February 2004 The Industry's Leading Publication for Wineries and Growers www.winebusiness.com
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The Top 30 US Wine Companies of 2003
WBM’s Top 30 US Wine Companies of 2003
(click on company name to view info)
    Wine Company Annual US Case Sales
1  E&J Gallo 75,000,000 
2  Constellation Brands 66,000,000 
3  The Wine Group 25,000,000 
4  Beringer Blass Wine Estates 11,000,000 
5  Bronco Wine Company 10,000,000 
6  Robert Mondavi Winery 9,700,000 
7  Trinchero Family Estates 8,300,000 
8  Brown-Forman Wines 6,000,000 
9  Kendall-Jackson 5,000,000 
10  Diageo Chateau & Estates 3,250,000 
11  Stimson Lane 3,200,000 
12  Allied Domecq Wines USA 2,500,000 
13  Heck Estates 2,061,600 
14  Delicato Vineyards 1,500,000 
15  Golden State Vintners 1,300,000 
16  Phillips-Hogue 1,200,000 
17  C. Mondavi & Sons 1,000,000 
18  Peak Wines International 700,000 
19  Ironstone Vineyards 700,000 
20  J. Lohr Winery 700,000 
21  Chalone Wine Group 670,000 
22  Don Sebastiani & Sons 640,000 
23  Bogle Vineyards 600,000 
24  Rodney Strong 500,000 
25  Barefoot Cellars 500,000 
26  San Antonio Winery 500,000 
27  Hess Collection 450,000 
28  Round Hill 350,000 
29  Domaine Chandon 320,000 
30  Wente Vineyards 300,000 
Source: Company information and WBM
               estimates.

     The numbers do not include bulk wine--wine processed by the company but sold under another company’s brand. Golden State Vintners, for instance produces the equivalent of about 12 million cases of wine a year but 1.3 million cases under brands it owns.
     Two large bulk producers were omitted because they don't produce wine under their own brands: Giumaurra Vineyards (one of California’s largest table grape growers) and Vie Del, the second largest player in the grape concentrate business after E&J Gallo now that Constellation Brands has exited the business and Michael Hat farming went into bankruptcy.
     The rankings include annual US case sales numbers for wine sourced from other countries but sold in the US under a US Wine Company. We estimate, for example, that E&J Gallo may annually produce 65 million cases in the US but import somewhere in the vicinity of ten million cases from Italy and Australia.
As part of our review of the state of the US wine industry, Wine Business Monthly compiled its first annual ranking of the top 30 wine companies by US case sales. These wine companies represent more than 90 percent of the US wine market. In exclusive interviews with WBM, the leaders of these wine companies explained where their companies are heading, how they plan to get there and the challenges they face today. As the market leaders, they wield enormous influence so what they have to say is instructive. We've summarized the key points below.

Current Situation
All the leaders acknowledged that the past several years have been very difficult. Considering that "extreme value wines" retailing for $2.50 or less per bottle retail accounted for six or eight million cases in 2003 and that most of last year's sales growth was picked up by imports, it's no wonder we're hearing about a tough business environment. The situation created a dogfight where many slashed prices. "No one is winning out of this price war," Brown-Forman Wines president and COO David Dearie said. "The consumer is getting some really good quality wines for the prices but from the supplier's point of view and the retailer's point of view, all we're doing is taking a lot of value out of the wine business."
     Most people interviewed, however, were cautiously optimistic about the future for two reasons.
     First, despite a difference of opinion on timing, most said they see the global wine supply situation coming into balance. Typical was the response we heard from Allied Domecq US president and CEO Bill Newlands, who said, "The crush this last year being down should balance supply and demand and get the pricing structure stabilized, if not heading up."
     Second, they believe per-capita wine consumption in America will increase substantially because younger people appear increasingly interested in wine. "My own belief is we are going to keep seeing growth," Franciscan Estates president Jon Moramarco said. "The market will keep growing as people make wine part of their everyday life. It will get better and we will go into better times."
     Most agreed that the greatest threat to the health of the US wine industry is competition from imports. A number of people noted that current trends in currency markets stand to brighten the export picture for exports and slow down sales of foreign imports, at least in the short term. Beringer Blass managing director Dan Leese said he "expects US vintners to see further erosion of market share at home because of imports but not to the extent many predict." He also said wine companies should to be careful not to make too many decisions based on short-term trends.

Long-Term Outlook
     There were differing perspectives on whether high costs will hinder the American wine industry's ability to compete over the long term in an increasingly global market.
     "The US wine business is going through a transition, there's a significant change going on, particularly at the sub-seven dollar end of the marketplace," Kendall-Jackson president John Grant said. "I think there are other countries in the world better positioned to market wines in that high-volume low-value segment of the marketplace."
     Fred Franzia, who turned the wine world upside down with "Two Buck Chuck," had a different perspective. "The greatest challenge for our wine industry is to build a US market both by increasing the number of wine consumers and by keeping foreign interests, both imports and joint ventures, from increasing their market share. I simply don't understand the short-sighted nature of my California colleagues when they give up shelf space to wines from overseas," he said. "It hurts our growers right now and long-term it will hurt our sales."
     Michael Mondavi of Robert Mondavi Corporation said US producers have always been the most innovative. He argues that while the US wine industry has higher costs, it can stay competitive because it has a superior climate for growing high-quality grapes.
     "We have some higher costs, but the US has always been the most innovative and we should be able to produce wines of higher quality as efficiently as any producers around the world," Mondavi said. "We got a little complacent in the decade of the 1990s and some of the other New World producers took advantage. It's time for us to wake up and go into attack mode."
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View WBM's Top 30 US Wine Companies of 2004