Jamie Goode: Can fine wine be made at scale?

The wine world is very sizeist. We wine geeks tend to favour small producers, and to dislike big wine companies (although we seem to make exceptions for Champagne and Port, though, where we recognize that some of the bigger companies tend to make some of the top wines: more on this later.) Is this size-ism justified? And where does it come from?

If we are to tackle the question of whether fine wine can be made at scale, first we need to define ‘fine wine’. A definition is something that allows us to complete a sorting task. If my definition of fine wine is to be useful, it must allow me to sort wines as fine or non-fine. Faced with a line-up of wines, I need to be able to use it to separate them into fine wine or not fine wine, or else it’s not really a definition. This is harder than it looks.

One definition might be by the price of the wine, but the problem here is that there are some fine wines (in my eyes, of course) that aren’t particularly expensive, and there are some very expensive wines that I wouldn’t describe as fine wines.

Another definition might say that fine wines are the classic wines that are sold by fine wine merchants, and which are traded on the secondary market. Most people think of these sorts of wines when the word ‘fine’ is used: the likes of classed-growth Médocs, top Burgundies, Vintage Port, prestige cuvée Champagnes, super-Tuscans, top Barolo and Barbaresco and ambitious Napa Cabernets.

The term ‘fine’ is used here to describe a segment of the market that has its roots in history. It’s seen clearly in Bordeaux where you have the classed growth clarets of the Médoc for fancy people, and then a swather of cheaper wines for normal people called Cru Bourgeois. These aren’t the cheapest of Bordeaux wines, but more claret for teachers as opposed to the landed gentry, doctors and stockbrokers. When the fine wine segment of our wine ecosystem developed, in the classic wine-producing countries most of the wine made was for many people a staple: a commodity. The term ‘fine’ probably developed to distinguish from this mass of cheap sustenance wine the sorts of wines that might be kept in the cellar of a country house, where the sensory properties of the wine and its ability to improve (or become more palatable) with age were equally important as the sensory hit from alcohol.

But this definition is now looking a bit off the pace with the developments that have taken place in the wine world over the last 30 years, and the emergence of what I like to refer to as the ‘new fine wine’.

And we also have the intersection between fine wine and the luxury goods market. Some wines are launched deliberately targeting the luxury goods market and they don’t really care about being fine or not. It’s a different market.

Perhaps my favourite definition – and this is maybe a bit of a cop-out – is the one Hugh Johnson came out with: wines that we want to talk about. Wines of interest, wines of place, wines that invite conversation. The sorts of wines we geeks get excited about. It’s a somewhat subjective definition, but faced with a table of wines, I think I’d be able to separate them into non-fine and fine with this thought in mind.

So let’s return to the theme of scale. Wine production is hard to scale-up, because the quality of the raw ingredients set a firm ceiling for the quality of the wine. You can make bad wine from bad grapes; you can make bad wine from good grapes; but you can’t make good wine from bad grapes no matter how talented you are. More specifically, the qualities of the finest wines depend on the precise qualities inherent in the grapes. At the point of harvest, the grapes have not only the ceiling for quality, but define what the final wine can taste like within quite a narrow set of parameters. Wine is almost unique in this regard.

Let’s compare it with beer. Beer is highly scalable, because the ingredients are more easily found and don’t determine exactly what the beer will taste like in the same sort of way that grapes flavour wine. Yes: to make a great beer you need good raw ingredients, but these can be found quite widely. Many classic beer styles developed in the past because these were the styles of beer that the local water had a propensity for making, but now we understand this, it is possible to condition brewing water, so this is no longer a limitation. You can make a pilsner, or a stout, or a pale ale or an IPA anywhere you like. Good grains for malting are readily available. Yeasts and hops are readily available. So theoretically a small craft brewery making distinctive beers can be bought by a big brewer, and the quality and style of the beer can be maintained even though the operation has scaled up significantly. In reality, this seldom happens. The new brewery space might, in subtle ways, change the character of the beer. More commonly, ingredient costs are the problem. Accountants see the chance to shave off significant sums by buying cheaper ingredients, while trying to keep as much of the style as possible, and then hope most customers don’t notice any change. It’s disappointing for those who loved the craft brewery’s output in the first place, but it’s also utterly predictable.

In the wine world we see many examples of a small producer being bought by a big wine company, and then the wines change, almost always for the worst. Sometimes the wines get considerably worse. And sometimes a famous winery name ends up being abused to the point that the big company finally mothballs the winery and the once-historic name is no longer used.

There are some ways in which a small winery might benefit from an acquisition by a big company. First, they have access to a marketing machine and distribution. Second, they might have capital that allows them to grow and build a new facility where it’s easier to work. Third, they may have access to highly skilled and experienced winemakers and viticulturists who can help them improve in certain areas.

