(Manfred Klimek / using a source from drinksbusiness.com / animated pic: runwayml)
The wine world loves simple explanations. It is no different from many other industries in that respect. For years, direct sales were one of those simple explanations and solutions. Too many winemakers sell directly, it was said. The trade would be hollowed out, the market damaged. A neat narrative – and above all, a convenient one. Yet this narrative also gave rise to consumer-oriented sales hotspots such as Wein&Co in Austria.
But the narrative now has a problem. And the US author Alfonso Cevola describes this problem precisely – from a US perspective, where the wine trade is already experiencing massive change. The problem does not lie outside the system, but within it: in distribution itself. In the way wine is sold today – or, rather, no longer sold.
A system tips
The key term is Pay for Performance. What sounds harmless, however, marks a profound break with the previous logic of the wine trade. In the past, the merchant was an intermediary. Today, they are a fulfiller of targets. In the traditional commission system, Cevola says, every wine was worth selling. Even the little Barolo without a marketing budget. Even the idiosyncratic Etna Rosso that needs a story (and has one). Whoever could sell it earned money from it. So it was explained, people were convinced – and it was sold.
With “Pay for Performance”, this has shifted. Today, what is primarily sold is what targets have been set for. And those targets arise where money has been put behind them. Large producers buy their way into visibility. Small producers cannot do so. Cevola describes the consequence as follows: “A wine without a budget became invisible in the US – not because nobody wanted it, but because it was economically irrational to sell it.”
In the US, this development now appears to be well advanced.
The illusion of diversity
From the outside, the market still appears intact. The shelves are full, the wine lists written, the systems working. Yet beneath the surface, something has changed. The range is shrinking – not in breadth, but in depth. Diversity still exists, but it is no longer actively sold. It is present, but no longer effective. The merchant no longer sells what they know or find exciting, but what they are paid to sell. Only in the high-end market, where merchants have to endure long periods of building trust, does Pay per Performance appear unable to take hold.
The loss of knowledge
The change affects not only products, but also people. Anyone entering sales today earns too little to live on in many markets. Bonuses are uncertain, often dependent on management decisions. Many well-trained young professionals move into other industries. Cevola clearly describes what the industry is losing: “What was lost in the US was not just staff. It was knowledge.”
These are precisely the skills that supported the wine trade for decades: the ability to explain provenance, place difficult-seeming wines, and build trust. These skills cannot be replaced by targets.
Too large, too narrow, too little room for manoeuvre
At the same time, the large distributors continue to grow – at least formally. In reality, however, their ability to represent diversity is shrinking. The larger the portfolio, the stronger the distortion caused by the system. Prioritisation becomes unavoidable. And under the current conditions, it is not determined by quality, but by budget. The result is a market that appears stable on the outside, but is constricted within.
The wrong culprit
For a long time, direct sales were seen as the cause of this development. But current figures show that this channel is also weakening dramatically in the US. Both systems are coming under pressure at the same time. The real cause lies deeper. The market was not changed by too many direct sales. Rather, it was changed by a system that devalues diversity economically.
What remains
The consequences are tangible. Fewer discoveries. More uniformity. A growing feeling that much of it is repetitive. Not because there is a lack of good wines. But because they are finding their way to customers less and less often.
And so, piece by piece, what has made the wine trade and buying wine interesting for around 30 years is being lost: diversity, curiosity, discovery. The only thing standing against this is the small, individual wine merchant. But economically, they do not have the potential to counter this with marketing. To escape this vicious circle? Perhaps the only thing that would help is an association of independent wine merchants.
But the emergence of such an association is unfortunately not to be expected, especially in Germany, where people understand stubborn individualism as individuality.