The Wine Industry’s Problem in a Nutshell

One sentence from this Wine Searcher article by W. Blake Gray about the state of the wine industry clearly articulates the problem: “Current market volume is 1 percent smaller than in 2012, while the number of wineries is nearly 50 percent larger.” That really says it all. Demand is flat but the number of wineries has skyrocketed over the past 15 years. The crisis is not simply anti-alcohol sentiment, changing demographics, or bad distribution. It’s oversupply. The hard fact is that the industry expanded way beyond demand. And so that expansion was obviously not primarily driven by rational market signals. A lot of people enter wine because wine is seductive. It promises land ownership, craft, beauty, hospitality, status, and a way of life that seems more meaningful than selling software or managing a dental practice. There is nothing shameful about that. Most great wines have been made because someone was captured by the romance of the vine. But when too many people make the same…