Understanding the US wine market: a brief guide to its structure, culture and practices

My own engagement with the American world of wine trade started with several culture shocks. Usual sales pitches that were habitual for me to produce, full of technical and historical details, simply didn’t work. The products I choose for my clients from my back-then employer’s portfolio – mostly European wines from lesser-known regions providing excellent value for price – were looked upon as something very suspicious. I felt being judged as if I was a snake oil salesman.

Cultural differences and economic behavior are intertwined. When it comes to wine, what and how we buy is shaped by our beliefs and our notions of value that can be highly subjective. My initial mistake was that I was a snob in a Bandwagon market. The dichotomy of Snob and Bandwagon effects on consumer behavior was first described by economist Harvey Leibenstein in 1950: sometimes people tend to buy what their neighbors consume, while in other cases they look for something that nobody else has.^[1] My previous experience was related to a strong Snob market. Buyers and customers wanted exclusivity: most obscure regions, nearly extinct historical varieties; the smaller the lot, the tinier the climat on a map, the better. It is rational behavior: when you possess some knowledge that others don’t, you can find a bargain that others can’t. The thrill of discovery becomes an inherent part of the pleasure that wine brings us and is valuable by itself.

But what if access to this information is restricted, or at least perceived to be as such? If you feel excluded, even if you not necessarily are? And if you were conditioned not to believe a salesman? Then the rational behavior is the opposite: look at what is already popular. In a culture where the importance to fit in is ingrained into your social experience since childhood, to “keep up with Joneses” is both a rational heuristic and socially encouraged behavior.

In a country with a tradition of wine drinking as short as roughly 50 years, in a mass society, lifestyle preferences can be shaped by corporate marketing activities to the point when the corporations don’t recognize their promoted narratives anymore and start to perceive their own stories repeated by customers as something that customers truly want, and something that is practically and morally righteous to satisfy. The consumer side of the US wine market is shaped by the structure of industry, and this structure is very different to what a European is accustomed to seeing.

It is, however, not obvious for an outside observer or a tourist visiting a typical US supermarket, let alone a specialist retail shop. The rows of bottles look perfectly normal and familiar, until you find out that most of them taste virtually identical.

The US wine production industry is incredibly consolidated. As of 2023, around 64% of the total US wine by volume was produced by top 8 wine producing companies: Gallo, The Wine Group, Constellation Brands, Trinchero Family Estates, Delicato Family Wines, Deutsch Family Wine and Spirits, Ste. Michelle Wine Estates and Jackson Family Wine Estates^[2] (in 2025 Constellation sold its wine brands to various buyers and focused on the distribution of Mexican beer). Gallo alone, the largest wine producer in the world previously known as E & J Gallo Winery, sold more than 1 billion bottles of wine (1,051 million bottles) in 2023, which are stunning 27% of the US wine production and 24% of all US wine consumption (nearly all Gallo wines are sold in the domestic market). This is, for example, approximately 50 times more than the total production by volume of Antinori.

The corporate affiliation usually remains unknown to an average consumer. The producers routinely mention only their subsidiaries on the back label, but not the parent company. In some cases, they mention nothing at all, although I’m not sure about the legality of this practice. Production facilities, however, are usually shared by these nominal subsidiaries for the sake of the economy of scale.

On the other hand, it is not a carefully guarded secret. For those who are willing to identify the asset affiliation it is almost always possible to find the listings of brands on corporate websites. The websites intended for commercial promotion are different. No parent company is usually mentioned on them.

It is relatively common practice in the US to sell a wine brand apart from its former production facilities,^[3] or for a large conglomerate to buy a winery just to lay off the personnel and to exploit the brand by turning it into a mass-produced wine.^[4] It is much more common in the US than for European conglomerates such as LVMH or Pernod-Ricard who, albeit trying to optimize costs and not hesitating to conduct lay-offs if necessary, usually don't view wine as perfectly substitutable commodity, and hence prefer to invest into developing purchased assets in a long-term perspective.

