The Growth of Mass Appeal Wines
Introduction to the United States Market
The national market of the United States of America in terms of wine availability and diversity is heavily weighted in two directions. The first is California. Of the 6,459 wineries in this country in 2008, 43.8% were located in California State and produced 88% of the total domestic wine production[1], a number that is consistent with past years[2]. Of this amount, just under half of the wine produced in California was consumed domestically[3]. The second mass of production in the U.S. is in large-scale wineries. While 94% of all wineries in the U.S. produce 30,000 cases or less per year, the remaining 6% produce 93% of all wine by volume[4].
From the above statistics, it is clear that American wine production is mainly identified by its California output and that state is the leader in bulk or mass appeal wines. When the consumer seeks to buy American wine, it is California that leads the field in producing wines that are identifiable both in branding (e.g. Gallo with 65 million cases sold every year as of 2003, of 265 million cases produced overall in the U.S.[5] ) and in grape varietals (e.g. Chardonnay with 15.4% of varietal wine grown in California[6]). Thus, in and of itself, California, with its industry leadership on all fronts, provides the greatest example of mass appeal wines in the United States.
Grape varietals are the leading marks of recognition in new world wines[7], which is in opposition to some European Union countries that rely on appellation or region names for familiarity. These would include Côtes du Rhône and Chianti. According the International Trade Administration, in California the five leading grape varietals crushed accounted for 65% of all grapes crushed and were[8]:
· Chardonnay
· Cabernet Sauvignon
· Zinfandel
· French Colombard (a blending grape used mainly in varietally-unidentified jug wines)
· Merlot
Imports are still alive and well in the American market, with the U.S. Department of Commerce attributing 28% of wines sales to imports:
“In 2008, wine imports from the top five countries accounted for almost 86 percent of the total value of wines imported into the United States:
• France supplied 31 percent
• Italy, 28 percent;
• Australia, 15 percent;
• Spain, 6.1 percent; and
• Chile, 4.9 percent.”[9]
It is fair to assume that much of the wine being drunk from France, Italy and Spain are mass-produced appellation-driven wines (the aforementioned Côtes du Rhône and Chianti), as well as varietally named wines from lesser-known regions[10] since, as in the U.S., mass-produced wine is what constitutes the bulk of production[11]. Thought there does exist evidence that the amount of inexpensive wine from the EU that is being imported into the U.S. is falling[12], the “wine lake” of Pinot Grigio shows no signs of drying up completely any time soon[13], nor do the amounts of varietally-named or branded mass appeal wine.
The Emergence of Mass Appeal Wines
The emergence of mass appeal wines can be linked to a consumer’s desire for name recognition. As far as brands are concerned, according to The Oxford Companion to Wine “(w)ine brands offer a familiar lifeline to new consumers baffled by a multiplicity of unfamiliar, often foreign, proper names”[14]. The term “brand,” however, must be expanded from its strictest sense of products marketed via a certain label and under a certain name since the IMPACT Databank run by M. Shanken communications calculates that the global industry share of the top 25 brands was just under 8% in 2004[15]. In a varietally-driven market, as the U.S. is, branding such as Yellow Tail or Sutter Home can be a way to guarantee sales, but so can having “Chardonnay” or “Cabernet Sauvignon” on the label of the bottle[16]. In the jug wine segment of the market, misidentified wines that hearken to an appellation-based system, such as American “Chablis” and “Burgundy” have long held a significant share of the market, though that share is steadily decreasing[17] and has trended away from generic names and toward varietally-named wines[18].
From the consumer’s point of view, the purchase of branded or varietally-labeled wines signals a perceived guarantee of consistency and a minimum expected level of quality[19], as well as reinforcing the fact that buying wine can be a simple process that need not be left in the hands of an expert. For consumers, especially at the less wine savvy end of the spectrum, buying a branded or mass appeal wine ensures that they are not wasting their money or their time, and as such, becomes a sort of security blanket[20]. Venturing outside of these categories can be seen as a risk that might not be worth taking, especially when shopping in a market where there isn’t as much professional help[21].
This is paid back to the producer as well. The American Association of Wine Economists indicates that “(a) shared brand name, like for example geographical ones, can reduce information asymmetries especially when the scale of production is too small and individual firms fail to establish reputations on a stand alone basis”[22]. Thus, from a producer’s point of view, becoming a part of a group that produces mass appeal wines can ensure a measure of economic stability not available in a more individual venture. Thus with the advent of a consumer base more likely to drink wine[23], the growth of mass produced wine that seeks out brand recognition as a way to encourage consumer interest only makes good business sense.
