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Category Archives: Wine terms

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’s not 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.

Wine terms: Flabby

wine terms flabby

A flabby wine has a lot in common with this fellow.

A well-made wine should have structure, and this is something that holds true regardless of price. Just because a wine is cheap doesn’t give it an excuse, and the best cheap wines do just that.

Structure means a wine should have a pleasing aroma and a beginning, a middle, and an end when you taste it. You should be able to taste the tannins (if the wine has any), as well as the acid, and the alcohol will stay in the background. In this, the wine is in balance, and that should be the goal for every winemaker.

A flabby wine doesn’t really have any structure, and one part – usually the fruit – predominates. The wine can taste almost syrupy, or more like grape juice than wine, and everything you taste sort of runs together.

The best analogy is an overweight man, whose muscle tone long ago went wherever muscle tone goes. It’s important to note, though, that – like people – a wine doesn’t have to cut and buffed to do its job. Too much structure can be just as bad as not enough, producing a wine that may be technicially correct but that offers little pleasure when you drink it.

Wine terms: Grocery store wine

One of the biggest changes in the wine business over the past decade has been the growth in wine departments in grocery stores. Just a decade ago, they were often small and cramped and dirty, and there wasn’t much to choose from – even among the biggest national chains.

Today, they look like this. More, after the jump:

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