US Wine Industry Consolidation Lead by Gallo
E & J Gallo, Constellation Brands, The Wine Group Dominate US Market
In an old brick building in downtown Walla Walla, Spring Valley Vineyards offers guests a taste of their super-premium Merlot, Cabernet and Syrah along with information about the families behind the cult brand who have farmed in Eastern Washington for more than one-hundred years. Spring Valley’s Cabernet based blend has made Wine Spectator’s Top 100 wines of the year list three times, in 2002, 2003 and 2006.
Big Companies Gobble Up Little Wineries
What visitors don’t hear is that in 2007, the Spring Valley brand was purchased by Ste. Michelle Wine Estates, the ninth largest wine company in the country. Technically, the vineyards are on a long-term lease so the family farm isn’t owned by Ste. Michelle, and the family is still involved in winery operations, but clearly this is no longer an independent Mom and Pop winery. Consumers would never know that from looking at their products, visiting the tasting room or perusing the Spring Valley Vineyards web site.
Wine Marketing Norms
Spring Valley wines are still as luscious as ever, according to Robert Parker’s Wine Advocate. On 6-30-08 the publication gave three out four Spring Valley wines marks in the low 90’s. While the quality of the product is not in doubt, it remains to be seen how the brand will evolve over time now that it’s part of Ste. Michelle’s massive portfolio. Is Spring Valley unique? Hardly. This is a very common marketing practice in the wine industry.
Gallo Brand Big Boy
According to Wine Business, in 2007 E & J Gallo Winery was the number one producer of wine in the US with 76 million cases sold worldwide. Think that Argentine Malbec from Don Miguel Gascon is a nice import? It’s a Gallo wine. So is that Italian Pinot Grigio, Ecco Domani. Even venerable old Napa Valley names like Louis M. Martini Winery are part of the Gallo lineup. In an April 4, 2008 article in the Los Angeles Times, author Jerry Hirsch states that one out of every five glasses of wine consumed in the US is a Gallo brand.
US Wine Distribution
Consolidation of winery brands in mega companies like Gallo, Constellation Brands (#2 in the US) or The Wine Group (#3) has been going on for many years and when it comes to the distributors who sell wines to retailers and restaurants, consolidation is also the name of the game. In Matt Kramer’s August 24, 2008 article in The Oregonian, he discusses the joint venture of privately owned distributor Southern Wine and Spirits of America, Inc. with Glazer’s Distributors to form an organization that will control 38% of all the alcoholic beverages sold in the US.
Think Local
What’s a consumer to do? According to Kramer, wine lovers should visit their local wine shop. Independent retailers are a good source for those seeking wines that are outside the mainstream. For those who live in wine producing states, another excellent alternative is to visit local wineries. Taste for yourself and buy what you like. Don’t be fooled by so-called bargain wines like Trader Joe’s infamous Two-Buck Chuck, it’s just another corporate behemoth – the Bronco Wine Company, now number four in US wine sales.
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