Wine Industry

Topics: Wine, Vitis vinifera, Table wine Pages: 12 (4543 words) Published: March 20, 2011
Executive Summary
The United States wine industry is a 12 billion dollar industry and is composed of 7,000 wineries and around 1,800 different companies. The three major companies within the industry are Constellation brands, E&J Gallo, and The Wine Group Inc. The industry has made its way through the economic crisis at a better rate than some of the other U.S industries however in order for them to continue to see any type of growth it is important that they acknowledge their issues and find ways in which they can rectify them. The majority of the issues among the industry are problems that cannot be directly controlled by individual wine companies. Therefore it is imperative that wineries find away to use these issues to their advantage, since they are impossible to just ignore. The four most crucial obstacles the industry is currently faced with are the economic state, the climate changes, the price of gas, and the CARE Act of 2010. All four of these obstacles affect the production of wine and as an end results affect the consumer. These obstacles cause the cost of wine production to increase and therefore wine companies have to increase the price at which they sell their wine to consumers in order to offset the extra money that was put in to the manufacturing of the good. The industry should also focus on their weaknesses amount the five forces, which include threat of substitutes, threat of entry, and threat of rivalry. If the industry can focus on lowering these threats, and concentrate on the value of their customers then they will be able to face the issues that they cannot control with a stronger hold on the market. Overview of the United States Wine Industry

The United States Wine industry is composed of over 7,000 wineries and about 1,800 different companies. The wine industry is highly concentrated which means about 80% of the industries’ sales come from the top 50 companies within the industry. The U.S wine industry accumulates about 12 billion dollars in revenue a year. In 2009 alone 767 million gallons of wine were consumed in the United States, which shows a gradual increase in the consumption of wine from previous years. Each year the consumption of wine in the United States continues to increase regardless of outside factors. Last year 707,084,113 gallons of wine were produced in the United States, of which 631,575,325 gallons came from California alone. The 3 top firms in the industry consist of Constellation Brands, E&J Gallo, and The Wine Group. Although the industry as continued to see a steady increase the production and sales of wine there are still major problems that they are forced to face. The following analysis will discuss; major products and cost of production, the major firms in the industry, industry competition/rivals, SWOT analysis, major problems in the industry, and finally recommendations to the problems they are facing. Products and Pricing

The wine industry is composed of one major product, and that is wine. There are numerous different types of wine, with a variety of different price ranges. Some of the most common types of wine include but are not limited to; White Wines including, Riesling, Chardonnay, Sauvignon Blanc, and GEWÜRZTRAMINER. Red wines include, Pinot Noir, Syrah, Zinfandel, Merlot, and Cabernet Sauvignon. Each of these wines has a different flavor that is captured from a certain grape in a certain manner. However, in order for winemakers to create their large variety of wines they are in need of a large variety of grapes. Some wine companies choose to own their own vineyards where they grow their own grapes. However, some wine companies buy their ingredients from other vineyards, the main reason being that growing grapes is a very arduous process and therefore they want to focus their energy on the production of the wine itself. Wine is produced in all 50 states throughout the United States, and in 2009 the United States produced more than 707...
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