Wineries (United States) — NAICS 312130

An investor's primer. NAICS 2022 code 312130 covers the manufacturing establishments that make wine, brandy, and brandy spirits from grapes and other fruit — the production step, not the growing of grapes or the selling of finished bottles. The code also includes nonalcoholic wine [1].

1. Overview

Wineries turn grapes (and other fruit) into wine. It is a farming-linked manufacturing business with an unusually long cash cycle: vines take years to mature, grapes are normally harvested in September and October and finished wine becomes available for sale between five months and two years after harvest [2], and much of a winery's value sits in land, barrels, and aging inventory rather than in fast-moving cash.

Why an investor should care — and a warning. Wine is a large consumer category, but market-size estimates vary widely by methodology: Silicon Valley Bank's consumer-market measure is approximately $74 billion in 2025 (329 million nine-liter cases, down 2.0% in volume and 1.6% in value from 2024) [3], while Forbes/Wine Institute figures place the U.S. retail market closer to $107–115 billion [4]. Regardless of the headline number, wine is in a genuine, multi-year demand decline: Wine Institute data show U.S. consumption falling from 1.06 billion gallons (3.16 gallons per resident) in 2021 to 870 million gallons (2.54 gallons per resident) in 2024 [5], and volume continued falling in 2025 — now four to five straight years below the 2019 peak [6][7]. That combination — real assets and premium brands on one side, a shrinking drinking base on the other — is the whole investment story.

The ways in are lopsided. Almost the entire industry is privately and family owned. Public-market investors have only a handful of small, thinly traded pure-play stocks plus one large beverage company (Constellation Brands) that has deliberately shrunk its wine exposure to a sliver. Most serious capital enters through private equity, direct winery/vineyard ownership, and farmland rather than the stock market.

2. What it is and how it's structured

In scope (312130): establishments that ferment and produce wine, sparkling wine, brandy, wine coolers, cider, and nonalcoholic wine, including bonded wineries and "blending and blending-and-bottling" operations [1]. A winery's own tasting-room and wine-club sales of its production count here.

Explicitly excluded (adjacent codes):

• 111332 Grape Vineyards — growing wine grapes is agriculture, not manufacturing, even when the same family does both. Estate wineries straddle the line; the farming half is a separate code.
• 312120 Breweries and 312140 Distilleries — beer and spirits production. (Brandy sits here rather than with other distilleries because wine and brandy can emerge from the same grape-processing operation.)
• 424820 Wine and Distilled Alcoholic Beverage Merchant Wholesalers — the distributor ("second tier") layer, including businesses that merely bottle purchased wine and wholesale it.
• 445320 Beer, Wine, and Liquor Retailers and 722 Bars/Restaurants — off- and on-premise selling of finished wine.
• Imported wine — brought in by licensed importers (wholesale), not produced under 312130.

Operating model. A winery acquires grapes through estate vineyards, grower contracts, or the spot market; crushes and ferments them; and then blends, ages, bottles, stores, and markets the resulting wine. The spectrum runs from vertically integrated estates — which own vineyards, production equipment, brands, tasting rooms, and clubs — to "virtual" brands using purchased fruit and custom-crush facilities. Production and facility costs are capitalized into inventory before bottling, while much of the marketing, hospitality, shipping, and administration is expensed as incurred [2].

Ownership mix. Overwhelmingly private. The volume leaders (Gallo, The Wine Group, Trinchero, Jackson Family, Delicato, Bronco) are family- or management-owned. Private-equity ownership has grown (Butterfly Equity owns Duckhorn; Sycamore Partners owns Ste. Michelle). Publicly traded producers are the rare exception, not the rule.

3. How big it is

Our federal ground-truth figures for NAICS 312130:

The federal Herfindahl-Hirschman index (a standard concentration measure) for this industry is suppressed in the source, so no HHI value is reported here.

The undercount caveat — important for this industry. Trade sources count roughly 11,000+ U.S. wineries (about 11,450 heading into 2025, slipping toward ~11,100 in 2026 as closures outpaced openings) [9]. The federal figure of 4,560 establishments looks far smaller for good reasons, not error: County Business Patterns counts only businesses with paid employees, while thousands of U.S. wineries are nonemployer sole proprietors, "virtual" brands, and "alternating proprietors" or custom-crush clients that share one bonded physical facility. So the federal statistics capture most of the industry's economic mass (payroll, shipments) but substantially undercount the number of operators. Both numbers are correct for different questions.

