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Thursday, March 27, 2014

Wine, Inc.

Who actually makes the wine you purchase? There are lots of different labels out there, but that doesn't mean each is a small family operation. The large companies own multiple labels and they make it difficult to know you're drinking a "corporate" wine.

These three companies make half of the wine you find on American store shelves:

Gallo - A privately-owned company headquartered in Modesto, CA. Some of their labels are André, Barefoot, Carlo Rossi, Louis Martini, MacMurray Ranch, Rancho Zabaco, Turning Leaf and William Hill. Gallo owns about 70 different labels, some based in foreign countries.

Constellation - Based in NY where they started as a single winery Constellation expanded rapidly to become a top-level wine, beer, and spirits company. They operate in 40 facilities around the world including U.S. brands Clos du Bois, Franciscan, Mondavi, Ravenswood, and Simi.

The Wine Group is a generically-named San Francisco Bay Area-based company that started as Coca-Cola's entry into the wine business in the 1970s. They own Almaden, Franzia, and Mogen-David--about 24 labels in all.
The next three on the list combined are smaller than any one of the previous three:

Trinchero is a family-owned wine group that started with Sutter Home White Zinfandel. They own over 30 labels in all including Joel Gott, Montevina, Trinity Oaks, and one that made the news recently, Duck Commander.

Treasury - Fosters spun off its wine division several years ago and Treasury seems to have had their troubles ever since (they've just appointed a new CEO after firing the last one for dumping millions of dollars worth of wine down the drain). They own over 50 brands including Beringer, Chateau St. Jean, Meridian, Souverain, and Stags' Leap. They are very much a wine corporation with revolving CEOs, a board of directors, and I've seen lots of corp-type job openings for finance, marketing, IT, etc.

Bronco - Fred Franzia, a nephew of Ernest Gallo, is best known for Charles Shaw (aka two buck chuck) along with Forestville, Hacienda, and about 60 other labels. He originally started the Franzia wine company that was later purchased by Coca-Cola (see The Wine Group above). Ol' Fred has had his run-ins with the law a couple times in his business life.

These companies are responsible for most of the wine you see in the marketplace. Is that bad? There are efficiencies to doing things on a large scale otherwise they wouldn't be in business. They are growing significantly every year with much of that growth from adding new labels to their portfolio.

I do believe that "boardroom winemaking" leads to a homogeneous wines. That is, if some particular wine or style of wine gets popular then they all will make it that way. For example, I see this in visitors to California wineries who are surprised that all CA Chardonnay isn't oaky and buttery.

There's a lot of wine styles out there that aren't all made like Barefoot and Franzia, but these small producer wines are dwarfed in the marketplace as they can't compete for shelf space with the big boys who muscle them out. That's too bad for you.