Monday, September 17, 2018

Co-ops, Part 2

Co-ops are organizations of farmers created for the purpose of defraying the costs of production for their members and fairly compensating those members for the fruit of their labors.  If that is our starting point then there ought to be a realization staring us in the face.  Co-ops have to compete with sizable other entities, either the largest of private estates or more likely, with the mass marketers we have written about over and over again here.  Business being business, arrangements have to be made to ensure the flow of product to consumers and co-ops seem to have figured it out. 

Having been employed by a grocery chain store, I know what kind of supply is expected by that retail model.  The shelves are expected to be kept full.  Grand deals are struck by the chain buyer and whoever the entity is that buys that shelf space.  It's all contingent upon a steady flow of product and if you can't guarantee that, you lose your slot.

So if a co-op, either domestic or imported, is playing at that level, it has to be sizable.  For our purposes today let's look at the imports.  In Europe 25% of all wine is co-op produced.  The governments of France, Spain, and Italy all support wine co-ops resulting in 30%-60% of those countries' wine industries being co-op driven.  In specific places within those countries the co-ops clearly rule: Languedoc @ 70%, Trentino @ 80%.  In Argentina and South Africa the largest wine companies are co-ops: KWV in South Africa and Fecovita in Argentina.

How did co-ops become so strong?  Begun in the mid-eighteenth century with the support of the Roman Catholic church who shared a kindred philosophy, co-ops gradually grew in  popularity.  Lobbying may have been mutual between government and the industry.  For government: the taxing agency's job is simplified; government can shape policies (green energy, etc.); and economies can be stabilized through co-op production.  For the co-op industry?  Public financing is everywhere across Europe.

In the last post we said how the maturation of wine tastes here in America and elsewhere had driven up quality standards and that the co-ops have had to adjust to keep pace with private industry.  As a result La Marca Prosecco is now the industry leader in that category and Nicolas Feuillate is certainly in the top tier from Champagne.  Both are co-op products.

Please join us this Thursday the 20th of September after 5pm when Morgan Miller presents the acclaimed wines of Casas del Bosque of Chile.  Most recently the Wall Street Journal has declared Bosque to be the top producer in its Budget Hall of Fame.   

No comments:

Post a Comment