Big Wine 2023

Big Wine has done the seemingly impossible: Make less product, but still control 90 percent of the market

The most telling statistic in the 19^th annual Wine Business Monthly’s survey, which ranks the 50 biggest producers in the U.S.? That the market share controlled by the 100 biggest companies has not changed all that much – even though many of them are actually producing less wine.

Which pretty much sums up the crisis facing the U.S. wine business as sales decline, its core customers age, and the rest of the country drinks something else.

The pie is getting smaller, but the biggest companies still slice off the same size piece. That’s certainly not good for the other 11,000 wineries, and it’s not even particularly good for Big Wine. Success is about growth, not maintaining market share.

In other words, as one industry analyst noted earlier this year, “This is obviously a place where none of us want to be. If a rising tide floats all boats, then a shrinking tide is the opposite. In that case, we’re in a Darwinian model, where the only way to get business is by taking it from someone else. And that’s obviously a place where we don’t want to go.”

Frankly, I was stunned when I finished parsing the numbers. Case in point: the study says E&J Gallo, the biggest producer in the world, hasn’t increased its sales in the U.S. in several years. But Gallo still accounts for almost one out of every three bottles made in this country.

Even more revealing: The 10 biggest producers have lost a stunning amount of market share, from controlling about 4 out of 5 bottles in 2016 to three-quarters in 2022 — even though the top 100 still control 90 percent. This is a business school example of cannibalization: Those in the next 40 are stealing market share from those in the top 10, and no one is necessarily better off.

Here are some notes of interest from the study (for those of you who haven’t already started drinking in despair):

• There are 11,691 wineries in the U.S., a three percent increase from last year.

• Eight of 10 wineries in the U.S. make fewer than 1,000 cases while a third make fewer than 5,000 cases. There are 281 medium-sized wineries making 50,000 to 499,999 cases—counting both bonded and virtual wineries. There are 79 large wineries in the U.S. making 500,000 cases or more.

• Some historic and important wine names have seen production slump over the last year. They include Bronco, makers of Two-buck Chuck, which suffered an 11 percent decline, and supermarket stalwart Ste. Michelle Estates, down 15 percent.

• The three biggest producers have seen their share of the market fall by one-sixth since 2017 – even though Gallo bought a sizable chunk of then No. 2 producer Constellation Brands a couple of years ago.

More about Big Wine:
• Big Wine 2022
• Big Wine 2021
• Big Wine 2020