The Tacoma Sun

LIGHT FOR ALL
 

MADE IN TACOMA: Michael Veseth, The Wine Economist

By Morgan Alexander

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Celebrating people, products, and businesses that make Tacoma unique.

 

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Recently, I came across a website that caught my attention because it touched on two favorite obsessions of mine: wine and Tacoma. The Wine Economist is a book in the works website by Michael Veseth, Professor of International Political Economy at UPS. Why would an Economics Professor at a small local private college be writing about wine, something near and dear to my heart? Intrigued, I had to learn more.

Sun: Please give us a little background on yourself.

Veseth: I’m a native Tacoman – high school at Lincoln and college at UPS, where I teach today.  I’ve studied, taught, lectured, lived and traveled across the U.S. and around the world, but I always come back to Tacoma.  It’s home.

I love teaching at the University of Puget Sound because the students are great and my colleagues are supportive. UPS is a place that has changed with the times (it was CPS when I was growing up here) but has always somehow managed to be just what students need at each particular moment. I like the University’s ability to adapt and grow combined with its steadfast commitment to achievement, intellectual integrity and the development of students as complete human beings.  I see my work with students at UPS as a way to continue the tradition of the great high school and college teachers who helped me so much.

Sun: I love the topic of the new book. It could have been coffee, cheese… or hamburgers, why did you choose wine?

Veseth: You are exactly right. Globalization and global market forces are all around us and all we really have to do is to look closely at our own lives to learn something about how the personal and local connects us to grand global forces.  I could write about almost anything and it would teach me something about globalization and the global/local connection.  In fact I have written about hamburgers and coffee, basketball and soccer, and the used clothes that you give to Goodwill and found something interesting and unique in each case.

I’m writing about wine now for a number of reasons.  First, a lot of people are interested in wine and so I can reach them and maybe teach them better through wine than I could writing about global interest rate spreads and covered interest arbitrage.  More importantly, a close examination of the wine market reveals a number of contradictory stories and I am deeply interested in trying to reconcile simplified dominant narratives of globalization (such as the McDonaldization theory) with the complex reality I find all around me. 

You have only to spend a few minutes in the wine aisle of your local supermarket to appreciate some of globalization’s effects.  The wine department at Tacoma Boys on 6th Avenue has more than 3000 different wines from about 30 different countries. Washington wines, however, are the largest single group on the shelves; global choice hasn’t crowded out local producers so much as it has created a larger market for their products.  The variety and diversity of choice is amazing and the questions that are raised – who produced these wines, how, and how did they get here – are endless.  Globalization is there in your wineglass, I like to say.  Drink up!

I can’t deny that I find wine research pleasant, too, especially since so many of my former students are active in the wine industry in one way or another.  My wine research has given me the opportunity to reconnect with former students and to change places with them.  Now they are teaching me about their particular businesses just as I once taught them as students.  Who wouldn’t enjoy an opportunity like that?

Sun: What are some opportunities, and challenges, you see around the corner for our homegrown wine industry?

Veseth: I write about Washington wine frequently on my blog The Wine Economist (wineeconomist.wordpress.com) and in fact I’m helping to organize an international conference of wine economists that will be meeting in Portland in August to discuss the Pacific Northwest industry among other things. 

The Washington wine industry is in extremely good position for the opportunities that lie ahead.  The dominant winemaker, Chateau Ste. Michelle, has achieved national and even international distribution and its success has uncorked opportunities for Washington wine in general.  Washington is one of only two important wine regions that I can think of (New Zealand is the other) that does not compete in the low cost commodity wine market (Two Buck Chuck drinkers, you know what I mean).  Most wine regions sell both commodity and quality wine.  Washington has benefited from a strong focus on premium and super-premium wine at a time when these are the fastest growing global market sectors.

That said, I think Washington wines still have trouble breaking into new markets because of a lack of a distinct regional identity.  What does it mean to be a Washington wine?  This is a liability as the wine shelves of the world become even more crowded and consumers search for a reason to buy one bottle instead of another.  The Washington “brand” needs strengthening.

Sun: Wow! I had no idea there was even a title of wine economist! Do you have any idea how many there are in the world?

