The beverage world has been shaken dramatic media reports About the barren lands, abandoned vineyards, and Dozens of wineries Close the door. photo exhibit Tens of thousands of acres of vineyards across the Golden State were bulldozed and then crushed into wood chips by massive industrial grinders.
this”Grape Apocalypse“(Grapepocalypse?) Considered a sad but inevitable outcome Decline in consumer interest In wine. That’s true, but that’s not all.
Not surprisingly, the wine industry has taken a hit inflation. However, the market has also been overwhelmed by the surge. imported wine and grocery chains prefer their own private label Wine brands (such as Costco’s Kirkland Signature wine or Whole Foods’ Wine Farmer).
Given that Millennials and Generation Z are not only drink less Overall better than previous generations, but more and more choose Used for brewing microbrews and craft cocktails. Global wine consumption hits record high 27-year low U.S. wine sales drop 8.7% 2023.
While all of these factors certainly play a role, they ignore the wine industry’s biggest industry-wide problem: being choked by government policy.
Since nearly every state has a three-tier system for alcohol, wholesalers or distributors act as government-authorized middlemen, connecting alcohol producers with retail stores. The rationale for the three-tier system is said to be to prevent large alcohol companies from forming monopolies at the producer level of the supply chain.
However, it basically does the opposite. For decades there have been multiple dealers Available at almost every winery. Today, there are less than 1,000 dealers Serving more than 8,000 U.S. wineries, of these distributors, only three goliath dealers that control Up to 67% of total U.S. wine sales ( some states This number climbed to over 90%).
This creates a state-backed collusion in which the largest distributors disproportionately focus most of their efforts on servicing the customers of the largest wineries. Many small and medium-sized breweries are often unable to find distributors who can represent their products. In turn, their wines never even make it to store shelves, completely cutting off their primary market access. When wine is produced or sold less, fewer grapes are needed—hence the increasing prevalence of vineyard desecration.
This is a lesson governments never learn, especially when it comes to alcohol: If you create a government-authorized middleman in the name of preventing a private alcohol monopoly at one level of the supply chain (the producer level), then you ultimately cannot to avoid creating a government approved monopoly On another level. Ultimately, as a wine hunter put itThe arteries of the U.S. wine market, the world’s largest, have become clogged, with the impact all the way back along the supply chain to the grapes themselves.
One way to help independent breweries is to reform the law to allow more breweries to self-distribute their products directly to retailers, including across state lines. Better yet, abolish the three-tier system entirely and let alcoholic beverages operate like the rest of the American industry.
If more wineries can stay afloat, demand for grapes will rebound and demand for grapes may reverse before it’s too late.