Two more scale facts worth holding: California produces roughly 80% of all U.S. wine [10], and the $24.3 billion federal figure is production value at the winery — it is not the ~$74–115 billion consumer/retail market [3][4], which adds distributor, retailer, and restaurant markups on top and includes imported wine.

4. The investable universe

Public pure-plays are scarce and small. This is the honest headline: you cannot buy "the U.S. wine industry" in the public market.

Recently removed from the public market — a telling pattern: The Duckhorn Portfolio (luxury) was taken private by Butterfly Equity for $1.95 billion in December 2024 [16]; Vintage Wine Estates filed Chapter 11 and delisted in 2024 after its stock collapsed from a $600M-IPO peak to pennies [17].

Major private / other owners (the real center of gravity). Trade data from the 2024 Wine Handbook put U.S. supplier volume shares at: Gallo 32.6%, The Wine Group 10.3%, Constellation 6.4%, Delicato 4.8%, Trinchero 4.1%; no other supplier reached 4% [18]. Those shares are pre-2025 and materially overstate Constellation's current volume position after it transferred mainstream brands to The Wine Group in June 2025 [12]. By cases sold [18]:

• E&J Gallo — #1, ~90 million cases; family-owned; brands from Barefoot to Louis M. Martini and Orin Swift.
• The Wine Group — #2, ~43 million cases (now higher post-Constellation acquisition); management-owned; Franzia, Cupcake — and, since 2025, Woodbridge, Robert Mondavi Private Selection, Meiomi, SIMI, Cook's [12].
• Trinchero Family Estates — #3, ~17 million cases; Sutter Home, Ménage à Trois, Mumm Napa.
• Ste. Michelle Wine Estates (owned by PE firm Sycamore Partners), Jackson Family Wines, Delicato Family Wines (Bota Box), Bronco Wine (Charles Shaw "Two-Buck Chuck") — all private.

5. How the money works

A winery's economics come down to price tier × channel mix × the cost and capital tied up in grapes, barrels, and time.

Price tiers. Value (roughly under $11 a bottle), premium ($11–25), and luxury ($25+). Margins widen dramatically up the ladder, which is why the industry's survival strategy is "premiumization" — sell less wine at higher prices. In 2025, cheaper wine kept sinking while bottles at $15+ held up far better [6]. However, "premiumization" is frequently overstated: higher price does not guarantee growth. SVB reports that even premium-winery revenue in its database was down 1.2% in both dollars and cases in the first half of 2025 [3].

Sales channels — margin differs sharply:

• Direct-to-consumer (DTC): tasting rooms, wine clubs, and e-commerce. Highest margin because the winery keeps the full retail dollar, and average DTC bottle prices run well above wholesale. Silicon Valley Bank reports that tasting rooms and wine clubs accounted for 53% of the average participating winery's sales in its latest survey, with regional reliance as high as 78% [19]. But this channel also shrank in the downturn — DTC winery shipments fell 15% in volume to 5.4 million cases in 2025, while value fell 6% to $3.7 billion [20].
• Wholesale (the three-tier system): the winery sells to a distributor, who sells to a retailer/restaurant. The winery typically nets only about half of the shelf price after the middle tiers take their margins. It's lower-margin but the route to scale. Distributor incentives can become an important hidden price concession — Willamette Valley Vineyards, for example, recorded $1.93 million of distributor incentive expense as a reduction of 2025 sales [2].
• Export: a smaller slice, exposed to tariffs and currency.

Cost and capital. Grape cost (estate-grown vs. purchased vs. bulk wine) is the biggest input. California's preliminary 2025 crush was about 2.7 million tons — 6.2% below 2024 and the lightest in more than two decades. The weighted average price across all grape types was approximately $979 per ton, down 3.8%; red wine grapes averaged $1,280.63 per ton, down 4.4%, while white wine grapes averaged $707.12, down 0.9% [21]. These are statewide averages with enormous differences by variety and district.

