The U.S Wine Industry

By Insel, Barbara | Business Economics, January 2008 | Go to article overview

The U.S Wine Industry


Insel, Barbara, Business Economics


A couple lifetimes ago I decided I would someday work in what I called a "lifestyle" industry: for me, that was food, wine, art, design--a business that produced a product that could really add to my own quality of life, that had intrinsic pleasure. That decision was made some time between saving the world at the World Bank and investing in emerging markets at merchant and investment banks in London. A bright young Harvard MBA who worked for me at the European for Reconstruction and Development once said that finance was "sterile." She did have a point.

In any case, four years ago I found myself in the wine business, managing a firm called MKF Research, the leader in advisory and research services for the business of wine. Today, that has turned into being the President and CEO of Stonebridge Research Group, which takes those research and advisory services the next step to improving operations and efficiency as well as analysis. But more about that later.

A Few Metrics for the Wine Industry

Let's start with a few basic metrics for the business of wine in the United States:

* The Alcohol and Tobacco Tax and Trade Bureau of the United States Department of the Treasury (the old ATF, now known as the TTB) listed more than 5,400 bonded wineries in the United States at the end of 2006, more than double the number in 1999. Each of the 50 states now has at least one winery.

* The retail value of wine produced in the United States in 2005 was $23.8 billion, about 73 percent of the total wine sold in the United States.

** About 90 percent of the volume of wine produced in the United States comes from California. California-produced wines also account for 95 percent of the value of all U.S. wine sold.

** An estimated 305 million cases of wine from all sources were sold in the United States in 2006.

** The vast majority of wineries in the United States produce less than 5,000 cases of wine per year. Together these wineries represent less than two percent of all the wine the United States produces but a major share of the wine costing more than $30/bottle.

The United States ranks 38th in the world in per capita wine consumption--the United Kingdom is first. However, wine consumption is growing in the United States. Depending on the data used, the aggregate growth rate has recently averaged between four and nine percent per year, while it is declining in most of the traditional wine consuming regions. (1)

Thus, simply extrapolating recent growth rates and population will make the United States the world's largest market for wine within the next few years. The United States is, in fact, the only major wine producing country that is a net importer of wine, in a world which otherwise seems to be floating on a lake of surplus wine. (2)

More than 23,000 farms grow grapes in the United States on more than 900,000 acres, for a total crop value of $35 billion--and the majority of those grapes are wine grapes. Grapes are the highest value fruit crop in the United States and the sixth highest value of all United States crops. Nevertheless, the total amount of funding for research on grapes and grape products in the United States in 2005 was $45 million, almost entirely provided by state governments and private companies.

The Wine Institute observes that North America is the only major wine market where demand for wine costing more than $5/bottle is increasing. Where consumers used to look for a bottle of wine under $10 for tonight's dinner, that ceiling today is more likely to be $15.

Americans tend to see wine as an "affordable luxury," a product that symbolizes a special experience; while most of the traditional wine-drinking countries see wine as a staple, a commodity of declining appeal (an exception being Bordeaux first growths and similar grand trophy wines). Consistent with the emergence of the "New Affluents," (3) wine has become a symbol of a quality standard of living. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

The U.S Wine Industry
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.