NEW WORLD vs OLD WORLD WINES (Part Two)

Marketing: While many European vineyards, especially in Burgundy, remain small family-owned affairs, many of the New World vineyards are owned by large corporations. The recent international increase in wine consumption leading to the dramatic globalization of the wine industry has led to vast economies of scale. In order to secure a contract with Costco or Tesco—who will need to stock the shelves of hundreds of their retailers—the wine producer needs to guarantee the delivery of thousands of bottles of consistently identical and dependable wine. This means that small independent wineries cannot compete with giant corporations. Consequently, especially in the New World, there has been rapid consolidation in the industry, with large international conglomerates owning lots of different brands in many different countries. Constellation Brands, for example, owns ninety-one different wine  brands, including Mondavi in California, Kim Crawford in New Zealand, and Ruffino in Italy. The quintessential French company Pernod owns the quintessential Australian Shiraz producer, Jacob’s Creek, and the quintessential Australian beer producer, Fosters (through its Treasury Estates subsidiary) owns that jewel of Napa Valley wineries, Beringer. The consumer may believe that he is getting a cute bottle of French artisanal wine from the Languedoc when he buys a bottle of Red Bicyclette, but the winery is actually owned, controlled, and marketed by E&J Gallo, California’s largest producer of jug-wines.

In his fascinating book Wine Politics, Tyler Colman quotes a senior French wine industry official in 2000, saying, “We don’t make wine to please consumers. We make wines that are typical of their terroirs. Fortunately for us, consumers like them.” Unfortunately for that arrogant official, the times are a-changing, and consumers are no longer dependent on the dictates of French bureaucrats. The Aussies have joined the game. While the winemakers of Burgundy fine tune their Appellation laws and wine labels to differentiate one side of a hill from another, and German winemakers create consumer confusion with labels mixing Grosslage with Einzellagen, the Australians cut straight to the chase with pictures of sweet, cuddly animals.

In 2005, the Old World conglomerate LVMH (Louis Vuitton Moet Hennessey) sold six hundred thousand cases of wine at an average price of $44, making $26 million. However, in the same year, the New World newcomer, Yellowtail, sold seven million cases of wine at an average cost of $6, making $42 million.

Yellowtail is a family owned Australian wine company that only began exporting to the United States in 2000, and which branded itself with brightly colored images of a cute Wallaby. In 2001, it sold 112,000 cases, a number that jumped to 7.5 million in 2005, helped by distribution through Costco. Yellow Tail has enjoyed similar success in the UK, which, in 2000, began importing more wine from Australia than from France. And in 2005, Yellowtail sold more wine to the US than all the French producers combined. Both research and experience demonstrates that most consumers today, especially when buying New World wines, want to buy wine by grape variety and brand name. Young consumers in particular tend to avoid what they consider to be confusing and pretentious wine labels, characteristic of some Old World wine bottles. Terroir and provenance have been surpassed by cute and cuddly.