Wineries

The US wineries industry includes about 1,000 companies with combined annual revenue of $8 billion. Major companies include Constellation Brands, E&J Gallo, and The Wine Group. The industry is highly concentrated: the 50 largest companies generate more than 80 percent of revenue.

COMPETITIVE LANDSCAPE

Demand for wine is driven by the restaurant and hotel industries, the level of business entertainment spending, and consumer income. A winery's profitability depends on production volume and sales price, both of which can vary from year to year. Large companies have stronger distribution channels. There are large economies of scale in production. Small wineries can compete with big-volume producers by making higher-quality wines that sell at a premium price.

PRODUCTS, OPERATIONS & TECHNOLOGY

Wineries manufacture wine and brandies through fermentation of grapes and other fruit. Grapevines are tended in spring and summer and grapes harvested in early fall. After being crushed, the grapes (skins, pulp and liquid, called the "must") are fermented in large vats for several weeks. Fermentation is caused by the yeast Saccharomyces, found naturally on grape skins, that transforms the sugar of the grape into alcohol. After fermentation, the wine is pressed out and aged in metal vats for several months before being filtered and bottled. Some companies blend several different wines before bottling and may buy blending wine from other producers. Higher-quality wine is aged in oak casks for up to two years before bottling. White wines are produced ...