Vision 2034: Long term thinking and unknown unknowns

Forecasting the future may be a useful exercise, but let’s not pretend any of us really knows what lies ahead for the wine industry in the very long term.

Donald Rumsfeld famously said in 2002: “There are known knowns; these are things we know that we know. There are known unknowns; that is to say, there are things that we now know we don’t know. But there are also unknown unknowns – these are things we do not know we don’t know.”

I always thought the criticism he received for this was more than a little unfair and that it represented a pretty concise summary of not only one of the major risks of going to war but also, more generally, of longer term planning. Nassim Taleb, in his book The Black Swan, noted subsequently that unknown unknowns are responsible for the greatest changes in our society.

This came to mind as I read the recent report from Prowein, The International Wine Industry: Global Experts’ Vision 2034. Carried out by Wine Intelligence, the UK-based research company, this report was based on the views of wine professionals around the world as to the likely state of play in the category in twenty years’ time.

What’s going to happen to supply?

I have to admit that I read it partly in the hope that there was some point on which I fundamentally disagreed which could then be the subject of a post. In this I was disappointed; the conclusions seemed very logical.

There were, however, some rather startling omissions, at least in the synopsis I read. There was no mention, for example, of whether the industry would consolidate or expand in terms of numbers of producers. There was no mention (linked to this) as to whether the co-op system would break down in France and Italy, which would have fundamental implications for both supply and our production-oriented ethos. Indeed there was no mention of whether there would be a more viable balance between supply and demand. All three issues are, I would argue, very large elephants in our particular room.

It is hardly the first time they have gone apparently unnoticed in such surveys. But in this report, given that macro issues like climate change and increased government regulation were identified as threats, their omission was perhaps more surprising.

The report was broken down into five main areas of likely developments. It was predicted that we would realise that the consumer is king or queen and adjust our focus accordingly. It was considered that the route to market would polarise (in line with the wine category more generally I assume), with supermarkets becoming even more dominant for mainstream wines, online sales increasing share and more producers selling direct to consumers.

Thirdly, North America and China were identified as the key investment targets, while sparkling wine would be the banker in terms of range investment. Fourthly, it was thought that packaging developments would play a more important role. Lastly, in terms of threats, in addition to climate change and increased government regulation, it was forecast that the competition from other alcohol categories like beer or cider would increase.

The problems with predicting the future based on our current knowledge

As noted, I might question the level of emphasis in some areas but there was nothing really contentious. However, I have a much broader issue with surveys like this. While they can act as a useful catalyst for us to stand back from the day-to-day and really think about how things need to change (or are likely to change) nevertheless they are fundamentally flawed because we can only forecast the future based on the knowledge we already possess.

Of one thing we can be certain: there will be developments in all kinds of areas of which we have no knowledge and which will change our particular world fundamentally. This may well include events such as wars, natural disasters or pandemics, the threat of which always exists to a greater or lesser extent, but I’m particularly talking here of the impact of technological advance.

James Burke, of Tomorrow’s World fame, suggested recently that because of developments in nanotechnology there would be more change in the next 40 years than there has been between the Stone Age and the present.

He argued that by 2043 nanofactories could well be widely available. This would mean that we had entered the “post scarcity economy”. Given that governments largely exist to deal with the impact on society of scarce resources, and that economic principles are centred around scarcity, this would indeed be a fundamental change. If it were possible for us to produce whatever we wanted at a minimal cost then we really would have embarked on a new chapter in human existence.

I raise this an example, albeit an extreme one, of how things might change. As a non-scientist I have no idea how likely nanofactories are to exist in that time frame or any other. I do know however that the past 100 years has not only seen incredible change, but the pace of change is clearly accelerating, and why would that stop now? Surely technological development feeds on itself.

This doesn’t mean that forecasting based on current knowledge is a waste of time, but it does mean that we should be aware, perhaps increasingly aware, of its limitations and perhaps look to build in more lateral thinking.

The things I didn’t see coming

I recently discovered a document I had written in 1982. This was a wine category strategy for Saccone & Speed, a division of Courage Brewing, and a leading distributor and brand owner. It makes rather embarrassing reading. Some of my recommendations proved mildly prescient but there was little real lateral thinking.