The extra money is also important in that it permits a winery to grow without entering the dead zone. Most family-owned wineries grow slowly, little by little. They find new vineyard sources, they begin to make more wine, and for a while things go well. But the danger behind this gradual growth is that there is a size of winery that simply doesn’t work. Grow incrementally, and you enter this dead zone. You outgrow your old distribution network, but you aren’t big enough for the next-size-up distributor. You need more staff, but you aren’t yet big enough to make the new hires you need. You need to either stay the same size (it’s hard to resist the temptation to grow) or you need to jump to the next level all in one go, where you are able to hire new people and get new distribution that allows you to compete at the next level. Being bought-out by a well-resourced, larger company can help you do this.

But the big issue is that wine is incredibly hard to scale. It’s because wine quality is rather annoyingly pegged to grape quality, and great vineyards are rare. There are plenty of ordinary vineyards, but then you’ll lose your distinctiveness if you end up getting grapes from these. And it’s expensive to farm well. Accountants would rather you purchased from growers who might not be as strict with yields as you’d like – and whatever some American authors say, there definitely is a relationship between yield and quality in many wine regions, albeit not a linear one, and quite a complicated one.

Let’s put this into more practical terms. Imagine you have started out a small label in South Africa based on purchasing grapes from well-regarded vineyards. Your label grows, and you are working hard to have relationships with the farmers who have the right sort of vineyards. How much can you scale this up and still make fine wine? Only as far as the pool of grapes of this sort of quality is able to stretch. You sell your brand to a bigger company, and suddenly they spread the net beyond the sort of growers who you have been dealing with to less conscientious ones. There goes the quality. It might not tank, but it may well decline.

Let’s turn this around a bit. What about someone with lots of money who wants to make fine wine, but in decent quantities. This could be possible: hire very good people and pay them top salaries, then go and buy some vineyard sources from growers who will sell if the price is right. Rather than the fruit from these vineyards being parcellated out to multiple small labels, you get it all, and you can make quite a lot of fine wine, because you have good vineyards and then good grapes.

Or consider a small, multigenerational winery in the Adelaide Hills, making wine from their own vineyards. They get bought by a big company who also has lots of vineyards in the Adelaide Hills, and suddenly production is trebled, then quadrupled, but with the extra grapes coming in of lower quality than those from the estate vineyards. The well-known name is used by the big company as a prestige brand. How long does it take for the market to realise that quality isn’t the same?

Fine wine can be made at scale if appropriate vineyard sources exist at scale.

There are examples of fine wine being made at scale. In the Médoc, many of the classed growth Château have significant vineyard holdings of 80-100 hectares. Not all of this goes into the grand vin, but a good proportion does. Cleverly, the biggest production of these Château is their grand vin. In many new world countries, the pyramid of production has the cheapest wines at the base in larger volumes, with the top wine at the top in much smaller volumes. In Bordeaux, this pyramid is inverted, with consequent economic benefit.

In Champagne, many of the prestige cuvées are made in significant volumes by large houses. The best example of this is Dom Pérignon, a wine whose production quantities are not made public but which are estimated to be in the range of 6 million bottles annually. And many of the base wines for some fancy ‘fine’ Champagnes are bought from the largest cooperative in the region. This isn’t how we normally think of fine wine, but Champagne is a bit different.

For Vintage Port, what people think of as fine wines are those made by the big Anglo-Portuguese houses, and these days they are owned by one of two parent companies. The Symington’s have Dow, Warre, Cockburn, Graham, Vesuvio and the Fladgate partnership have Taylor, Fonseca and Croft. The smaller houses make great wines but they rarely get a seat at the table.

And finally, there are examples of big companies who make large volumes of more commercial wines, but then turn their hand to making smaller volumes of fancy stuff and doing it quite well. Look at Torres in Spain, Trapiche in Argentina, Jackson Family Wines in California (and Oregon and France) and Sogrape in Portugal. There are many more. They understand that the pricier fine wines they make can’t be scaled up past the vineyard sources of appropriate quality.

The wine ecosystem needs larger wineries, and the wine world needs good cheap wine. It benefits everyone in a particular country or region if the large wineries are performing well, because this is how most people will first encounter the wines of that country or region. I am very happy when I try a wine from a big winery, made in huge quantities, that tastes good. But for fine wines – wines you want to talk about – you are probably going to have to go to a smaller winery, and sometimes a very small winery. Size-ism in wine is often justified. Not always, but often.

• Jamie Goode is a London-based wine writer, lecturer, wine judge and book author. With a PhD in plant biology, he worked as a science editor, before starting wineanorak.com, one of the world’s most popular wine websites.