By the same token, the retailer will be more prone to embrace the same branded wines, particularly in the more mass-market sector of the industry. In a grocery store, the most branded and mass produced of all consumer outlets, mass appeal wine is a necessity. Not only do these wines have to be available at all times of the year and quite often have to be made in sufficient quantity that many outlets of the same chain can purchase them[24]. Only in the smaller retail stores is there room for the niche wines that are truly produced on a smaller scale.
Additionally, with the ever-evolving concerns of marketing, the consumer can be manipulated into perceiving that a wine is more niche or artisanal than it really is. Packaging plays a huge role in consumer perception of a product, as evidenced by the number of marketing strategies available when considering label design[25]. According to Wine Business Monthly, “the most important aspect of any product is its brand image. Image is initially communicated through package design”[26]. For example, Bogle Vineyards, whose annual production is in excess of 1 million bottles per year, intentionally designs its labels to evoke boutique production, thus indicating to customers that it is a small, limited production winery, while the opposite is the truth[27].
Impact of Mass Appeal Wines and the Niche Market
The impact of the dominance of mass appeal wines is that some feel that niche wine could be pushed out of the market. In this sense, niche wine is defined as wines that “achieve individuality by reflecting terroir, vintage, producer philosophy, indigenous grape varieties or idiosyncratic production techniques”[28]. Wine author Jamie Goode suggests that the large, branded wines are parasites: “In short, the brands steal the positive image of limited-production estate wines; they themselves lack any interest, but they trade on the reputation and image of the diverse and truly interesting estate wines. This is parasitism[29]. However, trading on these images can cheapen the category as a whole. “At the beginning, when the scale of production is small, a growing number of members ensure higher visibility, but after a peak the collective reputation declines since the incentive to free ride prevails”[30] Though in this case the authors are speaking specifically of Italian wine collectives, the statement can be applied to the matter at hand regarding niche wines being infringed on by mass appeal wines.
In U.S. retail wine sales between 1991 and 2001, U.S. produced ultra-premium wine (defined as wine selling for more than $14 per bottle) grew from a 2% to a 4% market share, while jug wine (defined as below $3 per bottle) fell from a 65% to a 47% market share[31]. While this does indicate that the U.S. market is beginning to turn away from the lowest end of the market, it doesn’t necessarily mean than Americans are moving away from mass appeal wines. Part of the appeal to marketers and retailers is that mass appeal wines will have offerings at all price points, filling shelves at all consumer-demanded levels[32]. So the price of the wine on the shelf does not necessarily indicate whether the wine is niche or mass produced. Goode claims that this infringement of the mass appeal wines on the upper price levels of the market simply means that niche wines are in greater danger of being pushed out. When the consumer realizes that the higher price they are paying is not necessarily for better or more distinctive product, interest in the premium or ultra-premium product itself may wane, thus affecting estate-bottled niche wines[33].
The Australian market can be seen as a prime example of the rise of the prevalence of mass appeal wine. It is well documented that with the rise of Australia’s value wine industry came the devaluation of its product:
“Generically speaking in the UK, for example, Australia as a whole is now intimately linked in consumers’ minds with deals and discounts, with gondola ends, with born-to-be-discounted brands, with three-for-a-tenner, with party wine, with pub wine, with cheap wine, with bottom-end wine, with binge-drinking wine, with commodity wine”[34]
This is a continuing issue for the Australian market, as premium and niche producers continue to fight to overcome the mass appeal, bargain-basement image that many consumers have of Australian wine[35]. They are beginning to do so in part by focusing on regional wine with a sense of place; the first steps toward a terroir-driven niche wine.
The ultimate example of branded wine occupying the upper end of the price market is that of grand marque Champagne[36]. This wine proves that branded wine need not be cheap – in fact some of the most expensive wines in the form of non-vintage Champagnes from the major houses fall under the category of mass-produced, highly manipulated, standardized product. This does not indicate that the quality is sub-standard or that people aren’t getting the proper value for their money (though some will try to make that case[37]), but simply that branding and marketing have combined to create a category of ultra-premium branded wines that people are willing to pay top dollar for. The difficulty that individual Champagne producers face in getting their products to market only underlines the strength of the grands marques[38]. In 1997, grower Champagne made up only .62% of the market[39]. While it has since grown to just over 3% of the market, this is still miniscule in comparison to the amount of Champagne produced by the major houses[40].
American interest in varietal wine need not preclude interest in regionally-driven wine, which, as is seen in the cases of Australia and Champagne, can be a step toward consumer enjoyment of niche wine. Andrew Jefford posits that with a bit of guidance, the consumer who requests Sauvignon Blanc as a general category can be steered toward regionally driven wines that offer more nuance and an easier entrée toward the rest of the niche wine market[41]. However, with the wide variety of mass appeal wines available, the consistency of the product and the ever-increasing sales pressure for large wine houses to increase their exposure, niche wines can find it increasingly difficult to find a place on the shelf[42].
