Bulk wine, the Appellation system - and how China is changing the game

Aldi Sancerre

Can you remember who made the last Chablis, Sancerre, Côtes du Rhône or Chianti you drank outside your home? As a reader of this post - and thus someone with at least a passing interest in wine - maybe you can, but I'll bet most ordinary consumers would have a hard time naming any producers of these wines. If one were to ask the same question about Rioja, they might recall Campo Viejo, Faustino and possibly Murrieta or Riscal, but that would be all. And how many Pinot Grigio or Prosecco brands does anyone know?

If, after a fairly lengthy acquaintanceship with Europe's appellations, we sophisticated westerners have little or no loyalty or relationship with the people who make the regionally-designated wines we drink, what of the Chinese? I'm just back from a trip to see current and prospective consultancy clients in China and was struck by the pride they took in their brand books. Retail chains with hundreds of stores have registered long lists of Chinese names for western wines. "Look here" one Chinese company owner said, "we have Michelangelo, Napoleon, Prado..." (Actually, these weren't the brands he'd registered - I'm not at liberty to reveal those - but you get the idea.) As the owner of the Michelangelo brand, he can go out to buy Chianti, Barolo or Montepulciano d'Abruzzo on the bulk market and sell it under that name. Prado will do for Rioja or any other Spanish wine style, while Napoleon can cover France.

Shoppers in a Beijing wine shop - from Daily Mail

This isn't a Chinese phenomenon, of course. In the US, big retailers like Trader Joe's and Total Wines & More are well known for their "private label" wines; indeed the former chain's Charles Shaw, aka "Two Buck Chuck" is one of the most famous wine brands in the US, if not the world. Aldi and Lidl, the two fastest-growing major retailers on planet earth boast shelves packed with attractively packaged 'brands' you'll never find outside their stores. And then of course there are Tesco efforts like Ogio and Dino, two of the only Pinot Grigios any British wine drinker is likely to know. All of these have one thing in common: they don't look like retailer-brands such as Tesco's Finest (currently Britain's biggest brand in its own right), they look like 'real' brands.

So why does global retailers' embracing of their own brands matter? Well, for many people, of course, it won't. Lots of consumers will happily get lots more reliable wine that they'll be perfectly happy with, and lots of big commercial wineries will be increasingly able to find homes for the contents of their tanks. For the romantic chatterati who like to imagine a utopian future where small is beautiful and everyone does all their shopping at farmer's markets, and for smaller producers looking for routes to market it's a disaster, of course. Every inch of shelf space that's occupied by MadeUpName Chianti or Rioja is an inch that's unavailable to a bottle from a real, identifiable winery.

But the trend is also bad news for the bigger brands, whose only chance of getting into the major stores is on the back of ever-increasing marketing "contributions". (A usage previously more usually associated with Mafia thugs requesting payment for 'protection' against their colleagues). And it's bad news for the appellations. After all, once the retailer has persuaded its customers to trust Michelangelo or Ogio, it is not difficult to change the regional origin of the contents of the bottles. This, after all is a path that is already well worn by 'proper' brands like the proudly 'Californian' Mark West whose Pinot Noir has unashamedly - and almost indistinguishably - been sourced from both the west coast state - and Languedoc Roussillon.

What fascinates me is the way that, over half a century after British, Dutch and Belgian claret drinkers became used to getting chateau-bottled rather than locally-bottled Bordeaux, bulk wine sales and shipment are doing better than ever. Over half of all New World wine is now shipped in bulk and there is a busy trade in bulk sales of such popular and premium-priced French wines as Chateauneuf du Pape. While most wine professionals compare the merits of Prowein, Vinexpo and the London Wine Fair, the trade show that's quietly gaining the most traction is arguably Amsterdam's annual Bulk Wine Fair in November.

Wine on wheels - from Decanter

The essential trouble with the bulk market is of course its absolute lack of long-term fidelity. The bottle of Ogio Pinot Grigio or Aldi Chablis you buy today might contain wine that was produced by quite different people from the one you picked up a few months ago. All that's required is for the liquid to fit the criteria set by the retailer, be available in the right volumes and at the right prices.

The lesson for wine producers everywhere is simple: you're no longer competing with the winery down the road; you're up against any business that can fill a retailer's bottles. If you don't make your brand a lot stronger than the region or category, you may be riding for a very big fall.