The Future of Wine or How to Turn Wine into Orange Juice

Economics professor Kym Anderson reports on the continued globalization of the wine business and paints a picture of what the future looks like:

Falling international trade costs and de-regulation of liquor retailing have also allowed large supermarket chains to become buyers of both bottled or bag-in-box wines and wine for building their own brands.

Retailing through such chain stores requires large quantities of homogenous wine year after year. Producers in the New World were more adept at initially responding to this new demand, creating a huge new category of robust, fruity ‘commercial premium’ wines that fall between expensive fine wines and cheap non-premium (‘table’) wines.

But now the old world is catching up. France, Italy, and Spain now export almost 50% of the wine they produce forcing new world producers to innovate to keep up.

Simultaneously, New World producers are seeking to expand their exports of more-expensive wines to complement their lower-end products. The next phase of wine’s globalization therefore may involve a convergence whereby both groups produce terroir-driven super-premium wines alongside more-affordable ‘commercial premium’ branded wines. Meanwhile, cheap basic non-premium wines are continuing their demise.

If you think this means better, more interesting wines to drink, I’m not so sure:

Technological developments are rapidly altering the means of exporting commercial premium wines. In the past decade or so the share of wine that is exported from the New World in bulk shipping containers has risen from less than 15 to more than 40 percent. Bottling in the country of destination is sometimes cheaper, and it lowers the cost and carbon footprint of shipping. By shipping in 24,000-litre bladders to fit 20-foot containers, this new technology offers greater opportunities to blend wines from any region of the world.

Translated, this means that bulk wines blended to all taste the same to satisfy the average consumer, with differences created by marketing, is moving from the budget wine sector to the premium sector. You will now have the privilege of paying $25 for a pretty label and a story about family farms in the 18th Century.