The source of wine has always been associated with Europe, in particular France, Italy and Germany. This premier position has recently been challenged successfully by wine producers from the new world, namely Australia, New Zealand, USA (in particular California), Peru, Chile and South Africa. More recently we also hear of good quality wines from India and China. How and why did this change of pole position take place? What were the transformations? Let us explore the reasons.
Firstly with globalisation, many countries removed the trade barriers, enabling the import of wines from non-traditional trade partners (e.g., wine from Peru and Chile into Malaysia). This removal of trade barrier contributed to the increased demand for wine globally.
Secondly wine was produced in Europe following traditional systems of ownership of vineyards, classification, naming and labelling of wine bottles, compliance to ancient antiquated regulations for sales of wine, and distribution systems. Europe, owing to historical reasons, had adopted a complex, unwieldy system of production, labelling and distribution. This increased the cost of wine exported. Despite the continuous loss of market share, French wine producers held on to their practices, arguing that wine production is an art and not an industrial production process – the way soy oil or olive oil is produced. Each wine bottle from a particular vineyard or vineyard region was treated as a unique product without equivalence – a sort of collector’s item to be consumed for special occasions or stored as an investment.
But the world was changing fast. Wine became a preferred drink at cocktail parties and before a formal meal in new markets which previously did not consume wine in the manner they are doing now. Consumers in Japan, Hong Kong, Singapore, Malaysia and in other countries are now used to drinking wine. These younger drinkers order wine just as they order beer, whiskey or other cocktail drinks. Are they generally interested in the type of grapes, vintage, place of production, etc? The answer is generally a NO. Their taste is simple, red or white wine and possibly sweet or fruity. This is where the new world producers started taking advantage of the situation. Wine from new world countries generally came with simple labels enabling consumers to order the preferred wine subsequently without cracking their heads to recall the name of the wine they last preferred! This was a coup in trademarking and labelling of a product consumed by younger and generally unsophisticated consumers.
The wine producers of the new world were not controlled or regulated by complex unwieldy trade regulations. They produced their product to meet simple quality standards which enabled many small producers to sell their output to large vintners. The vineyards adopted new types of planting methods and harvesting methods (semi-automatic compared to manual harvesting), sites of flat land rather then hilly lands, the industrial process of blending and fermentation of mixed grape juice from different sources to produce a predetermined quality standard (similar to how chemists use different proportions of chemicals to produce a predetermined specification). The organisation of the wine industry was like any other well-managed agricultural industry. The EU producers refused to see wine production as part of the agricultural industry like other agricultural produce.
So grape growing, wine production, trademarking, labelling, distribution, marketing and promotion has been given a completely new treatment by the new world wine producers. Unless EU producers relook at their practices, it is a foregone conclusion as to who will emerge the winner of the global wine wars between the new world producers and the traditional producers from EU.