Dec 16th 1999
Bonnie Tonneson, who follows the wine industry at Hambrecht and
Quist, an investment bank in San Francisco, says that the proper way to
look at wine is as part of the luxury-goods business, rather than as a
branch of the drinks industry. The market for expensive wine, she points
out, is expanding—even if total consumption of wine is static or
falling. And the buyers of expensive wine are exactly the kinds of
consumers whom other luxury-goods industries are eagerly pursuing:
middle-aged, affluent, interested in travel and the arts.
Ms Tonneson sees a parallel between baby-boomers' willingness to
splash out on an expensive coffee at somewhere like Starbucks, and their
interest in buying expensive wines with some sort of “story” behind
them. Indeed the parallels between coffee and wine are telling. In a
study of the international wine trade† published in 1995, Pierre Spahni
argued that
distinctions between wines are often overdone
for marketing purposes or sheer snobbery. Coffee, for instance, reveals
striking differences in quality and taste—owing much to the same factors
imparting character to the wines—yet it is only marketed under a
handful of varieties and a few powerful brand names.
Yet since then the marketing of coffee has become more like the
marketing of wine, as producers struggle to persuade consumers to pay
more for a brand that tastes better, and is often linked to a particular
place, region or even grower.
This sort of marketing is now spreading to other foodstuffs. A recent
article about olive oil in a food magazine published by Waitrose, a
British supermarket chain, would have a familiar ring to readers of the
wine press: “Ten years ago, olive oil meant Italian. Now it could well
come from California or Queensland.” The article also said that
“single-estate and single varietal olive oils are much dearer but worth
every penny.”
--
As international companies make inroads into the historically fragmented
wine industry, further consolidation is in prospect. The next big move
is likely to be the development of much closer links between
California's and Australia's big firms. Companies such as Beringer,
Mondavi, Southcorp and BRL Hardy have been circling each other fairly conspicuously in recent months.
