Posted: Mar 15, 2019
Total wine volumes from domestic wineries were up just 1.3% in the US in 2018. "Overall it's a softer wine market than we're used to," said Gomberg, Fredrikson & Associates editor and BW166 founder Jon Moramarco during GFA's annual review webinar today.
The lion's share of US wine comes from California where volumes were up 1.1% for the year. But the three biggest wineries in California-Gallo, Wine Group and Constellation-are lagging behind the rest of the industry. Those three represent about 53% of total California wine volumes (down from 56.3% in 2017).
Volumes from the top three were down nearly 5% in 2018, while volumes from other wineries in California were up almost 9% for the year.
Jon said it's largely due to the fact that the big suppliers play more in the low end (below $9). "When you look at the softness in the under $9 the big three really drive a lot of that market and control a lot of that market and that's where they're seeing declines," he said. That's exactly why Constellation is looking to offload its low-end brands [see WSD 02-21-2019].
GROKKING TWE'S ROUTE-TO-MARKET CHANGES. Jon said he's been asked several times how Treasury Wine Estates is doing after its route-to-market shakeup. You'll recall, TWE changed up 40% of its distributor network last year and now self-distributes for about 25% of its business in the US, including in California [see WSD 01-30-2018].
So far, it looks like they've been impacted the most in California. Volumes in the state were down more than 29% in 2018 and domestic shipments of their California wines were down 5%. Meanwhile, out of state volumes were up 3.1%.
Though Jon noted that TWE has also made some changes in what brands they're focusing on and that it's "hard to draw final conclusions from this."
Stay tuned for more from the webinar, including private label stats, views on alternative packaging as well as the opportunities and challenges facing the industry.
Source: Wine & Spirits Daily
March 14, 201
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