Zero-Sum Wine Game Strategies The Wine Economist
The last weeks Wine Economist column was a thought experiment. What if the Covid recession was a game-changer like the oil crisis of the 1970s? The two crises undermined fundamental economic assumptions and produced lasting effects. In particular, drawing on the work of MIT economist Lester Thurow, the oil crisis changed the nature of the […]

The last weeks Wine Economist column was a thought experiment. What if the Covid recession was a game-changer like the oil crisis of the 1970s? The two crises undermined fundamental economic assumptions and produced lasting effects. In particular, drawing on the work of MIT economist Lester Thurow, the oil crisis changed the nature of the game from positive-sum growth to zero-sum competition for slices of the pie.

Maybe the parallel is out of base and maybe the game hasn't really changed. But let's think about the future of the wine industry in the kind of slow growth, low inflation, high debt economic environment that many see on the horizon, with an emphasis on taking shares. market in a stagnant economy.

The zero-sum dilemma of wine

Zero-sum market environments are nothing new for wine. As this OIV graph of the volume of wine demand shows, the growth of the world wine market was once quite strong. Imagine a trend line for 2000-2007 and you will see what I mean.

Now draw a trend line for 2008-2019. It's pretty much a flat line, isn't it? The image improves if we look at value and not volume due to the trend towards premiumization, but the weight of stagnant volumes is still heavy.

The objective is therefore to gain market share or increase margins rather than take advantage of a growing global market, which creates winners and losers. New Zealand has been victorious for many years. Sales of Marlborough Sauvignon Blanc have increased year on year, a trend that has continued in the Covid crisis environment. Imports from other countries have struggled here in the US market, even the Italian powerhouse under pressure. But the wave of Kiwi wine continues.

Trading spaces: activated and deactivated

Perhaps the most obvious example of Covid's zero-sum impact on the wine market is the shift from on-site to off-site sales. Bars and restaurants have suffered both from government restrictions on opening and also because concerned shoppers have generally avoided crowded places even when not officially restricted. The consumption of wine as a whole has not changed much, but the place of consumption and the places of purchase of products have changed considerably.

The shift to off-site consumption has many impacts, especially for wineries who have worked very hard to get products on restaurant wine lists and for emerging brands that are using on-site sales to gain a foothold. the door. Shifting sales from your restaurants to stores and supermarkets isn't as easy as flipping a switch. Supermarkets in particular favor big brands and large product lines and there is some evidence that consumption patterns have shifted in this direction as well.

A significant impact of this change, as I explained in a Wine Economist column for April 2020, it's consolidation throughout the supply chain. Consolidation is a trend that goes far beyond the wine sector, of course. In an increasingly zero-sum market environment, large companies want to get even bigger both to reduce competition that compromises margins and also to be able to negotiate better terms and reduce costs. It's not exactly wine-opoly - more vin0-ligopoly (insider joke for economics majors who remember the difference between monopoly and oligopoly, which is the competition between a few big players).

Wine wars / Price wars

The Econ 101 teaches us that one way companies try to gain an advantage in a zero-sum gaming scenario is by cutting prices. This can quickly escalate into a price war, of course, which is the ultimate negative-sum game for sellers (and a boon for consumers), especially if aggregate demand is price inelastic.

Are we witnessing price wars on the wine aisle? As I explained in a May 2020 Wine Economist column, wine prices can go down and up at the same time, making it difficult to detect the net effects. If you're like me, your email inbox or Facebook feed usually has at least one vineyard or wine club discount offer - sometimes at insanely low prices.

If one takes a close look at the offsite data, it appears that the price overvaluation is continuing. Sales of wines over $ 25 jumped at the start of the pandemic, for example. But, as I noted in May, these high-priced sales are replacing, at least in part, even more expensive on-site purchases. These consumers were in fact on the decline as they moved from restaurant meals and wine to home consumption. This is not a price war as it is cross-channel consumer behavior, but it will have that impression for wineries that cannot easily move sales from on-site to off-site markets. .

Game changers

Winning is not easy if you think of the market in zero-sum terms (although not everyone agrees on this - President Trump has proclaimed that trade wars are easy to win). While there are many different strategies to consider, three stand out in my mind.

The first strategy is to analyze changes in market conditions and focus tightly on growth segments. There is no single wine market, so a stagnant environment can be a bit like a duck on a lake - calm on the surface, but turbulent below. I wrote on Precept Wine in 2019, for example, highlighting their “Willie Sutton” strategy of putting resources into growth segments.

