Wine Industry Analysis

2724 Words Mar 17th, 2012 11 Pages
The US winery industry had a growth rate of 4.7% between 2006 and 2011, and is expected to grow by a rate of 4.9% over the next five years [ (IBISWorld) ]. In California alone an average of 175 wineries have opened every year since 2000 [ (Richard Green) ]. The states of New York and Virginia have been major players in the US wine industry. The data shows that the demand for wine has been increasing at an exponential rate over the past 5 years. Average annual revenue for the wine industry is expected to be estimated at $20.2 billion through 2016 [ (IBISWorld) ]. The growth of the wine industry, particularly over the past 10 years, can be attributed to a few key drivers in the market. Per capita consumption of alcohol has increased …show more content…
These wineries would import large amounts of wine in bulk, and then bottle the wine in the US. This allowed the larger wineries to sell their wine at a considerably cheaper price, hurting the smaller domestic wineries. In 2011, the import market share in wine was roughly 26.5% [ (IBISWorld) ]. The amount of foreign wine entering the US has been on the rise ever since it was named the largest consumer of wine in the world. Foreign producers, who are experiencing a decline in business in their home country, are looking for new markets to sell their product. Countries such as Argentina, Chile, Australia and New Zealand are able to produce their wine at a lower cost than the US. The import of these wines has heated up the competition in the US creating benefits for the US wine consumer. The superior quality of the imported wines has also changed consumers thinking as far as how much should be spent on a good wine. The immediate future looks promising for the wine industry. In 2012, the industry is expected to grow by 4.4%, and will only increase through 2016 [ (IBISWorld) ]. The wine industry relies on a three-tier distribution system. The producers sell to the wholesalers, who then sell to the retailers. The national sales tier consists of suppliers who sell to a wholesale distributor [ (Tincknell & Tincknell) ]. As suppliers continue to consolidate, the larger producers will have the upper hand due to
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