A unique American notion of commercial wine is the key for understanding the culture of the US wine market. This term lacks a universally accepted definition yet ubiquitously used within the industry with a certain implied meaning. Although you can find definitions mentioning high-volume inexpensive wine production at industrial facilities, in practice this notion has implications vastly beyond that. There is, after all, nothing intrinsically wrong with high-volume winemaking and simple and inexpensive wines, but the notion of commercial wines certainly implies some other connotations. Not all simple and inexpensive wines can be called commercial. Conversely, not all commercial wines are inexpensive: there are plenty of them above $50 or even $200.

Although it’s inevitable that a term without strict definition might be understood slightly differently by various people and companies, I suggest the following formulation as the most adequately describing the implications of this term: a commercial wine is a wine produced for the sole purpose of making money. It is devoid of any aesthetic or existential ambitions of the winemaker or cultural or historical context. It’s a product of what is perceived by marketers as consumer taste and customer appeal, sometimes very questionably measured, rather of artistic expression or craftsmanship tradition, let alone the expression of God’s will, as many Burgundians still consider their wines. The Weberian explanation of American wine through protestant ethics of commercial success is tempting and sometimes used by commentators, although I personally find it unconvincing.^[5]

You don’t need to go that deep to understand the corporate ethos of maximizing profit by minimizing costs and adding as much margin as possible through marketing. Leibenstein suggested analyzing the demand as a sum of functional demand (for wine, organoleptic qualities) and non-functional demand (the properties of a product that aren’t connected to its physical qualities).^[6] Terroir-based marketing strategies that became mandatory for almost any European wine, at least theoretically, are derived from some physical properties, and the concept of provenance. Commercial wines are usually marketed through selling stories, sometimes fictional, and other artificially assigned attributes.

There is, once again, nothing wrong with marketing activities per se, whether they are conducted by a corporation, a cooperative, an independent grower or a monastery. Historically wine was elevated from commodity to cultural product by these activities, when, for example, in 1666 the London tavern Pontack’s Head started to sell wine from Chateau Haut-Brion for 7 shillings a bottle instead of 2 shillings for usual claret. On the other end of this specter there are German cooperatives: I wish more of them would invest in marketing, enabling higher prices and more profit for the benefit of their members and improvement of their wines. Marketing alone doesn’t make wine commercial, although some marketing practices can be indicative to spot a commercial wine. The lack of physical details is usually a warning sign.

But why does this, after all, work? I am afraid that it is impossible to analyze the US commercial culture without touching the highly problematic question of American epistemological relativism. It has historical roots: from the notions that all religious denominations and all congregations are equal and that no one can be persecuted for their words ensued the culture of free speech that, perhaps, constitutes one of the greatest strengths of the United States of America. The English notion of freedom that marks a gentleman, in the original sense from early modern England, is the freedom to tell the truth.^[7] A gentleman is a person who is economically independent and therefore has no incentive to deceive others for profit (a quite idealized view, of course). The American notion of freedom is different: you can claim to be what you wanted to be and do what you wanted to do. What ensured the unprecedented social mobility and even more unprecedented wealth accumulation, backfires to the society that has very loose consumer protection laws.

One of defining features of commercial wine production in the US is the use of high color concentrates (HCC). Winemaking techniques are significantly less regulated in the US than in the EU, and this practice, unthinkable in Europe, is not only allowed but allegedly ubiquitously used by manufacturers of commercial wine, although the real volume of HCC in wine production is hard to estimate. A high color concentrate is a syrupy liquid containing concentrated anthocyanins, tannins and aromatic and flavor compounds, usually produced from non-Vinifera grapes.^[8] In 2020, Constellation Brands tried to sell its concentrate production assets famous for additives such as Mega Natural, Mega Purple and Mega Red to E & J Gallo, but the deal was blocked by the Federal Trade Commission on the premises of antitrust legislation. In a published decision, the FTC mentioned that both Constellation and Gallo had been two largest producers of winemaking concentrates in the country^[9]. Eventually, Constellation sold these assets to another large producer of similar substances, Vie-Del.

