The internet’s greatest accomplishment is the flattening of the economic landscape, making the concept of a global local an economic reality for the artisanal maker market.
In the wine world this has empowered the smallest producer to build global markets of interest for their wines.
True for tiny, under the radar, producers like Christian Ducroux ,who I’ve never met, though buy my allocation every year. True for the most talented of the west coast natural winemakers who have fostered communities across the world with astoundingly small productions. Many whom I consider friends.
I’ve blogged about this often, and my passion for this approach, this community and the power of the web to tie this together is a common meme for me.
But it’s the cost plus pricing of the natural wine market and the resulting marketplace effect that has been getting my attention lately.
As a primer, all product pricing exists along the continuum of cost plus (what is costs to produce and what you need to live) and market driven (what the market is willing to pay at a premium).
The natural order of things is that prices go up as brands grow and value is more and more implied. People charge what they can. Think Porsche, Lululemon and of course the wines of Gannevat.
But more and more I find myself asking at tastings with small natural winemakers, Why don’t you charge more?
Natural wine is by definition an unscalable process.
Smaller plots, smaller yields and manual processes are the rule. And in the new world where land and grapes are both expensive, this is exacerbated. It’s an artisanal and resource intensive activity at its core
So what’s going on?
From an economic perspective of course this is counterintuitive.
Smaller producers with growing brands should create just the opposite. This should be creating allocations and a replaying of the Napa cult trends from the 90s.
Certainly some of the prices are creeping upwards and I see the beginning of price hikes in some of the most well known artisanal producers.
I had to step back to marketplace economics rethought with web dynamics to understand what is going on.
There has been an artisanal revolution in wine. This is unarguable.
People are making wine naturally everywhere. Production per average producer is actually going down as the number of small producers gets larger.
And the quality of the product is increasing as information on best practices is shared and the palettes of the consumers become more sophisticated and demanding.
This is a perfect marketplace storm of supply and demand in the natural wine market.
Large and growing consumer demand on one side. More and more small producers charging just what they have to on the other feeding the supply chain.
The bar for quality, the competition for shelf space and mind share has on an average leveled the pricing.
So interesting.
So fascinating that what has been happening for a decade in the software and services market with open competition is happening in the luxury markets of the wine world
I am just starting to understand this.
Take a walk around your larger artisanal wine shop. Maybe what—2000 different skus across maybe 700 producers from around the world.
It is not a leveled pricing by any means. It’s a broader range with an average defined by the breadth of choices.
At the top end, you have producers like Ambyth and Els Jelipin where enthusiasts like myself put out their dollars to support these extreme and wonderful projects.
You will have the crazy low end of Ducroux and my newest find from Portugal, Filipa Pato selling for $12 a bottle.
And a huge spread in between of styles and prices.
From the garages in Berkeley and coops in Portland. To impossibly small generational brands hanging onto the sculpted cliffs above the River Sil in Ribeira Sacra. From the moon shaped spheres crafted out of volcanic stones in the Canary Islands.
From $12 to $80 a bottle.
I’ve know for a decade that there was a change happening in the tastes and ethos of the consuming wine loving public.
And we all know that we are living in the golden age of wine. Choices, diversity, quality, inventiveness and ubiquitous access everywhere. Down the street or online.
What I didn’t realize is that we were setting a marketplace effect in place.
That unfettered supply and demand was creating an open market effect in the most complex and regulated world of the wine and spirits distribution here in the states.
That cultural change made possible by the connecting threads of the web was transforming the economics of the very market itself.
Marketplace economics, community platforms, changing tastes and culture coming together to reshape the wine world.
How often is something this powerful good for everyone involved?
Consumers, producers, importers, distributors and retailers.
This is something we can all raise our glasses to.
