Wines & Vines

September 2011 Winery & Vineyard Economics Issue

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WINEMAKING Maybe most important, brewing has a dramatically shorter turnaround time. Beers and ales go from mash to bottle in a matter of weeks, not the months or fre- quently years required before wine goes to market. This shorter cycle means that breweries use their equipment, their major capital investment, over and over, 20 or 50 times a year, while wineries use their heavy equipment only once. Brewers are reminded over and over again of how they could save time and labor and variability with an equipment upgrade; wineries can have trouble throwing cash at machinery that sits idle 11 months per year. Still trying to understand the gap, I called Dr. Roger Boulton at UC Davis, who among other things has been deeply involved in the design of the school's new winery, a facility that deserves the over- used term "state of the art." The Davis winery has 10 times the technological so- phistication of comparably sized commer- cial operations. And besides confirming my general impression that advanced technol- ogy has penetrated further into brewing than winemaking, he sent me off to study up on the Rogers Adoption Curve. In an influential 1995 work on the dif- An opportunity for Tasting Room Suppliers fusion of innovation, Iowa State Univer- sity professor Everett Rogers argued that adoption of new products, methods and technologies follows a standard bell curve distribution: 16% early adopters, including 2.5% of innovators; 34% each in the early majority and the late majority, followed by a final 16% of laggards. The curve helps describe everything from the iPad craze to the rise of Korean barbecue, and Boulton puts the U.S. wine industry squarely in the laggard camp, while breweries—even small ones—are more likely somewhere on the left side of the curve. Boulton also offered two interesting speculations on why this might be. First, in the California and U.S. wine industries, a handful of large companies control the mass market and are able to increase rev- enues simply by increasing volume—more of the same, not wine of greater value. In- creasingly, the biggest operations get their wine someplace else, imported in bulk or bottle, rather than finding ways to im- prove and increase domestic production. The incentive for innovation is therefore weak, a situation Boulton contrasts with the technology dynamics of a number of emerging, export-oriented national wine industries. A new eNewsletter from Wines & Vines: Tasting Room Focus Distribution also matters. Wine sales primarily lumber through the three-tier system so that wineries are often several layers away from consumer reactions to their wines. The big beer companies gener- ally control their own distribution, which is enormously profitable but also keeps them closer to what beer drinkers think, and the smaller, craft-brewing enterprises generally have plenty of face time with cus- tomers in their taprooms. If a beer comes out oxidized, the brewer hears about it; if a bottle of wine gets oxidized, feedback usually stops at the wine shop. What goes into the decision of a particu- Sell to your target audience Contact us for more details (866) 453-9701 • winesandvines.com lar winery regarding a particular piece of technology is a complex stew indeed, and for smaller wineries, sheer cost is always a key factor. But for the wine industry as a whole, lagging behind other beverage sec- tors in technical innovation could end up being costly indeed. Tim Patterson is the author of Home Wine- making for Dummies. He writes about wine and makes his own in Berkeley, Calif. Years of expe- rience as a journalist, combined with a contrar- ian streak, make him interested in getting to the bottom of wine stories, casting a critical eye on conventional wisdom in the process. 54 Wines & Vines sePTeMBeR 201 1

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