Veseth: The American Association of Wine Economists has several hundred members, I understand, and there are a lot  more of us around the world.  I’m helping the association organize a conference in Portland in August and I guess they expect about 300 people to attend from the US, Europe and Australia and maybe other places too.  http://www.wine-economics.org/  The email list for conference announcements has about 4000 names, I’m told, but I think that includes both academic and industry people and perhaps food economists, too.  So I don’t have a solid number for  you, but it is a surprisingly large group given the narrow (but deeply interesting) topic.   Wine economics is very important.  The famous Master of Wine examination is 1/3 about the economics of wine, 1/3 about its history and geography and 1/3 about sensory analysis of wine.

Sun: I’m a budding winemaker with dreams of starting my own wine empire. I read that the number of Washington wineries has increased 400% over the past 10 years. Meanwhile, wine consumption is only growing at something like 4%. What do you think of this? Should I quit now while I’m ahead?

Veseth: It depends on what you hope to achieve.  I have written that consolidation in the wine market seems to be producing a “missing middle” effect.  Big winemakers are successful because of economies of scale in marketing branded goods and in distribution. 

Small winemakers (one or two thousand cases) can still be quite successful if their wines are good because they can internalize labor costs (friends and family) and handle distribution personally through direct “cellar door” sales.  This business model keeps out of pocket costs low and allows a higher yield on sales.  Higher wine volumes (middle-sized wineries) mean substantial labor costs and the necessity to accept bigger discounts to get your wines into the distributor system.  This makes it problematic to make the middle work.  It can work, but it’s a different business model.

There are good opportunities for small scale wineries, especially if you take the time to get training on the business side as well as in winemaking.  The community college in Walla Walla offers good one-day seminars to help you understand the economics of your operations and how to meet the many regulatory requirements on production and sales, especially inter-state sales. 

The Carlton Winemakers Studio in Carlton, Oregon is an interesting experiment in filling the missing middle of the wine market.  It is something like a wine cooperative where several smaller winemakers share facilities and start up or grow bigger without taking huge risks.  I am cautiously optimistic that it is a model that can be reproduced elsewhere.  Maybe you should be thinking about a wine cooperative in Tacoma rather than going it alone?

There are a several boutique wineries in the South Sound area – more than most people imagine.  They are invisible to us for the most part because of the very local and personal nature of their production and distribution. You have to seek them out because they don’t have tasting rooms with parking for tour buses and they don’t necessarily appear on the published wine maps.  But they are there.   If you want to see “cottage industries” like these you have to look very closely around you and train your eyes to see what you don’t expect rather than what you know you’ll find. This is harder than it sounds, but it pays off.

Sun: In you’re previous book, Globaloney, you explored myths about globalization and that “all globalization is local”. Should Tacoma get out of the Port business and into something else? Are we putting all our eggs in one basket?

Veseth: International trade created Tacoma and sustains it today, so I am a big fan of the Port of Tacoma. I edited a book for the New York Times a few years ago as part of their “Twentieth Century in Review” series.  They gave me 100 years of everything published in the New York Times  - news stories, photographs, editorials, book reviews, obituaries, the works.  My challenge was to tell the story of the rise and fall and rise again of the global economy through, as it turned out, more than 400 articles and about 150 images.  When I went looking for stories about globalization in the pre-World War I era I was not surprised to find Tacoma in the center of it.  The most important stories about trade with Japan and China were published with a Tacoma, Washington dateline.  Interestingly, these stories reflected the same combination of optimism and anxiety that we find in discussion of international trade today.

Sun: What do you love about Tacoma?

Veseth: I love the neighbors and the neighborhoods.  I grew up in the South End and I loved the sense of community I found there.  I go back to the Lincoln International District a lot and I take out-of-town students there so that they can get a feel for how diverse Tacoma really is.  I live near UPS now because I like being able to see my students, former students and co-workers every day on the street, in the shops and at the library.

And I like being less than an hour away from Seattle, the mountains or Hood Canal.  Tacoma’s the center of the world… my world, anyway.

published February 20th, 2008

2 responses so far ↓

  • 1 Erik B. // Feb 20, 2008 at 10:58 am

    Wine is a good topic for the Sun. There has been increasing talks of more urban wineries.

  • 2 Andrew // Feb 20, 2008 at 4:35 pm

    Where do I buy his book?

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