(Manfred Klimek / using a source from drinksbusiness.com / animated image: runwayml)
The wine world loves simple explanations. In this respect, it is no different from many other sectors. For years, direct sales were one of these simple explanations and solutions. Too many winemakers were selling their own wine, it was said. Retail was being undermined, the market damaged. A neat narrative – and, above all, a convenient one. However, this narrative also gave rise to consumer-oriented retail hotspots such as Wein&Co in Austria.
But the narrative now has a problem. And the American author Alfonso Cevola describes this problem precisely – from a US perspective, where the wine trade is already undergoing massive change. The problem lies not outside the system, but within it: in the distribution system itself. In the way wine is sold today – or, rather, is no longer sold.
A system is collapsing
The key term is ‘pay for performance’. Whilst this sounds innocuous, it marks a profound break with the previous logic of the wine trade. In the past, the retailer was an intermediary. Today, they are a fulfiller of targets. In the traditional commission-based system, according to Cevola, every wine was worth selling. Even the little-known Barolo with no marketing budget. Even the unconventional Etna Rosso, which needs a story (and has one). Whoever could sell it would earn a commission. So they would explain, persuade – and sell.
With ‘Pay for Performance’, this has shifted. Today, what is sold above all else is what targets have been set for. And these targets arise where money is at stake. Large producers buy their way into visibility. Small producers cannot do this. 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 trend now appears to be well advanced.
The illusion of diversity
From the outside, the market still appears intact. The shelves are stocked, the wine lists have been drawn up, the systems are 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 marketed. It is there, but no longer effective. Retailers no longer sell what they know or find exciting, but rather what they are paid to sell. Only in the high-end market, where retailers have to endure long periods of building trust, does ‘pay per performance’ seem unable to take hold.
The loss of knowledge
The change affects not only products, but also people. Anyone entering the sales sector today earns too little in many markets to make a living from it. Bonuses are uncertain, often dependent on management decisions. Many well-trained young professionals are moving into other sectors. 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 have underpinned the wine trade for decades: the ability to explain provenance, to place wines that seem difficult, and to build trust. These skills cannot be replaced by targets.
Too big, too narrow, too little scope
At the same time, the major distributors continue to grow – at least on paper. In reality, however, their ability to reflect diversity is shrinking. The larger the portfolio, the greater the distortion caused by the system. Prioritisation becomes inevitable. And under current conditions, it is determined not by quality, but by budget. The result is a market that appears stable on the surface, but is constricted at its core.
The wrong culprit
For a long time, direct sales were seen as the cause of this development. Yet current figures show that this channel, too, is weakening dramatically in the US. Both systems are coming under pressure at the same time. The real cause lies deeper. The market has not been transformed by too many direct sales, but by a system that devalues diversity in economic terms.
What remains
The consequences are palpable. Fewer discoveries. More uniformity. A growing sense that much is repeating itself. Not because there is a lack of good wines, but because they are finding their way to customers ever less frequently.
And so, bit by bit, what has made the wine trade and wine buying so interesting for around 30 years is being lost: diversity, curiosity, discovery. The only thing standing in the way of this now is the small, independent wine merchant. Yet they lack the economic clout to counter this trend through marketing. Breaking out of this vicious circle? Perhaps only an association of independent wine merchants could help.
Unfortunately, however, it is unlikely that such an association will emerge, particularly in Germany, where people tend to view going it alone as a sign of individuality.