Monday, September 17, 2018

The number of wineries in the USA

We all know that the number of wineries in the USA keeps increasing, but few people know just how many there are, or how rapidly the number is increasing. Well, this is precisely the sort of thing that the government likes to keep a track of, and they do not hide the information from us.

The data in the following graph come partly from the U.S. Tax and Trade Bureau (Bonded wine producers count by state: 1999–2018) and partly from the Wine Institute (Bonded wineries — data prior to 1999). To make this clear: "Bonded winery premises include every licensed production facility of single firms or individuals, licensed warehouses, experimental wineries and wineries with no casegoods production or fermentation capacity." That is, pretty much everything.

Number of US wineries through time

So, that makes 12,573 facilities as of June 30 2018. This is one winery for every 30,000 persons in the country.

There was a decline in number from World War II until 1965, presumably also still reflecting both Prohibition and the Great Depression. However, from 1970 there has been an exponential increase in the number of wine facilities, as shown in the next graph.

Fit to the exponential model of the number of US wineries through time

The exponential model fits very well, which means that the rate of increase is itself increasing each year. Indeed, the number of wineries is multiplied every year by c.1.07 (on average, each year there is an increase of 7% over the previous year). It is not obvious how long this rate of growth can be maintained, since there is a finite amount of land area on which to construct these facilities. However, it has been going on for a half-century now, with no sign of abating.

Obviously, not every year has exactly the same increase, as shown in the next graph, which simply shows the annual change in number.

Annual change in the number of US wineries

First, note the apparent boom between 1975 and 1980. This is an artifact — it is the accumulated number of new facilities over 5 years (341), not just 1 year (presumably, c.70 per year). Second, the apparent boom in 2011 also looks like a possible artifact — the preceding decline, plus the boom, looks like there were a whole lot of new facilities that were not recorded during 2008-2010, which were then included in the 2011 census. However, this same pattern is repeated across all of the states, as shown (in green) for California in the next graph. So, whatever it was that caused this was widespread.

Annual change in the number of California wineries

Speaking of California, it is appropriate to finish with a consideration of how the biggest wine-producing state fits into the national pattern. This is illustrated in the final graph, which shows the number of California facilities as a percentage of the national total.

Percentage of US wineries that are in California

Note that the increasing dominance of the California industry until 1965 (reaching 57%) coincides with the general decline in the national number of wineries. This maximum percentage was maintained until 1984, after which there was a rapid rise in winery numbers elsewhere — that is, until 1986, the number of new facilities outside California grew more rapidly than the number inside. Things steadied after that, with the increase in numbers both inside and outside California keeping pace with each other until the end of the century.

However, the last time California had more than 50% of the US wineries was in 2001; and its dominance has steadily decreased since then. Nowadays, people are simply setting up more facilities outside California than inside it — after all, there is a lot more potential vineyard land outside. Presumably, this trend will continue for the foreseeable future.

6 comments:

  1. David wrote in an earlier blog about family wine businesses making it to the second and third generation:

    "Keeping the family wine business is often hard"
    URL: https://winegourd.blogspot.com/2018/09/keeping-family-wine-business-is-often.html

    Here in the U.S. -- especially California -- we are seeing a discreet shift in winery ownership, as the founding generation enters retirement years and finds few second generation family members interested in taking over the business.

    Wine Spectator reported on the search for an "exit strategy."

    Excerpt from Wine Spectator Online
    (November 12, 2013):

    "West Coast Wineries Are Up for Sale -- Quietly”

    (A wave of recent deals show investors see opportunities in wine, while owners see an exit strategy.)

    URL: http://www.winespectator.com/webfeature/show/id/49221#.UoI_yAMMzG8

    By Tim Fish
    Senior Editor

    “. . . While small wineries can succeed by selling most of their inventory direct to consumers and large producers have muscle with wholesalers, those in the middle -- annual production of 5,000 to 15,000 cases, for example -- can’t get much attention from distributors unless the brand is hot.”

    ReplyDelete
  2. [Previous comment deleted to correct for a typo.]

    Wines & Vines trade media reported (circa January 27, 2014):

    "Number of Wineries Grows to 8,391 in North America"
    URL: https://www.winesandvines.com/news/article/127266/Number-of-Wineries-Grows-to-8391-in-North-America

    Excerpt:

    "New data from Wines & Vines magazine confirm solid growth in the North American wine industry during 2013. The number of wineries grew to 8,391, a gain of 4.3%. U.S. wineries showed two other signs of health as their combined production increased 6.3% and the winery average bottle price rose from $9 to $10.85.

    "Wines Vines Analytics, the magazine’s market-research team, released these numbers prior to the Unified Wine & Grape Symposium in Sacramento, Calif., as a small sample of the information available in the 2014 Directory & Buyers Guide, now available in print and online formats.

    "The United States now has 7,762 wineries, led by California with 3,674. Canada has 568 wineries, having gained more than 8%. The net change in North American wineries was 345.

    "Bonded wineries have their own brick-and-mortar production sites, while virtual wineries have brand names and produce wine at host facilities.

    "Two Western states and two mid-Atlantic states had the fastest winery growth rates. Arizona counted 14.3% more wineries, Maryland 11.1%, Colorado 7.1% and Pennsylvania 4.8%."

    Two calendar years later, Wine Business Monthly trade media reported (circa February 2016):

    "Number of United States Wineries Reaches 8,702"
    URL: https://www.winebusiness.com/wbm/?go=getArticleSignIn&dataId=163894

    One calendar year later, Wine Business Monthly reported (February 2017):

    "Number of United States Wineries Reaches 9,091"
    URL: https://www.winebusiness.com/wbm/?go=getArticleSignIn&dataId=179530

    Around this same time, Wines & Vines reported (circa January 24, 2017):

    "North America Winery Count Is Now 9,872"
    URL: https://www.winesandvines.com/news/article/179538

    Excerpt:

    "North American wineries grew in number to 9,872 as 2017 began, an increase of 5% from a year ago, according to data compiled for the new 2017 Directory & Buyer’s Guide from Wines & Vines magazine. U.S. wineries totaled 9,091; the Canadian total was 692, and the Mexico count was 89.

    "California remained dominant among the 50 states with 4,202 wineries, or 46% of U.S. wineries, followed by Washington with 747 wineries and Oregon a close third with 713. British Columbia led Canadian provinces with 309 wineries followed by Ontario with 236."

    ReplyDelete
    Replies
    1. As noted by Wineman below, counting wineries depends on how you define them. Comparing the number of bonded facilities to other definitions, such as that of Wines and Vines, would be interesting.

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  3. "Ripped from the headlines . . ."

    From The San Francisco Chronicle online
    (September 13, 2018):

    "While other wineries sell, Martinelli makes the hard choice to keep a vineyard in the family"

    URL: https://www.sfchronicle.com/news/article/While-other-wineries-sell-Martinelli-makes-the-13227629.php

    By Esther Mobley
    Wine Critic


    ReplyDelete
  4. Isn't it important to differentiate bonded from virtual wineries? Many producers, large and small, will do a DBA with the TTB for a brand, in effect adding to the number of wineries. So, is that really a winery? I think the average person thinks of a winery as a location where you can drive down the driveway and see the production facility (and go into the tasting room!), rather than one of Gallo's or Trinchero's (or so many others) brands that show the winery name on the back label as the same as the brand name.

    ReplyDelete
    Replies
    1. Then distinction is certainly a worthwhile one. However, getting the data is more tricky because, as far as I can see, the government doesn't make the distinction in their data collection. They tax you, whatever set-up you have!

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