The wholesale wine market in the United States is undergoing a deep transformation. From the consolidation of distributors to the rise of private labels, small and medium producers are facing growing challenges to find space on shelves and access distribution channels, leaving them with fewer options to reach consumers. This concentration of power has reduced competition and made it difficult for independent wineries to negotiate favorable conditions.
Distributor consolidation: an obstacle for small producers
One of the most notable changes in wine distribution in the United States is the consolidation of distributors. Currently, three large companies dominate the market: Southern Glazer’s Wine and Spirits, Republic National, and Breakthru Beverage Group. These companies control more than 50% of the market, leaving fewer options for smaller wineries that struggle to find a distributor willing to offer shelf space for their products.
Barry Herbst, from the independent store Bottle Barn, highlights that this concentration has reduced the diversity of products in the market. Although large distributors handle thousands of brands, they prioritize large producers, leaving independent wineries out of the game. Rob McMillan, from the Silicon Valley Bank wine division, adds that “wine distribution remains stuck in warehouses,” with smaller wineries left on the sidelines while the big players gain access to retailers.
Protip: This statement shows how important it is to bring “winning” products to the market that not only are DIFFERENT but also BETTER than the competition. At Toral Wines and Spirits, we bring products with a proven track record in the market, but we strive to offer them as an exclusive label for a specific retailer. This is not easy to do, but implementing this strategy will make everyone happy in the end!
Private labels and their impact on small producers
Private labels have gained popularity in recent years, thanks to their higher profit margins for retailers. This trend has placed significant pressure on small wineries, which often cannot compete with the prices of private labels. As a result, many independent wineries have been forced to seek alternative distribution channels.
Protip: As long as customers are walking into stores, our idea is to bring products that consumers are looking for. Building brands and providing a service are two different strategies that can work simultaneously. The key is to be clear about the goal for each market opportunity.
For instance, we specialize in producing labels for U.S. brand owners who already have established brands in the market. The goal is to improve how quickly cases are turning, with better cost and quality for the brand owner. The brand owner can be a supermarket chain, importer, distributor, etc.
The importance of adaptation: direct-to-consumer and niche markets
Faced with the challenges of consolidation and private labels, many medium and small producers are turning to alternative strategies to reach their customers. Direct-to-consumer (DTC) sales have become an attractive option, especially after the pandemic, allowing producers to connect directly with consumers. However, this strategy faces logistical and legal barriers, such as shipping restrictions between states, making large-scale implementation difficult.
On the other hand, smaller wineries can find success by focusing on niche markets, such as natural wines or lesser-known regions. Barry Herbst emphasizes the importance of independent stores offering a more exclusive selection to compete with large chains.
Protip: We chose the brand “Hospitality Series” to be an exclusive label for hotels and restaurants in the Americas. Our family owns a hotel in Chile, Puerto Viejo Hotel Llico, and we felt that having a “welcome wine” when guests arrive at the hotel is the perfect “Hospitality experience.”
The future of wholesale wine distribution in the United States
Despite the current challenges, the future of the wholesale wine market in the United States is not entirely bleak. Large producers will continue to dominate, benefiting from distributor consolidation and the growth of private labels. However, small producers will need to adapt to the new market realities, either by diversifying their sales channels or seeking specialized distributors that value the quality and authenticity of their products.
Medium and international wineries will continue to face difficulties but will also find opportunities if they can focus on creative strategies to stand out in the U.S. market.
Protip: The opportunity for winery brands comes from having genuine brands with scores and great reputations (the kiss of death for winery brands is having low prices on the internet). Retail buyers will always check to ensure they are getting a good deal! The key is to build a long-term relationship with a specific retailer in a region and provide exclusivity in that “winning” product.
Hospitality Series Cabernet Sauvignon: a wine that represents quality and tradition
In such a competitive landscape, Hospitality Series Cabernet Sauvignon stands out as a wine that reflects the perfect balance between quality, tradition, and a modern approach. This cabernet offers a sophisticated and enjoyable experience, ideal for those looking to enjoy a carefully crafted wine in an increasingly complex market.
Unlike many other brands, Hospitality Series Cabernet Sauvignon is produced by a winery committed to quality and sustainability. By choosing this wine, consumers not only enjoy a unique tasting experience but also support independent producers who are working hard to keep the winemaking tradition alive.
The U.S. wine market is undergoing a deep transformation, driven by distributor consolidation and the rise of private labels. While this environment presents challenges for small and medium wineries, it also offers opportunities for those brands that can adapt and find new distribution channels. Hospitality Series Cabernet Sauvignon is an example of how a brand can stand out in a competitive market by offering a high-quality product and a unique story.
