Winemakers Industry Trends

Industry Growth to Continue

US wine consumption is still relatively small compared to that in other countries, suggesting that a high level of growth can be maintained. Annual wine consumption per person is about 2 gallons in the US, much lower than in many European countries.

Industry Consolidation Hurts Smaller Wineries

The weak US economy, an oversupply of grapes, and widespread consolidation of wine companies here and abroad contribute to a more competitive market. Consolidation over the past four years helped create or expand several large companies with considerable purchasing and distribution resources.

More Premium Brands

Makers of higher-priced wines face greater competition from large makers of generic wines, like Gallo, that have entered the premium market and from hundreds of new wineries in California and abroad. The abundance of grapes in recent years has spurred the introduction of many new brands and scores of new wines, such as those in the new extreme-value varietals category – reviews indicate that many offer excellent value for $3 or less.

High Volume for Low-Priced Wines

Better production methods have produced good quality wines at low cost. For example, Bronco’s Charles Shaw wine sells for $2.99, earning the nickname “Two-Buck Chuck.” In two years, Bronco sold 10 million cases of “Chuck” through Trader Joe’s retail stores. Success at this “extreme-value” end of the market, and an abundance of good quality grapes, has influenced other wineries to introduce lower-priced brands.