Wine's Role in the Global Market
In this global marketplace, what path does our alcohol industry need to take in the future? How can we ensure all who want to enter the marketplace have a fair opportunity? Where does the wine begin & end?
I’ve been ill with COVID this week after a spate of international travel to some important wine events and regions in the world. In between sleep, this forced downtime has given me some pause to consider these larger issues that have been bubbling for some time.
The U.S. Treasury Department recently released recommendations for how federal agencies can help drive competition in markets by increasing enforcement, more closely scrutinizing mergers, and implementing new regulations to decrease the burden on smaller industry participants.
This is a controversial issue for sure but one which needs to be addressed. Consolidation is on the rise–50 largest wine companies (out of the 11,000 total) account for the vast majority of sales volume for domestic wines!
Treasury reviewed this consolidation trend, assessed current market structure and conditions of competition, as well as threats to competition and barriers to entry. Other important points:
Treasury composed a detailed picture of the current landscape for U.S. alcohol beverage distro and sales.
The report argues that reducing consolidation could increase competition, and benefit America’s consumers, workers, & small businesses– I call this “wine democracy!”
Vigilant antitrust enforcement can reduce impediments that make it difficult for smaller producers, distributors and retailers to compete with larger players in the industry.
Change needs to originate from the state level as the current three-tier system of sales and distro is regulated on state-by-state basis.
Competitiveness in Direct-to-Consumer sales & shipments has supported domestic producers by giving them a profitable path to market, rather than having to rely on wholesalers who can disregard the needs of small, artisan producers.
So what do you think? Do you feel smaller producers are being treated unfairly in our current 3 tier system? How can we move forward together to help increase wine democracy?