The second is simple: accept that the game is zero sum and play hard to win on those terms. This means being very aggressive in terms of cost and pricing and making sure you are on the winning side when the consolidation takes place. Being tall doesn't guarantee success (small can be good looking in a profitable niche), but there is no great benefit to being of average height.

The final strategy is to try and change the game. If the wine versus wine is zero sum, try moving the game to a game with better odds. Don't sell wine, sell a lifestyle. Don't sell wine, don't sell community, cultural, celebrity, or culinary connections. Ship the wine, sell the dream. Tie your wine to a horse who can transport it to new market niches. Product differentiation - that's what it is.

What's new on this? Nothing. The most popular wine magazines, for example, have long presented food, travel, and lifestyle as hooks for their wine stories.

In fact, using product differentiation to create and protect a profitable market niche is the standard theory of “monopolistic competition”. But now may be the time to think about what sets your wine offering apart, and what you can do to protect yourself from zero-sum competition.


We would recommend either Wineworks Premium or Wineworks Superior as your first 30 Bottle Kit Wine. Both of these ranges are designed to produce a good quality wine that is ready to drink within 2-4 weeks but will benefit if left up to 6-8 weeks. Furthermore, they also have a great selection of wines to choose from.

If you’ve never made wine before or you simply don’t have any of the equipment or ingredients any longer then you could purchase one of our bundles. These bundles combine all the required equipment along with your prefered wine pack so that you can have everything delivered to your door and just get started. The Wineworks Superior Starter Bundles are a great choice if you want to keep the equipment budget down but still choose the quality of wine you’d like to go for. Whereas, the Wineworks Luxury Starter Bundles offer a better quality equipment pack and still let you choose from a great choice of wine packs.

The two most important critères of making wine are Cleanliness and Temperature. Firstly remember everything that comes into contact with the wine should be cleaned and sterilised ( see below ). Secondly maintain a constant temperature between 21-26°C ( 69-79°F ). It is much better to be on the cool side and constant than hot one minute and cold the next. Airing cupboards are definitely no, no’s. ( See below )

Clean and sterilise all equipment. Here’s a selection of Sterilisers you can use and if you not quite sure which steriliser to go for then you can take a look at our Beginners Wine Making Part 1 - Cleaning, Sterlising

Wineworks Superior wines : These usually take 10-15 days to ferment, and a further week to clear. Again the wine can be drunk immediately but we recommend ageing it 4 weeks but you can leave it up to 12 months. The time you will leave it will depend very much on your stocks. So get plenty built up. The reds benefit more than the whites with ageing. Certain packs ( see the list below ) are suited more to the experienced wine maker and take around 4 weeks to ferment and then left for a further 2 weeks. These products does really benefit from ageing. All the packs we list in this section require little ageing.

As it’s new to you it will probably take in all 2 hours for your first batch. However, once you are used to it 1 hour is about the maximum amount of time needed. We would also point out bar the bottling side; it takes just as long to make 6 bottles as it does to make 30 bottles, so we strongly recommend you make the larger quantity. After all 6 bottles doesn’t go very far as we said before !

From our experience it is much better to maintain a constant temperature than a fluctuating one. We suggest 21-26°C ( 69-79°F ), although if it is cooler than this, it is not a problem, it just takes slightly longer to ferment. If you can’t maintain this then we supply three different forms of heating equipment : Brew Belt / Heat BeltThis is a simple insulated electric cable that wraps round your conteneur and provides a gentle heat. It is very souple and extremely easy to use. Heat Tray ( 4 demi/5 Gallon Fermenter ) This is like a flat tray that provides a gentle continuous heat that goes under the fermenter. Immersion HeaterThis drops into the container, through the bung and can be thermostatically controlled to maintain the juste temperature. Similar to a fish tank heater. All these can be added to our starter coffret packages. See our video showing the variétés of heating equipment available for your fermentation.

It is important to clean

If you’ve made it this far, hopefully understanding a bit of what we’ve said, then you’ll want to know how much it will cost to get started ! As you may have noticed, we’ve put together a couple of equipment packs which include everything you need, and take the confusion out of buying. You can make your first 30 bottles of Wine for approximately £65. 00. That’s all in ( Equipment

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