Barolo for $20 - a discussion

My first contact with Barolo was at work - during our Senior Partner's holiday party at his favorite Piedmont (Piemonte) wine seller. I connected with Barolo the high class, expensive, special occasion Italian wine - same as Prof. Hannan highlighted during class.

BUT, a couple of weeks ago I came across a $20 Barolo at Trader Joe's (when buying the Hanna Sauvignon Blanc - see other blog post). This made me curious: a) How can a Barolo be $20,  b) what do the Barolo producers think about it and c) who could be potential customers for this Barolo?

Let's look at a) How can a Barolo be $20?
As discussed in class, making an authentic Barolo is expensive. The wines require 38 months of aging from which 18 are in oak, the Nebbiolo grapes are very hard to grow and there are strict regulation on the origin. But the key to getting to $20 is to cut out the middleman (remember inefficient 3 tier system) through direct import. As for other products in Trader Joe's business model is further based on exclusive arrangements leading to lower prices. 

b) What do the Barolo producers think about it?
Seeing a Barolo at $20 creates skepticism - same as my initial reaction, Italian journalists questioned the reviewer whether the wine was authentic (not restarting out discussion from last class though). Unsurprisingly, many of the incumbent Barolo producers (from both methods) get upset when these low price wines get any publicity as they fear it damages their wine's reputation. 

c) Who could be potential customers for this Barolo?
I discussed the $20 TJ Barolo with a Level 3 sommelier (read: my house mate) and she mentioned that it is OK but by far not anywhere close to the "real" Barolos. And having tried a $60+ Barolo will make you unwilling to go back to this $20 version (I still need to verify that but for now I trust her judgment). So who could be potential customers? Let's look at reverse wine snob - a website exploring cheap wine with decent quality. This mainly addresses beginning wine lovers who are just embarking on a wine journey with limited budgets. So that would contradict the wine producers argument as they have different target customers.

So, what do I learn from this: It comes back to really identifying your target customers, establishing a brand and cleverly manage (=circumvent) the challenges of the 3 tier system. 


Sources:
http://www.reversewinesnob.com/2015/03/barolo-on-the-down-low.html
http://www.reversewinesnob.com/2013/06/berton-vineyard-black-shiraz-trader-joes.html
http://www.vegaswineaux.com/2004-barolo-from-trader-joes-the-verdict/
http://www.traderjoes.com/digin/post/tjs-wine-insider-july-2015
http://www.winethropology.com/2015/03/serious-barolo-bargain.html