Anyone who has been paying attention to the ways of the world in the last few decades could tell you that the times, they are a changin'. There has been a steady move away from the locally owned mom and pop businesses in favor of larger corporations. In some industries this comes in the form of big box retailers moving into an area, displacing the locally owned stores, and in some cases it is in the form of the larger companies buying out the smaller ones. The wine industry has certainly not been an exception to this trend, and we have seen an acceleration of this trend in recent years, with brands like Constellation growing ever larger in their holdings. The state of the economy over the last several years has certainly contributed to this, as more and more people are becoming value conscious with their wine purchasing decisions.
Washington State has long been the home of smaller production wineries, with the exception of a couple of juggernauts. One of the larger companies in the state is Precept Wine Brands. This week Precept announced two purchases that are expected to push their production up to around 900,000 cases this year. With the acquisition of Canoe Ridge Vineyards and Sageland Vineyards, Precept builds on the large purchase of Corus Estates and Vineyards (which included Alder Ridge and Sawtooth wineries) last year. In addition to the wineries, the acquisition of Canoe Ridge Vineyards has brought the vineyard holdings of Precept up to approximately 3000 acres.
One representative from a winery contacted me this week and posed some questions about what affect the growth of Precept will have on the smaller wineries in the state. The concern that was implied in the questions was that the purchase of heritage brands and subsequent lowering of the price of the wines could be potentially damaging to producers who must charge a higher price for their boutique and small production wines.
A counter argument was presented almost a year ago by Paul Gregutt on his blog. Gregutt had interviewed Precept Brands Founder/CEO Andrew Browne, and his take on the issue was that the growth of Washington owned companies was a positive thing for the state's wine industry, potentially aiding in establishing Washington wines in other markets. His point, as I understand it, is that the growth in the sub-$15 wine market from Washington and increase in production are likely necessary to make Washington a true player in the global wine marketplace. He sums up his point in the comments when he says that, "…a rising tide floats all boats."
So what is the overall effect of the consolidation of wine brands under larger corporations? It's hard to say at this point. I have always had a soft spot in my heart for locally owned business. I generally avoid Starbucks in favor of local options, and I'll always shop at a locally owned option over a big box store when possible. I certainly think that, at least in the short term, the trend can make it harder for smaller brands to compete. Having heritage brands on the market for $15 a bottle is bound to move some sales away from brands that are in the $30+ price point. The question is how large this move is going to be, and how many brands will be able to weather the storm. The centralizing trend will likely only accelerate as some brands aren't able to remain profitable and join the other labels that have been purchased by larger companies. That being said, Paul Gregutt has a point. When I lived in Texas, the only Washington wines that were readily available to me were Ste. Michelle, Columbia Crest and Hogue. These wines were all of high quality for their price point, but didn't give me very much choice when it came to Washington wines, which hurt the state's ability to grab my attention overall. Having more options for Washington wine in markets around the country (and globe) does seem like it would help to more firmly establish the state's wines in the minds of consumers around the country.
Ultimately, the questions won't really be answered until we've had several years to observe the trends. I would definitely be interested to hear the thoughts of those in the Washington wine industry on the question (either on or off the record.) I would also be interested in hearing some thoughts from producers in California, who have already had to deal with these kinds of issues for some time.