It is a unanimously accepted belief in the US that the mass customer prefers wines with dense opaque color, full body, plush texture and somewhat sweetish mouthfeel; most certainly some focus groups have been conducted to ascertain these conclusions. High color concentrates are usually added in quantities from 2 to 6 g/l which leads to 2-4 g/l of sugar content in resulting wines. On the palate, it results in a distinctive flabby and jammy character which experienced wine tasters call distinctively unappealing. It is also allowed to add up to 25% of different varieties to a varietal-labelled wines, so a $45 Pinot Noir made for a certain audience can easily contain a quarter of Petit Sirah and several grams of Mega Purple. For American commercial wines, technical sheets are almost never published as the details of manufacturing process would immediately become obvious. Instead of technical details, promotional materials for these wines are usually based on personal stories of the personalities associated with the brand or on very generic statements repeating the same vocabulary. A somewhat trained eye can recognize a commercial wine solely by looking at the promotional website for it.

The understanding of the notion of commercial wine is also vital for understanding the oppositions to it: the minimum intervention winemaking, a concept a bit puzzling for a European if it goes beyond the rejection of new oak («Do you mean you don’t control fermentation temperature? – I mean I don’t add Mega Purple»), variations of the natural wine paradigm, and organic and biodynamic practices. I would argue that it is mostly the taste of high color concentrates in commercial wines that made natural, organic and biodynamic wines so popular in the US, especially among younger generations. However, the counterculture side of wine world in the US, according to my personal perception, is more openly New Age than elsewhere. There is a wine store in San Francisco that sells natural wines along with magic crystals. The American epistemological relativism certainly plays a role here too.

There is no shortage of US wines that are neither commercial nor esoteric and would be considered by a European simply normal, both entry-level and highly priced terroir-driven, but there is gaping conceptual vacuum for them. Worse is the matter as commercial wines pretend to be normal on supermarket shelves. Partly to fill this vacuum, Clark Smith coined the term Postmodern Winemaking for the third approach, neither industrial nor esoteric, in his eponymous book^[10] which is an advanced winemaking tutorial as well as a conceptual manifesto. This term, however, is hardly suitable for category signaling for the customer. It is strange that I have never seen an explicit statement “does not contain high color concentrates” on a back label. Some conscientious producers put technical data there, but this kind of signaling works, of course, only for the initiated.

The distribution part of the market is also very consolidated. Top three companies (Southern Glazer’s, RNDC, Breakthru) account for about 30% of revenue; Southern Glazer’s allegedly amounts to more than 20% of the market by volume.^[11] Although the US three tier system was mostly designed to prevent vertical integration, the widespread practice of sales incentives and the large amounts of “push money” paid by conglomerates to distributors effectively bound sales reps to hugely prioritize commercial wines over products that would suit the customers’ needs better. Incentives became the main driver of sales, and while the bar is constantly rising, it’s impossible for a small producer to win this competition against commercial wine behemoths that allocate large margins of their prices to marketing budgets.^[12] The more commercial the wine is, the larger usually the incentives. No surprise that both on-premise and off-premise listings in the US are dominated by commercial brands.

For a small independent quality-minded producer, the road to market is tricky in the US. Although the legislation varies from state to state and the remains of the three-tier system still impose restrictions, the direct-to-customer sales have become the dominant channel for small wineries. A survey by Silicon Valley Bank suggests that in 2024 an average US winery sold 70% of its production directly to customers, either online or in tasting rooms.^[13] Interstate shipments, however, remain complicated for small wineries.

Demographically, the present state of US wine market was shaped by baby boomers who remain the dominant cohort in terms of spending. It was the rapid economic growth of the 70s, the boom for domestic quality wine production after the Judgment of Paris and the commercialization of the wine industry that created the first American generation of wine drinkers. Unlike their frugal parents from the silent generation as well as their less well-off children and grandchildren, baby boomers adopted conspicuous consumption of premium wines, favoring the big, bold, dense and overripe style peaked in Napa Valley in the 1980s. The whole industry mourns their decline and blames either cannabis or the healthy lifestyle of the youth for the shrinking market, while refusing to pose tough questions to itself. But beyond these uncomfortable questions, the opportunities are plenty.

Ilya Zabolotnov

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