I didn’t predict, for example, the demise of the multiple specialist sector, and completely failed to spot the rise of the southern hemisphere. In fact I dismissed Australia’s potential in a few lines. Yet within a dozen years Australia was well on the way to market leadership and the Australian way of doing business (encompassing amongst many other things the focus on varietals and the establishment of subsidiaries) had changed the face of the UK wine market.

And these were simply changes within my own category. I didn’t even come close to predicting, as James Burke had ten years previously, the widespread use of computers and the increased propensity for consumers to share personal information and experiences that are now revolutionising the way we do business.

Maybe I was just a lazy thinker, and maybe others in similar positions were more astute. The reality is that I was (and still am) making predictions within the framework I understood. From what I’ve read in the Prowein report this is par for the course.

So if this Prowein report had included a section on left field ideas, what would it contain? Well, if we entered the post scarcity economy then clearly the impact on the wine world would be so profound that our industry would have to completely reinvent itself.

However, coming some way forward from that point, what is emerging as a “known” through the haze? Well here is one question as a start: what will be the effect of 3D printing on our category ?  Any thoughts from someone with a scientific bent ?

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6 thoughts on “Vision 2034: Long term thinking and unknown unknowns

  1. 3D printing…. That’s a great question. I guess the obvious simple answer would be to be able to create bespoke P.O.S.
    But the availability of that kind of technology is only as much value as the use anyone wants to make of it. We’ve had office printers good enough to forge banknotes for years (see http://boingboing.net/2009/08/26/man-spent-7-million.html) but have we really exploited inkjet printing to produce better prototype wine labels we can test on real life consumers?
    The motor industry effectively failed to evolve for decades until political and economic pressure and improved technology gave us the hybrid vehicle followed, remarkably quickly, by the new wave of fully-electric ones. We could have had electric cars long ago, if we had had the will to build them. We could have started to use screwcaps for wine in the 1980s (as the Australians and Swiss did) if we’d cared about taint. But we STILL don’t care enough about TCA and/or random oxidation to stop using natural corks in most of the world’s super-premium wines.
    We could all be exploiting the internet (either via QR codes or simply through better websites) but we don’t. Bordeaux is still in the kindergarten when it comes to wine tourism – after decades of watching how it’s done in the US and Australia.
    All of which is to say that innovation is something the wine industry does when it is forced to do so, or when a few atypically dynamic producers (Grosset, Villa Maria etc) drag it into doing so. I’ve tried to pioneer PET bottles – and had a really hard time persuading UK and US distributors that they offer a genuinely useful alternative to glass (in terms of weight, unbreakability, recyclability…)
    Lateral thinking is what most of the wine world simply does not like doing. (Which, while frustrating, can be good news for you and me Mike – and for the like-minded people with whom we engage on our blogs…)

    • I agree with all this Robert. My next post will in fact be about the urgent need for cultural change…an old chestnut of course! Not only do we need to embrace innovation but we need to make the most of the opportunities that exist currently.In fact even if we focussed 100% on the latter we would be in a much better place

      • …and another point to add, Robert, ref your comment on PET. I’ve said a few times in marketing presentations that if I had to bet on one long term prediction I would put my money on the demise of the glass bottle for all but fine wines within ten years. And I agree with you that, as things stand, the winner will be PET. However given he conservatism of the wine industry I’m not sure I would risk very much money!

  2. To Mike and Robert, thanks ever so much for this useful grist for my mill. I’m almost finished writing a book chapter on Innovation adoption in the wine sector. Unsurprisingly, it’s the production-based innovations that dominate an otherwise sparsely populated field within wine business. However, there is some hope in the capacity to encourage adoption, by looking at fields outside of wine for inspiration.

    What is the most interesting challenge for our sector is in being able to recognise and respond to the constraints of adoption based on regional or cultural differences. Taking the screwcap example from above: who could have predicted that New Zealand would have gone from negligible volumes to almost 90% of wine production being bottled under screwcap between 2001 and 2007? Contrast this astounding rate of adoption with the country responsible for inventing the wine bottle screwcap (Le bouchage mechanique), France. More than 50 years after its creation it is still virtually unseen, and unknown. Paradoxically, both countries also have neighbours that use screwcaps extensively on their wines.

    Encouraging adoption in the wine sector is never a ‘one size fits all’ approach. Sadly, that’s the way that too many wine businesses are approaching it.

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