predictions are coming true.

Is that a bad thing? I’m not so sure.

It’s not the whole wine industry that’s dying

If the clickbaity side of media was to be believed, the reason the wine industry is in trouble is because younger generations are drinking less wine.

There is some truth to this. Younger generations are drinking less alcohol overall. Gen Z drinks around 20 per cent less than Millennials who already drink less than older generations.

But that doesn’t mean they’re not drinking. They’re just drinking differently.

When it comes to wine, they’re drinking better:

• 83% of the $15+ per bottle market are Millennials and Gen Z.

• When it comes to younger generations, the average spend on a bottle of wine for those willing to spend $20 or more is $65.

• Compare that to Baby Boomer’s $36 (and only on special occasions).

In other words, younger generations are prepared to spend nearly double on a bottle of wine compared to their parents or grandparents.

But this isn’t always what’s reported. The media prefers to report that “Gen Zs are drinking less” ideally with a “it’s the end of the alcohol industry as we know it” spin.

It’s not as simple as that.

Bulk wine might be struggling but the demand for quality wine is up. Premium wine is expected to grow 6% by 2030. Sales of $20-$25 bottles are up two per cent this year alone.

And good wine producers are having no problem selling their wines. Many quality wines (not just the expensive ones) are in high demand. Sometimes they’re highly allocated.

I know this because I sold wines like these. Many of them for many years.

I know this because my friends who work in the wholesale trade clamour for good wine whilst fighting off stiff competition with other wholesalers or even other markets.

I know this because winemakers tell me their highly allocated wines are often sold within days. I know of wineries that have two-year waiting lists.

Even smaller, less expensive (at least compared to the cult labels) wines are selling well. My friend started a wine project last year and she sold every bottle within just a few months of release.

How many of these wineries do you think are contributing to wine lakes?

The problem for the bulkier end of the market is that their focus has been elsewhere. It’s been on quantity. On catering to a market that buys wine very differently from the markets coming up behind them.

I saw it every day in my wine store. Generally speaking, older folk would buy cheaper wine by the case — often the same one — week in, week out.

Younger clients on the other hand would have a higher spend per bottle and they’d switch up what they bought every time.

These are, of course, generalisations. I saw plenty of younger people drink as their parents did (cheap and plentiful) and many older folk drink young’uns (less but better).

But as a rule, my experience on the ground jives with the stats I’ve mentioned.

This is a big problem for the bulk wine industry. And it’s a hole they are struggling to dig themselves out of.

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Give the consumers what they want

And if you think that’s $5 bottles, you’d be sorely mistaken.

Current trends instead currently include:

• Sustainability. That includes organic, biodynamic and “natural” wines.

• Climate change considerations.

• More emphasis on who’s making the wine. What’s the winemaker’s story?

This is unsurprisingly being driven by Millennials and Gen Z who now make up 50% of restaurant and 34% of wine-at-home sales. The wine industry would be sensible to listen to them.

But as wine writer

Jason Wilson

says:

This is an industry that’s completely lost sight of the consumer.

This is an interesting idea and one I’ve think about often as I meander through my wine career.

I think of things like: how can large wineries talk about sustainability when they are (in part) responsible for the downward pressure on grape prices?

How can they talk about a sense of place when they source grapes across vast vineyard areas?

Some have tried. I’ve seen plenty of big wineries try to enter the organic, biodynamic and natural market. Or talk about a sense of place.

But it seems it’s not enough to save them.

My theory? Drinkers aren’t buying into these brands’ attempts because many other wines give them what they want for real.

This is a brave new wine world. Bulk wineries with their cheap and cheerful brands have less of a place in it than they did back in the day.

Because whilst they are being sold off, smaller wineries with their in-demand allocations are thriving.

My honest opinion?

I’ve spent my whole career advocating for the small. The sustainable. The underdogs.

Because *unpopular opinion alert* deep down, I don’t believe wine should be commoditised. Bemoaning the end of the bulk wine industry feels a bit like bemoaning the end of the battery chicken era.

But unlike food, we don’t need wine to live. It’s an optional extra, not a requirement. So should bulk wineries exist to satisfy that side of wine drinking? I’m not so sure.

As it turns out, younger generations aren’t either.

I love wine to the very depths of my soul. I love everything about it from the geeky winemaking bit to the way it brings people together.

As an industry, I want it to thrive. And perhaps de-commoditising it is the only way this can happen.

Whatever my opinion, the reality is that commoditised wineries are struggling.

But perhaps that is not as terrible as it seems.

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The world may be drinking less wine but I believe the best of the industry is yet to come.

I see how exciting the world of wine is right now. I watch my friends establish wine businesses that double turnover year after year. I get excited when I see more and more wine bars crop up.

Most of all, if I didn’t think wine has a bright future, I wouldn’t be starting a small wine project next year with my husband Sam Dixon Brown.

This is a new world with new rules. We have a new market to cater to. One that is very different from the one that came before it.

The larger side of the wine industry may be in trouble. Yes, that might mean the end of cheap-as-chips wine.

But it certainly doesn’t mean the end of the industry as a whole.

Far from it.

In fact, we’re only just getting started.

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