The conclusion can then be drawn that niche wines will continue to be driven out of the market by branded wines that arc across the price point spectrum[43]. However, this is a trend that may be countered by a recent food-related one – that of the idea of buying local[44]. The buying local and organic trend is one that can be reflected in wine not necessarily be buying local, but by buying green and sustainable[45]. In this model, being embraced by affluent urbanites, niche wine has become the go-to drink – one feels that showing up to a party with a bottle of Yellow Tail or even a higher-end Coppola in tow would be a social faux pas in this particular circle[46]. While fuller data is unavailable, this trend suggests that there may yet be a continued market for small-production niche wines.
Conclusion and Personal Commentary
Niche wine is by its very definition a limited commodity. It is unrealistic at this time to believe that all wine drinkers would want to drink this style of wine or, even if they did want it, would be able to obtain it. While it is acknowledged that wine drinkers tend to trade up in their scale of wine as their tastes mature, some drinkers never move past the very basic entry level wines – and are fine with that.
I believe that, aided by the advent of the green/local movement, but by no means inextricably tied to it, that niche wine will never be truly pushed out of the market. With wine drinking on the upswing with Generation X and the Millennial Generation, it can only stand to reason that, while some of these drinkers will never advance past the “Two Buck Chuck” phase, others will dive headfirst into tiny-production, esoteric wines.
As people are first drawn to wine, it seems a huge, foreign concept, filled with confusing labels and foreign languages[47]. Sometimes an untested wine tastes too sweet, other times too sour, still other times unfamiliar and inexplicable. Reaching for a familiar brand, written in English, with splashy labeling is the easiest way for a novice to get by[48]. However, with man’s natural curiosity, the same wine novice can often begin to become more curious about what the other wines out there taste like. With the advent of the digital age, it is easier than ever to find out information on wine, follow trends, and receive concrete advice on how to branch out beyond what they know. And for some, this experimentation will pay off with increased knowledge and a more sophisticated palate. The resultant consumer is a prime candidate to become an aficionado of niche wine.
Thus, it stands to reason that, as long as humans are curious about finding out more about subjects they don’t know that much about, and as long as niche wine continues to provide compelling and unique drinking, it can never be pushed out of the market. Its share may fall and rise, but it will certainly remain an important part of wine drinking culture.
[1] International Trade Administration, U.S. Wine Industry 2008 Report
[2] Wine Institute, 2010
[3] Ibid
[4] Firstenfeld, 2010
[6] International Trade Administration, U.S. Wine Industry 2008 Report
[7] Prial, 2001
[8] International Trade Administration, U.S. Wine Industry 2008 Report
[9] International Trade Administration, U.S. Wine Industry 2008 Report
[10]Vins de Pays de France, “Varietal Vins de Pays Wines”
[11] Shah, “Who’s Who in Italian Wine”
[12] Davies, 2008
[13] Shah, “Pinot Grigio Profile”
[14] The Oxford Companion to Wine, Jancis Robinson, p. 102
[15] Robinson, 2006, p. 102
[16] Volpe et. al, 2009
[17] Heien, 2002
[18] Berger, 1998
[19] Boudreaux & Palmer, 2007
[20] ibid
[21] Boudreaux & Palmer, 2007
[22] Castriota & Delmastro, 2009
[23] Anderson, “World’s Biggest Wine Country: USA” 2005
[24] Heien, 2002
[25] Auston, 2008
[26] Ibid
[27] ibid
[28] WSET, 2010
[29] Goode, “The Two Cultures,” 2002
[30] Castriota & Delmastro, 2009
[31] Heien, 2002
[32] Ibid
[33] Goode, “The Two Cultures,” 2002
[34] Jeffords “Forging the Golden Handcuffs,” 2010
[35] Ray, 2010
[36] Robinson, 2006, p. 102
[37] Theise, Not Dated
[38] Les Maisons de Champagne et Leurs Grands Marques
[39] Theise, Not Dated
[40] Ibid
[41] Jeffords “Forging the Golden Handcuffs,” 2010
[42] Goode, “The Two Cultures,” 2002
[43] Ibid
[44] Marketingcharts.com
[45] Cowen “Wine Trends on the Horizon” Not Dated
[46] Asimov, 2010
[47] The Oxford Companion to Wine, Jancis Robinson, p. 102
[48] Castriota & Delmastro, 2009
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