Tag Archives: Big Wine

Big Wine: 5 companies, 60 percent of sales, 200 brands

Call it serendipity. Shortly after my blog posts about Big Wine at the end of last year, a Michigan State study offered even more data about how Big Wine works and how it has changed the business.

The paper, “Concentration in the U.S. Wine Industry,” was compiled by Phil Howard, an associate professor who studies consolidation. After doing soft drinks and beer, he told me, wine was the next logical step.

“And even I was surprised by what I found,” Howard said. “Wine was much different than what I thought. If you go to the stores, it seems like you have all these choices, because the shared ownership is not very apparent. We wanted to help consumers understand what they were really buying.”

The study consists of two parts — third-party sales data and store visits from Howard and his graduate assistants. The former, displayed in some very nifty charts on the study website, paints a fascinating picture of market share as well who owns what labels. Three companies — E&J Gallo, The Wine Group, and Constellation Brands — account for more than half of wine sales in the U.S.

This is my favorite chart. For example, you can see how important Cook’s champagne is to Constellation Brands (about as much as Robert Mondavi, believe it not), and that Bronco, which makes Two-buck Chuck, has a bigger market share than much larger companies like Diageo and Altria, which owns Chateau Ste. Michelle.

The store visit results were even more fascinating. Howard and his graduate assistants counted wine at 20 Michigan retailers, where they found more than 3,600 unique varieties (where chardonnay was one variety, merlot another, and so forth). Those wines came from more than 1,000 different “companies,” although, as the study noted, the “top firms each contribute to an illusion of diverse ownership by offering dozens of brands (and hundreds of varieties), many of which do not clearly indicate the parent company on their label.”

The reason for that, said Howard, is not difficult to figure out: “A company known for producing cheap wine and not quality wine does not necessarily want to be identified with a premium, high-end brand.”

Other key points:

• The only unique varieties of wine found in more than half the retailers were Clos du Bois chardonnay, from Constellation, and Cavit pinot grigio. In other words, wine has no national brands, in the way every retailer in beer carries Bud Light and Coke and Pepsi are in every store that sells soft drinks.

• Half of the stores carried the same six varieties — Blackstone merlot, Ravenswood zinfandel, and Woodbridge chardonnay, all from Constellation, and Apothic red, Barefoot chardonnay, and Ecco Domani pinot grigio, all from Gallo. What this says about retailer selection, customer preference, and distributor clout is worth a second study.

• The top six wine companies in the U.S. accounted for more than one-fifth of the varieties found in the stores. That it isn’t higher speaks to retailer determination to carry other brands, something else not seen in soft drinks or beer.

• Howard said that the variety and number of wines, as impressive as it is, would probably be even more impressive in states that are less regulated than Michigan, which has one of the tightest three-tier systems in the country.

Finally, though Big Wine isn’t as top-heavy as Big Beer, it may be headed that way, said Howard. He said the wine business resembles the beer business in the 1950s, when 30 companies dominated the market. Today, just two beer producers — AB InBev and Molson Coors — account for three-quarters of all sales.

Big wine companies and wine quality, part II

Big-CompaniesThis is the second of two parts looking at consolidation in the wine business and the rise of the giant producer — a handful of which dominate the U.S. wine business. Today, advice on how to tell which multi-national made the wine you drink. The first part, which ran on Dec. 13, looked at company size and why it matters.

What do the Barefoot, Cupcake and Two-buck Chuck wines have in common? Each are labels owned by one of the largest wine companies in the country, but you can’t tell that by looking at the label.

Nowhere does it say that E&J Gallo owns Barefoot, perhaps the best-selling wine in the U.S. Or that The Wine Group makes Cupcake through its Underdog division. Or that Two-buck Chuck, the Charles Shaw wine sold at Trader Joe’s, is one of dozens of labels produced by Bronco.

That’s because there is no legal requirement to do so, and most wine companies aren’t interested in that sort of thing. So what ?s a curious consumer to do? Googling the wine while standing in the store aisle isn’t the most efficient use of time. Rather, look for clues on the back label.

Look for something like “Produced and bottled,”  “Vinted and bottled,” or “Imported and bottled.” The location that follows usually identifies the parent company, so that almost all Gallo-owned brands say Modesto, Calif. In addition, the “imported” line may have a company name similar to the name of the multi-national that owns the brand, so that CWUS is part of Constellation Brands, the second-largest U.S. wine company.

The following list is far from complete, given that wine companies acquire and sell brands the way baseball teams trade players. And not everyone uses these pointers. But it should get you started — and I welcome additions to it:

Gallo: More best-sellers than you can imagine, like Apothic and Dancing Bull, and most say Modesto.

The Wine Group, whose brands include Cupcake, Big House, Fish Eye and Flip-Flop: Look for Livermore or Ripon, Calif., on the back label. There may also be a reference to the Underdog division.

Jackson Family, which makes not only its trademark Kendall Jackson, but Murphy-Goode, Cambria and Freemark Abbey, often has Santa Rosa, Calif., on the back label.

 Accolade Wines, which owns Geyser Peak and Atlas Peak, as well as Aussie labels Banrock and Hardys. may have Healdsburg, Calif., on some older bottles (the company has since moved to Napa).

Bronco: Two-buck Chuck’s parent has Ceres or Napa for location; its brands include Salmon Creek, Forrest Glen, and Napa Ridge..

Constellation: The CWUS identifies imported labels like Kim Crawford, while some imports, like Monkey Bay, will say Madera, Calif. Domestic wines will say Woodbridge or Acampo (and a tip o’ the Curmudgeon’s fedora to blog visitor Russ Winton for this).

Chateau Ste. Michelle: Look for Woodinville, Wash., as well as Patterson, Wash. for secondary brands like Columbia-Crest and 14 Hands.

Treasury: This Australian company identifies its imported wines, like Rosemount, Penfolds and Lindeman ?s, with the initials TWE. It ?s more difficult to tell its U.S. brands, like Beringer and Meridian.

Diageo: Its U.S. division, Diageo Chateau Estate Wines, owns Beaulieu, Sterling, and Rosenblum. Look for Sonoma, which isn’t much help, or some form of the initials DCEW.