Big Wine tightened its grip on the U.S. market in 2013

Big Wine tightened its grip on the U.S. market
So how many smaller wine companies should we buy this year?

Big Wine tightened its grip on the U.S market in 2013, with new figures showing that three companies accounted for more than half of all the wine produced during those 12 months. E&J Gallo, The Wine Group, and Constellation Wines totalled some 187.5 million cases of the 370 million produced.

Throw in the next three biggest companies — Bronco, home of Two-buck Chuck; Trinchero Family Estates; and Treasury — and that total rises to 241.4 million cases — about two-thirds of the wine made in the U.S. The top 30 by themselves account for some 90 percent; in other words, all the wine that those of us who write about wine love to write about? Hardly anyone drinks it. No wonder availability is such an issue.

The report, Wine Business Monthly’s annual ranking of the 30 biggest U.S. wine companies (requires free subscription), follows up on last year’s Michigan State study that found that Big Wine controlled about 60 percent of the U.S market. The two studies didn’t use the same methodology (Wine Business Monthly doesn’t include imports like Yellow Tail, but apparently does include foreign brands owned by U.S companies), but the trend is obvious. The big are getting bigger.

A few thoughts about the results:

? There is big, and then there is really big. No. 1 Gallo, with 80 million cases, sold more wine than the bottom 26 companies combined. That’s a staggering statistic, and speaks to Gallo’s understanding of the post-modern wine business — marketing, certainly, but also how to leverage the three-tier system and how to develop products, like sweet red wine, that elude other wine companies.

? Adding brands. “One of the things that surprised me was the number of big wineries that are not introducing new brands,” said Wine Business News editor Cyril Penn. “It’s mostly just the Gallo’s and Constellations of the world are doing a lot of that this year.” These so-called line extensions are another sign that the biggest companies see wine the same way Proctor & Gamble sees cleaning supplies and Campbell’s sees soup.

? Consolidation is all. Wine Business Monthly included its 2003 top 30 list, and 12 companies on that list are gone, sold or merged into bigger companies. In addition, five companies are on the 2014 list because they bought other companies to get big enough to make the list.

? Big isn’t as big as it used to be. One million cases used to be the hallmark of a big wine company. These days, it will only get you 18th on the list.

Is all this bigness good? For prices, almost certainly. The biggest companies can afford to sell wine for less and make up the difference on volume (to say nothing of their lower costs of production, thanks to economies of scale). Wine quality, at least technically, should also benefit, so now flawed or unripe wine. What’s less clear is what bigness means for value. Big Wine focuses on price and technical quality, and whether the wine is interesting is an afterthought. Hence all those $10 California merlots that taste the same.

The fear for those of us who love cheap wine is that, as the big get bigger, it will be more difficult to find interesting cheap wine. I’m seeing some of that this year, with producers sacrificing interest in favor of cheaper grapes to keep prices down. The last thing any of us want is for wine to turn into beer, where cheap means Budweiser and Miller Lite, and where it’s almost impossible to find the $10 values that exist in wine.

13 thoughts on “Big Wine tightened its grip on the U.S. market in 2013

  • By poly_chem -

    I think you might need to check the math. You state that Gallo is the largest, with 80 million cases, yet state that the top 3 sold 287.5 million cases.

    Even if all 3 sold 80 million cases (which they didn’t), the total would be 240 million, not 287.5 million.

    • By Gillett -

      Poly – your math is excellent. You might like to re-read the article as they are accurate in their presentation of the numbers.

      • By poly_chem -

        Yes. The article has now been corrected by the author. When it appeared on Thursday, March 13, it contained erroneous data.

  • By poly_chem -

    I looked up the WBM article data:
    Gallo = 80 million
    Wine Group = 57.5 million
    Constellation = 50 million
    Total = 187.5 million (not 287.5)

    Add in the next 3, as in your article:
    Bronco = 20 million
    Trinchero = 18.5 million
    Treasury = 15.4 million
    Total of all 6 = 241.4 million out of 370 million = 65% (not 92%)

    The big guys aren’t as big as you claim…and they drive a lot of sales to people for everyday consumption.

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  • By Chris -

    Great work, poly_chem.

    Math is fundamental Wine Curmedgeon. Your article has a whole different profile, or maybe isn’t an article at all, if you could simply add and divide percentages.

    • By Wine Curmudgeon -

      Turns out it wasn’t my math, but my typing — put a 3 where a 2 should have been and a 2 where a 1 should have been. Thanks for your help. I’d fire my copy editor, but that’s me, too. I have written a post about this —

      The point, though, is the same, as it notes in the WBM article, that the top 30 account for “90 percent of the domestic wine sold annually in the U.S. by volume.”

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  • By Donn Rutkoff -

    I wonder if this is really any different than 20 or 40 yrs ago, when Gallo Hearty Burgundy was probably on top and the # of small wineries was way smaller list than today. And white zin was probably biggest about 20 yrs ago. Did that hurt the rest of the industry? No.

    Consumption is increasing in the US, and that is good no matter whose wine is selling.

  • By Kevin Luther -

    As a Winemaker & also Salesman for Wise Villa Winery, this dilemma is very important for me. It is basically impossible to convince a distributor to take you on as a small winery, and even if you do they take 50% which leaves you selling wine only marginally above cost of production–which doesn’t work for us small guys like it does for economy of scale companies.

    The “light at the end of the tunnel” is that big, consistent-but-boring, faultless but uninspiring wine companies actually by their very nature create opportunity for consumer backlash. Their very existence actually increases a niche consumer demand for something authentic, something hand-crafted, something real. That’s why I love the craft beer revival and Portland crafsmanship revolution and so on…and any blog that supports products created by a person, products that are one-of-a-kind.

    Kevin Luther
    Associate Winemaker
    Wise Villa Winery

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