Ah, there’s nothing quite like reading the Western Farm Press to get your day going.
OK, I’m overstating a little, but I have to say that this article on trends in the U.S. wine market did get my attention. It reports on a conference by Jon Fredrikson, head of a consulting firm specializing in the wine business, Gomberg, Fredrikson and Associates, where Fredrikson gives a portrait of the market in 2007. (If you want the full report, you can purchase it here – for 295$)
A number of interesting tidbits emerge :
- Total U.S. wine sales were up 4 percent in 2007
- Red wine sales are growing twice as fast as white wine sales, while blush wines are going down the drain, so to speak.
- Imported wine is now a third of the market, compared with 15 percent in 1990.
- Three companies (Gallo, Wine Group and Constellation) control 60 percent of U.S. shipments, and the top 10 companies control 82 percent of shipments
This last part is a little disturbing, because of what it entails in terms of access to market for smaller wineries. The large groups like Constellation do control a wide variety of producers and products, from the big industrial brands to small, high-end domaines and châteaux, so it’s not like they were going to make us all drink two-buck chuck. But it does mean that access to wines that are outside these empires may become more difficult over time. And I’m also a little worried about what would happen if one of those giants, who keep going on buying sprees, were to fail – say, under the weight of debt from massive acquisitions.
Although the Canadian market is generally very different from the U.S. market, with the provincial monopolies controlling imports and sales, but the weight of big conglomerates does play a factor here too. With thousands of products vying for shelf space, the bigger players should tend to consolidate their place in the stores there too. At SAQ, for instance, shelf space for refrigerated products is leased to wine distributors and agents, meaning that it’s not an individual store employee who’ll choose a wine he likes for his or her customers, but rather a matter of who paid to be there. Promotional capacity, follow-up with the media, and all those marketing tools also become more powerful for the bigger players in a consolidated context.
It will be very interesting to see how this all develops over time, and how “independents” will react to preserve their business.