Tag Archives: Wine Business Monthly

Big Wine 2019

Big Wine 2019Big Wine 2019: It still has a stranglehold on what we drink, but the biggest companies aren’t quite as big

A funny thing happened to Big Wine 2019: The three biggest companies didn’t dominate the market in 2018 the way they did in 2017. Neither did the top 10. But the top 50 still sell 90 percent of the wine made in the U.S., according to the 15th annual Wine Business News magazine survey,

In other words, it’s business as usual for Big Wine. They’ve just rearranged the profits.

Still, before you get too depressed, know that the magazine study acknowledged that the wine business is in trouble, citing the usual reasons – aging Baby Boomers, competition from craft beer and spirits, and the neo-Prohibitionists. Or, as the woman who runs the company that makes the ubiquitous Kendall Jackson chardonnay told the magazine: “It seems tougher this year and it probably will be tougher next year. It doesn’t seem like it’s as easy as it was.”

Which, hopefully, is good news for those of us who are tired of higher prices, declining quality, and more plonk on the shelves. If Big Wine sees the problem, maybe they’ll do something to fix it besides putting sugar in dry red wine.

Among the highlights

• Sales by volume were almost flat, from 403 million cases in 2017 to 408 million in 2018. That’s a 1.2 percent increase, far less than the growth in the legal drinking age population. Which means younger drinkers are drinking something else or aren’t drinking at all.

• The average price of a bottle of wine sold in 2018 was $14, which includes restaurant sales. Hence, the number is higher than the average usually cited for retail sales, $9 or $10 a bottle.

• Imports, as a share of U.S. wine sales, were only 23 percent. That’s also much lower than the numbers usually cited, which range from one-third to 40 percent of all the wine sold in the U.S.

• E&J Gallo controls 17 percent of U.S. sales, and its Barefoot brand accounts for almost 5 percent of all the wine sold in this country. Which succinctly describes the power of Big Wine.

• The share of the three biggest producers – Gallo, The Wine Group, and Constellation Brands – fell to 55 percent in 2018 from 60 percent in 2017. The share of the top 10 companies declined for the third year in a row, from 84 percent in 2016 to 81 percent in 2017 to 78 percent in 2018. Was this decline caused by premiumization, since these producers tend to have the least expensive wines? Or was the cause something more ominous, related to the decline in wine’s popularity?

• The magazine said there are 10,047 wineries in the U.S. Take out the top 50, and the other 9,997 sold 31.5 million cases in 2018, or about 3,150 cases each. The average Big Wine company sold almost 6 million cases – making it almost 2,000 times bigger. Which, regardless of any changes in the market share among the 50 producers, shows just how top heavy the U.S. wine business is.

More about Big Wine:
• Big Wine 2018
• Big Wine 2017
• Big Wine 2016

The power of Big Wine 2018

Big Wine 2018

Three out five bottles on the grocery store Great Wall of Wine could come from just three companies.

Big Wine 2018 accounts for nine out 10 of bottles made in the U.S. How can that be healthy for the long-term growth of wine?

This is the first of two parts looking at Big Wine 2018. Part I, the numbers. Part II, what that dominance means for wine drinkers.

Nothing illustrates the power of Big Wine 2018 more than the half a pallet of Meiomi pinot noir sitting on the floor in the wine department at a Central Market in Dallas. Meiomi, owned by Constellation Brands, is mass market wine, not exactly what you’d expect to see by the case at Central Market, which positions itself as Whole Foods with a Texas twist.

But there it was. And why not? Big Wine is so big, as noted in Wine Business News’ annual ranking of the U.S. largest producers, that it can make almost any retailer an offer that it can’t afford to refuse.

In 2017, Big Wine continued to dominate what we drink, according to the Wine Business numbers. The 10 biggest companies accounted for 81 percent of the wine made in the U.S. In addition:

• The three biggest producers, E&J Gallo, The Wine Group, and Constellation, kept their market share from last year – almost 60 percent. In other words, they make three out of every five bottles of U.S. wine.

• The share of the top 10 companies actually declined from 2016, from 84 percent to 81. That’s not because they’re less powerful, but because the next 20 brands took business away. The Josh Cellars label, owned by Deutsch Family, was little known a couple of years ago. Today, though, it is the 12th biggest “winery” on the list, with 2.2 million cases. Stop and consider what that means: Two years ago, hardly anyone had heard of Josh Cellars. Today, it accounts for close to one percent of all the wine made in the U.S.

• The top 50 companies on the list represent 90 percent of U.S. wine production. Given that there are almost 10,000 wineries in this country, this means the other 9,950 make only 10 percent. Is that healthy for the wine business over the long term?

• In the first Wine Business list in 2003, a winery had to produce 350,000 cases to make the top 30. This year, that threshold had doubled. So yes, the big are getting bigger; given that wine consumption is flat, how long until that starts hurting the other 9,950 wineries?

• The 10 best-selling grocery store wines in the country are owned by Big Wine; Gallo owns No. 1 Barefoot, and No. 10 Apothic. These 10 account for almost one-quarter of sales as measured by dollars. That’s depressing enough, but measuring by dollars probably under-represents their dominance. These are cheap wines, most costing less than $10 a bottle, so they could account for as much as 40 percent if measured by cases sold.

More on Big Wine:
Big Wine takes over
Big Wine growth 2016
Big Wine to become one company

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.