Wineries in the US Industry Market Research Report from IBISWorld Has Been Updated

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While many industries have been hit hard by the recession, wine production has achieved solid growth, with revenue and demand on the rise as a younger generation of wine consumers, the millennials, has boosted demand for wine, especially for bottles in the lower price range. For these reasons, industry research firm IBISWorld has updated a report on the Wineries industry in its growing industry report collection.

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Despite consumers "trading up," the rising cost of grapes will likely cause declines in profit

The Wineries industry is enjoying a growing base of wine drinkers, particularly among the millennial generation. Rising consumption has increased revenue at a rate of 3.6% per year on average over the past five years. The industry has not been without its troubles, however; during the economic recession, sales fell and demand shifted to lower-priced wines, causing rapid revenue growth to stall in 2010 and contract 1.4%. Nonetheless, revenue rebounded in 2011 and grew strongly in 2012. “Mirroring the improving economy, wine consumption is expected to increases further in 2013, allowing revenue to rise a moderate 3.2% to total $17.3 billion,” says IBISWorld industry analyst Doug Kelly. Although operating profit increased in 2011 as consumers started to “trade up,” profit is expected to decrease in 2013 as producers struggle to pass along the rising costs of grapes. Lower price points have benefited the larger players that are able to produce in bulk. However, smaller wineries are struggling to cope with consolidation among suppliers, wholesalers and retailers. Despite the consolidation trend, new wineries are still entering the industry.

Smaller wineries are finding refuge in direct-to-consumer wines. Retail and on-premise (i.e. restaurant and bar) sales fell sharply during the economic recession, so many producers turned to selling via the internet and in tasting rooms. Regulations for direct sales vary by state, though, complicating this distribution method. Pending legislation is likely to increase hurdles in the coming years, which could negatively influence industry profit. In another blow to profit, grape prices are forecast to continue their upward climb. While revenue is projected to continue growing through 2018, profitability is projected to decline over the period.

The Wineries industry has a medium level of market share concentration; the top four producers hold about 49.6% of the industry's US market share. Concentration increased during the five years to 2013 as a result of larger corporations acquiring some independent vineyards and wineries, especially in the Napa Valley and Sonoma County. However, since 2008, there has been a noticeable absence of winery acquisitions by publicly traded beverage and consumer companies. This absence is not by coincidence. According to Kelly, industry companies had to engage in a thorough analysis of the profitability of each of their consumer divisions during the economic downturn. This resulted in a decreased willingness to acquire additional brands and divisions. There is much anticipation within the industry that 2013 and the following five years will see a noticeable increase in acquisition activity as the economy improves. Small to medium sized wineries will be acquired by larger operators, which benefit from greater economies of scale and scope. For more information, visit IBISWorld’s Wineries in the US industry report page.

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IBISWorld industry Report Key Topics

While this report primarily focuses on wine production, it also includes firms that produce brandies and ciders. Wineries in this industry grow grapes and manufacture wines and brandies; manufacture wines and brandies using grapes grown in other vineyards; and blend wines and brandies.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit or call 1-800-330-3772.

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Gavin Smith
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