Why Drink Domestic
How the pandemic exposed our broken wine system — and the urgent need for change
February 24, 2021 — Before I spent a weekend shoveling cow shit with the folks at Johan Vineyards in Oregon, I used to think all good wine was French. Or at the very least European.
It was a wet October day and our hands were cold from stuffing bullhorns with local manure and burying them near the vines — part of a biodynamic farming practice called preparation 500. We stirred valerian root into a bucket of hose water, forming a vortex to “channel the cosmic forces,” the crew told me in jest — adding, “also to add oxygen.” Later this concentrated fertilizer would be sprinkled onto the compost heap with pine branches.
Until then, all the natural — sustainable, handmade, biodynamic, whatever-you-want-to-call-it — bottles I was drinking and reading about were coming from Europe, or even Australia.
It didn’t feel like American wine was even on the table.
But after my experience at Johan Vineyards, it dawned on me that the excitement and experimentation of the natural wine movement wasn’t some far away phenomenon. It was happening right here in my (proverbial) backyard.
Winemakers across the country (from the better known regions within California and New York to Vermont, Maryland, Maine, Texas, Washington and Utah) are making some of the most interesting and delicious wine out there — and they’re adopting the kinds of farming and business practices that rope wine into a much larger conversation about agriculture, climate change, inequity and inclusion.
So why aren’t we drinking more American wine?
Maybe it’s because wine from far away places still carries a certain mystique. Or maybe it’s a question of access: in America, are small-scale winemakers simply too hard to find?
Nearly every wine at the supermarket is owned by a handful of conglomerate companies like E&J Gallo — the folks behind Barefoot, Andre, and almost one hundred other wine and liquor brands. Even the shelves of most liquor stores are lined with carbon-copy California Chardonnays. You might find a good domestic bottle here and there, but it takes digging. And intention.
For a lot of us, local bars and restaurants were our most reliable source for craft domestic wines. Now we might not be drinking it at all.
When COVID-19 closed bars and restaurants last spring, off-premise wine soared 27.6% in the first two weeks of March. That was good news for the big guys, but detrimental to small producers who’ve long relied on these places, on top of tasting rooms and tourism, for the bulk of their business. Distributors were forced to cancel contracts overnight. Winemakers like Megan Bell of Margins in the Santa Cruz Mountains lost nearly all of her out-of-state wholesale orders. When we spoke in March, she’d switched over to a full-time e-commerce business — shifting away from the standard distribution model to direct-to-consumer sales through her own website.
For U.S. wineries, direct-to-consumer holds immense promise in the form of higher profit margins and richer customer relationships, but it’s hard work — and rarely is it financially viable for small producers who rely on distributors for exposure. Shipping can be prohibitively expensive. And some state laws restrict or complicate wineries from selling directly to consumers.
These are the kind of longstanding systemic issues exaggerated by COVID-19.
The pandemic didn’t upend or change the wine economy so much as it revealed its existing fragility.
Most of these fundamental issues can be traced back to American wine’s three-tier system, which places state distributors as the mandatory middlemen between producers and retailers. Built after Prohibition, the three-tier system handed legal authority to individual states, along with a way to control — and profit from — the sale of alcohol. The logic was that multiple tiers, and the resulting markups, would help curb alcohol consumption in the form of higher prices. At the same time, it provided maximum taxation potential for state governments — why tax once when you can tax three times?
But what made sense in 1933, makes little sense today.
A vestige of this century-old legislation, distributors are the modern-day “rum runners” — supported by an outdated system that makes direct-to-consumer sales extremely challenging. Small-scale winemakers have come to view distribution as a double-edged sword: they rely on distributors to get the word out and to gain access to a variety of markets across the country, but the significant profit cuts can often make it economically unviable.
“Our current system makes it extremely difficult to navigate and be successful as a small brand,” says Jack Tregenza, direct-to-consumer manager and cellarmaster at Johan Vineyards — even in a pre-pandemic world. “It’s extraordinarily complicated and expensive for a small producer to compete or even participate in selling their wine across the United States. You have to be at a certain scale to get on the shelves, and that requires a certain level of investment and capital.”
Big distributors favor big wineries that have the kind of consistency and case counts that appeal to big retailers. E&J Gallo produces 83 million cases of wine per year. Johan makes roughly 3,000. That’s like fighting Goliath with a butter knife.
With the rise of big box liquor stores and consolidated distribution companies, it’s getting even worse. When there’s thousands of wineries in a single distributor’s portfolio, how can a small producer like Johan possibly expect to stand out?
