All things small and beautiful

There are about 27,000 professional wine producers with their own winery and label in France and many of them are small, family businesses with an average of 8ha of land.

24 May 2017
By Jonathan Hesford

Why is the wine world still able to support thousands of tiny producers when almost all other forms of food and drink production have become industrialised?

First of all, wine production is quite different from other types of farming. The desirability, and therefore price, of wine varies enormously between regional AOPs (Appellation d’Origine Protégée). 

The land designated for an AOP is limited geographically and the rights to plant vineyards within the AOPs are also controlled. This means that it is not simple for an estate to expand within an AOP.

Secondly, economies of scale which apply to other forms of farming, do not work in wine production.

Studies that have tried to measure the effect of economy of scale in wine show that it only applies for wine of low quality and price.

In the production of quality wine, the price of the bottle is far more important than any size factor. Therefore there is little incentive to increase in size and lots of incentive to increase desirability, and therefore price, of the estate’s wine.

Additionally, an increase in size doesn’t always lead to an increase in profitability.

To give an example, imagine an estate run by a couple.

The two of them can increase profitability by maximising their time, farming as many vineyards as possible. However, there comes a point when they need to hire a third person. That extra salary means the estate needs to be 50% bigger to produce the same profit level. Now they have 50% more wine to sell which they can only do by dropping the price or employing a salesman, which necessitates yet more growth.

So we can see that only certain sizes of wine estate work financially and often it is better to remain small and increase reputation in order to sell the wine at a higher price, than to make more.

As well as economic factors, there are problems with supply, quality control and consistency as a winery tries to expand.

It is not always easy to buy or plant another vineyard that will provide the same quality grapes.

This may be due to AOP restrictions or simply the availability of good sites.

Controlling the quality across a handful of vineyards and a small number of cuvées is a lot easier than trying to manage many vineyards and lots of different wines.

Every tank and barrel is slightly different, so unless a massive blending exercise takes place, consistency is harder to achieve across a million bottles than a thousand.

This means that it is very difficult to simply ramp up production of a particularly desirable wine. It’s just not like making soda, beer or gin.

Also consider that the two main types of large-scale production in France, the Cooperatives and the Négociant firms, have severe weaknesses in terms of controlling their supply compared to estate producers.

So what does this mean for the consumer?

If one is only looking to buy low to average quality wine at a low price, then a large producer should be able to offer better consistency and value for money.

However, once we are looking at more desirable wines, the advantages of the large producer tend to get overshadowed by those of the small. 

Small producers may have the advantage of owning the best vineyard sites, putting in extra “free” hours among the vines, having more flexibility to pick at perfect ripeness, to use hand-pickers and not be time-restricted on use of the press and other equipment.

The individual preferences and tastes of the owner-winemaker, the courage to experiment and simply having fewer hands stirring the broth, all enable the creation of more exciting wines.

Not all small producers are aiming to make great wines of course. Some are small because they can’t expand due to lack of demand for their wines. But it’s more likely to find interesting, unique and enjoyable wines from small, independent estates than from larger producers. 

In our world of globalisation and inequality, isn’t is also nicer to think that the profits are going towards supporting many independent families than into the accounts of investors?

Jonathan Hesford is the owner, vigneron and winemaker of Domaine Treloar in the Roussillon. www.domainetreloar.com

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