Investigative Report on Wine Industry

Abstract

This study is an investigative report on the wine industry of United States. Market of wine is evaluated through different indicators, in addition five forces models are also analyzed in order to get an insight of the wine industry.

Table of Contents

Introduction4

Discussion & Analysis5

Market Overview5

Market Value6

Market Volume7

Market Segmentation I8

Market Segmentation II9

Market Share10

Five Forces Analysis11

Buyer Power12

Supplier Power13

New Entrants14

Substitutes15

Rivalry16

Conclusion & Recommendation17

References18

Investigative Report on Wine Industry

Introduction

According to IWSR- International Wine and Spirit Research, about $180 billion are generated by the international market for wine in annual sales. France, Italy, and Spain are key wine producing countries. According to Euromonitor, through 2015, global wine sales can be raised at a 3% compound annual growth rate attributable to growing markets and evolving consumer tastes. Veuve Clicquot Ponsardin (France), Gruppo Italiano Vini (Italy) and Viña Concha y Toro (Chile) are top wine making companies.

Grape growing and wine making, as with most commodity products, are subject to instabilities in supply. Global prices can be reduced by less wine production because of bad harvests, while in some regions; lower prices and trimmed down margins for producers can be resulted because of overproduction everywhere. Unfavorable exchange rates of currency and the expenditure in transportation of wine to international customers can also challenge winemakers.

The largest market in the world for wine is United States by volume, but new opportunities may be offered for winemakers by emerging economies in Asia. According to an analysis by Euromonitor, by 2015, in China demand for wine could enlarge that market to 15 percent of world consumption from 7 percent. Expansion opportunities may also be offered by South American markets like Brazil in the future.

About half of all wineries in the United States are located in California which makes up about 90 percent of industry revenue. New York, Washington, and Oregon are other top wine producing states. Lots of smaller wineries sell largely in their own states. About 1,800 companies with joint annual revenue of $14 billion are included in the US wineries industry. Constellation Brands, Jackson Family Wines and E&J Gallo are among major companies.

The restaurant and hotel industries, consumer income and the level of business entertainment spending, drive demand for wine. The profitability of winery relies upon sales price and production volume, which can vary from year to year. Stronger distribution channels are possessed by large companies that can have the benefit of significant economies of scale in production. By making superior-class wines and then selling it at a premium price, small wineries can rival big-volume producers. The capital-intensive industry of wine generates average annual revenue of about $370,000 per worker.

Major competitor for US wine producers are imports that constitutes about a third of the US market. Mainly from France, Italy, and Australia, the imports come. Canada and the UK are the most important markets for US wine exports.

Discussion & Analysis

Market Overview

The wine industry comprises of champagne, sparkling wine, fortified wine, and still wine's retail sale. Headed by stable sales growth across categories of still wine, fortified wine, and sparkling wine, ...