“As a producer we’d much prefer to sell directly to consumers,” said Tregenza. “When wineries are selling to a wholesaler we’re selling at FOB or ‘freight on board’ — a fancy word for what the distributor pays the producer before adding their own markups to sell to retailers and restaurants — “which is well below the wholesale price and as low as 50% of retail.”
Translation: if a bottle sells for $40 on the shelf, the producer probably sold it to their distributor for $15-$20, if not less. The distributor then adds 35-50% when they sell it to a retailer, and the retailer adds an additional markup so they can make a profit, too. This means that a big part of the consumer dollar isn’t making it back into the producer’s pocket.
Large-scale wineries are able to lower their shipping and production costs by purchasing their own wholesale licenses, glass factories, and massive nationwide warehouses. And they’re usually picking grapes by machine. Small producers who pick by hand or purchase premium fruit face a much higher cost-of-goods, lowering their margins even further.
As Tregenza puts it: “There’s not much of an American dream in wine.” But he’s optimistic. With the right change, he says, there could be. He sites the role of social media in “democratizing” the wine industry — opening the door for smaller producers to gain exposure and have agency in their own marketing and customer outreach.
The way forward? Buy direct.
Purchasing from winemakers directly, either through their websites or through online marketplaces that empower direct sales, is the best way to meaningfully support small producers — giving them the financial flexibility to invest in the things that will move the industry forward. Take Johan, which plans to invest in a flock of sheep as part of a regenerative farming system that builds soil fertility and sequesters atmospheric CO2. Or Margins, which is helping transition vineyards from conventional to organic or biodynamic farming practices. Or Erik Longabardi of Floral Terranes, who is working to preserve the cultural and agricultural history of Long Island.
The direct-to-consumer model also gives producers the elbow room to buy more expensive fruit from farmers using better and more equitable labor practices, or to adopt changes in their own vineyards that address some of the prevailing systemic labor issues in wine.
The industry has a long way to go in this regard, but we do see the pot simmering in small, but important changes — like Adelsheim in the Willamette Valley who partners with ¡Salud!, an Oregon-based company that offers migrant workers and their families access to essential healthcare, including mobile dental trucks and wellness clinics that deliver care on site.
Meredith Bell and Luke Wylde of Statera, also in the Willamette Valley, choose fruit contracts based on vineyard managers’ ability to prove they’re paying livable wages to their laborers. If a vineyard can’t answer their questions about their labor practices, they cut the cord.
Systemic change will ultimately come from larger vineyards and conglomerate companies jumping on board. But small-scale efforts like these are breeding industry-wide awareness and hopefully paving the way for bigger brands to follow suit.
Investing in these efforts as consumers, if we can afford to, means playing a role in changing the American landscape in a literal, tangible way. The closer we get to knowing our winemakers, the more we feel like active participants in the product. We become part of what we’re drinking.
“The more we can buy wine in relationship with our community where the most resources stay in our community, the better,” says Molly Madden, a regenerative economist who built a cooperative wine supply chain model through RedHen Collective. “The wine itself is not the only thing we should be thinking about. We should be paying attention to the entire system of interactions.”
It matters where we buy our wine, how many and whose hands touch it and benefit from it along the way. And how far it travels.
Depending on where you live, domestic wine probably carries a lower carbon footprint. California wine might travel just as far to New York as wine imported from Europe — but what about Wild Arc Farm in the Hudson Valley? Or Liten Buffel in Buffalo? Even Oyster River in Maine or Old Westminster in Maryland? What if we treated wine with the same fervor we do local beer, meat, and produce? Not “local” per se, but regional at least.
It means investing in people and their stories. Cultivating one-on-one relationships. Asking questions, opening conversations, and becoming informed consumers who understand the nuances and complexities of what it takes to produce a bottle of wine, as well as the systems that bring it to us.
“Let your relationship be your guide through this stuff – who do you love and care about? Check in on them,” says Madden. “We have an internal compass of where we want to invest our money and where we would suffer the greatest if they were gone. That is where we have the most power as consumers.”
We can keep our favorite people afloat now. And after the pandemic subsides, we can connect with our wine producers on an even deeper level. Visit the vineyards that we helped support. Shovel cow poop with them, maybe. And proudly serve their wine at our next dinner party — talking as fervently about the wine we’re drinking as the parsnips on the table grown by a local farm.
Katy Severson is a writer and chef who covers sustainable agriculture. regenerative foodways and climate change.
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