Wine Trade

The different origins of wine in diverse countries have given rise to different structures of production. Large companies dominate in the newer wine producing countries, while small-scale producers are the norm in the more established regions. Essentially, the way wine industries organize themselves relates to the fact that grape growing-an agricultural activity-is often handled on a small scale, and wine productions capital-intensive manufacturing activity-is often more effectively handled on a large scale.

PRODUCING WINE
The business of grape growing comes in all shapes and sizes. In much of southern Europe, grape growers often own small plots of vines which they farm along with other crops. In Burgundy, French inheritance laws mean that holdings have become smaller and smaller. Growers who make their living from grapes may own a few rows of vines in one vineyard, a few more in a second one, an acre somewhere else and so on. In Alsace in the early 1990s, the average holding of grape growers was less than 2.5 acres (1 ha) each. In vineyards in Monterey, California, on the other hand, 8,650 acres (3,500 ha) may be planted in one site.

What options are available to such small-scale, and even moderately sized, producers? In many parts of the world, they can sell to large wine production companies-this happens in much of northern Europe and the newer wine-producing countries.

Another alternative, found in southern Europe particularly, is the local cooperative, owned by many local growers. It makes wine using all of their grapes, often at different quality levels.

Traditionally, the wine from co-ops was often of poor quality. Now some cooperatives-such as "La Chablisienne" in Chablis-are actively pursuing quality and their wines can be both good and reasonably priced.

In some parts of the world a system of negociants, or brokers, evolved. They bought the grapes or wine of small producers, and then made larger scale blends under their own label. Often the resources to market the wines further afield than a small producer could. This system became particularly strong in Burgundy, where committed negociants could make some of the greatest wines, while those with less integrity got away with some of the most execrable. In time, these producers often bought land and grew grapes themselves.

The committed grape grower, who has enough land or who has little but high-quality terrain, can make wine either by making the capital investment to build their own winery, by using someone else's facilities or by paying a local winery to make the wine for them. The last two options save the expense of equipping a winery, but still allow a degree of control over how the grapes are used.

The non-European wine-producing countries are dominated by large producers. In New Zealand, two companies-Montana and Corbans produce about 75 percent of all wine. In Australia, the top four companies-Southcorp, BRL Hardy, Orlando Wyndham and Simeon Wines -are responsible for about two-thirds of the grapes processed, and rather more of the wine sold. Meanwhile, the Gallo company in the United States makes more wine each year than the whole of Australia produces. Countries with a well-established wine industry-including South Africa and Chile as well as European nations-have large companies (Louis Vuitton Moet Hennessey in France is an example), but none dominate the market in the same way.

Even the large companies rarely grow all their own grapes. From major champagne houses like Moet et Chandon to top Australian producers like Orlando Wyndham, the majority of grapes is bought in from external growers. This minimizes the company's need for investment to be tied up in land, and allows flexibility from year to year-especially important given the vagaries of climate and the changing preferences of the market.