How faithful are American value-wine drinkers?

For several years now, the USA has been named the “most attractive” wine market, by the Global Compass report. However, this does not mean that the USA does well across all wine categories, as a producer. For example, Michael Franz has recently commented on The scandalously poor performance of affordable American wine.

The scandal in American wine is, apparently, that: “the United States produces distressingly few globally competitive wines costing $20 or less.” This is in spite of the report that US wine reached an average of $10 per bottle for the first time back in 2017. That is: “Consumer thirst for higher-quality wine has pushed the average price for the equivalent of a standard-sized 750-milliliter bottle of wine sold by US retailers passed $10 a bottle.”

I am interested in wines at less than $20-per-bottle because that is the price I try to target for good-value wines (ie. it is possible to find good wines at this price, but you have to do a bit of searching). As I have noted before (Finding inexpensive wines), the searching can be done, in the USA, with the aid of web sites like the Wine Curmudgeon and the Reverse Wine Snob.

In terms of good-value wines in the price range that we are discussing here, these sites have been known to suggest brands like McManis, as well as Castle Rock, Chateau Ste. Michelle, and the Robert Mondavi Private Selection. These wines are even exported to places like Sweden, as I can attest (Sweden is currently the 9th biggest US export market by value).

These recommendation sites do not, of course, recommend things like Charles Shaw wines, whose history has been recently reviewed (Two Buck Chuck and the lure of bargain wine). This wine was originally made by the Bronco Wine Co. as a private label for Trader Joe’s; and, at a price of $1.99, it has apparently sold almost one thousand million bottles since 2001. As noted in the article:

Almost 20 years later, Two Buck Chuck is still here. It still sells for $1.99 in California, though it has risen as high as $2.99 over the years, while shipping costs have raised the price elsewhere in the country to as much as $3.99. Still, even at that price, it costs about half as much as the average bottle of wine.

As pointed out above, it is actually notably less than half of the average, which is now $10. Much closer to half the current average price is: The cheap wine that turned Americans on to fine wine, the E&J Gallo Hearty Burgundy, which retails at $9 for a double bottle. Launched way back in 1964, it was marketed as a thirst-quenching dinner wine of consistency and reliability. It quickly came to dominate the market, selling two million cases annually.

In terms of wine production, E&J Gallo, Constellation, The Wine Group and Treasury Wine Estates (originally from Australia) are currently the major producers in the USA. This does not at all mean that the best-selling brands come from all of these companies, as they each own oodles of wine brands. According to Statista, the five leading table-wine brands in the USA in 2020 (in million U.S. dollars) were:

Finally, it is clear that a lot of the inexpensive wines in the USA come from elsewhere in the world, perhaps supporting Michael Franz' assertion. Or, as Don Kavanagh has put it:

If we were to tell you that you could get a 97-point wine for less than the price of a steak, you'd probably think we were crazy — but you can. Okay, you might have to go to Europe to buy it, which would add considerably to the cost of the bottle ...

The big-selling imported wines in the USA tend to be somewhere near the average bottle price. The American Association of Wine Economists periodically lists America's top imported wine brands, in terms of volume. It is therefore instructive to compare the various lists over recent decades (eg. VinePair). The most recent compilation (AAWE) looks like this (in thousands of 9-liter cases) for the four lists over the past 20 years:

Only the top 10 brands are listed each year, but there are 24 brands in total, across the 20 years. Only Concha y Toro and Riunite appear in all four lists, with Cavit and Lindemans appearing three times each. This does not show a lot of long-term faithfulness by American cheap-wine drinkers (60% of the brands appear in only one list).

In terms of dominance, back in 1991 Riunite accounted for 36% of the wine sold by the top-10 brands, but it has faded since then, accounting for 5—15% of the wine. Mind you, it is still the biggest wine company in Italy (Italy's biggest companies). In 2011 and 2019, Yellow Tail also managed to dominate, accounting for 36% and 30%, respectively, of the wine sold by the top-10 brands.

In those latter two years, Cavit managed 15% of the wine, in second place. However, back in 2001 the top brand was Concha y Toro, which accounted for only 16% of the wine sold by the top-10 brands. This indicates a much more even marketplace for wine importers in the USA, at the turn of the century, unlike at any other time.

Meanwhile, in the distribution tier of the US three-tier alcohol system, three companies — Southern Glazer’s, RNDC/Youngs and Breakthru Beverage — appear to control close to two-thirds of all wine sales in the USA, after a decade of severe consolidation. This indicates as much industry dominance as is present in the wine imports. Consumers do not, of course, show any faithfulness towards distributors.