Above grape cost sit oak barrels, and — crucially — inventory that ages for one to three years or more before it can be sold, tying up cash. Willamette Valley Vineyards, for example, carried $33.4 million of inventory at year-end 2025 — nearly as much as its annual net sales — including 188,527 bottled cases plus 697,725 gallons of bulk wine in process [2]. Estate wineries also carry vineyard land that takes ~4–5 years to reach full yield. Part of the long-run return on an estate winery is land appreciation, not just wine margin. Brand strength and critic scores are the pricing-power lever — a 95-point score can reprice a wine overnight.

Recurring revenue (wine-club subscriptions) and tourism (tasting-room visits, events) are the highest-quality parts of the model; the treadmill of selling commodity wine into a consolidating distribution system is the hardest.

Profitability. Gross margins can look attractive while returns on invested capital and cash generation are weak. In Silicon Valley Bank's premium-winery sample, the 2024 gross margin was 59.1%, but pretax margin was negative 2.6%; only about half of sampled wineries were profitable, down from 76% in 2021 [22]. Dispersion is exceptionally wide: top-quartile wineries reported 8% sales growth and an 11.9% operating margin, while the bottom quartile reported a 10.2% sales decline and a negative 10.5% operating margin [19]. Brand relevance, channel execution, inventory discipline, and cost structure appear more decisive than appellation alone.

Seasonality. Willamette says its first quarter is normally its weakest and volume rises progressively through the fourth quarter with holiday purchasing [2]. Restaurant traffic, tourism, tasting-room visitation, and gifting add discretionary cyclicality even though everyday wine has consumer-staples characteristics.

6. What drives demand

• Demographics and moderation. The core wine-drinking Boomer cohort is aging out of heavy consumption, and Millennials/Gen Z are not replacing them. The share of U.S. adults who drink at all fell to about 54%, a record low in Gallup's tracking [23]. This is the single biggest force in the industry.
• Health narrative. Rising "sober-curious" behavior and mounting health advisories are structural headwinds (see Regulation). Health concerns and moderation have weakened the former perception of wine as a uniquely benign alcoholic beverage.
• Substitution. Spirits, hard seltzers, ready-to-drink cocktails, non-alcoholic options, and cannabis/THC drinks all compete for the same occasions — Gen Z especially has more choices than any prior generation [6]. Low- and no-alcohol products address part of the moderation trend but also compete with traditional wine for occasions and shelf space.
• Premiumization and disposable income. The affluent, experience-driven buyer still trades up; luxury and DTC hold better than the value tier.
• On- vs. off-premise. Restaurant/bar demand (higher price per bottle) versus retail; both matter, and restaurant traffic swings the mix.
• Tourism. Wine-country visitation directly feeds the highest-margin DTC channel.

7. Regulation

Wine is one of the most heavily regulated consumer products in the U.S., at both federal and state levels.

• Federal (TTB). The Alcohol and Tobacco Tax and Trade Bureau issues the bonded winery permit required to operate and approves every label (COLA, Certificate of Label Approval) — labels must comply with rules governing alcohol content, appellation, varietal claims, producer identity, and health warnings [24]. The TTB collects the federal excise tax — about $1.07 per gallon on most still wine up to 16% alcohol, with rates varying by alcohol content, carbonation, and eligibility for credits [25]. The Craft Beverage Modernization Act (CBMA) gives smaller producers a large tax credit (up to ~$1 per gallon on the first 30,000 gallons), which materially helps small wineries [25].
• The three-tier system. A legacy of Prohibition's repeal (the 21st Amendment left alcohol regulation largely to the states): producers must generally sell to licensed distributors, who sell to retailers, who sell to consumers. It fragments the market state by state and inserts margin-taking middle tiers. State franchise laws can make distributor appointments difficult to terminate and give a distributor substantial control over shelf access.
• DTC shipping law. In Granholm v. Heald (2005), the Supreme Court held states may not let in-state wineries ship directly to consumers while banning out-of-state wineries — they must treat both evenhandedly [26]. That opened the DTC channel; today most states allow winery-to-consumer shipping, but each requires its own permits, taxes, and volume caps, and retailer shipping remains far more restricted [27].
• Health labeling — a live risk. In January 2025 the U.S. Surgeon General issued an advisory calling for cancer-risk warning labels on alcohol, citing links to at least seven cancers [28]. It is not yet law, but it signals possible future warning-label mandates and feeds into the revision of the federal Dietary Guidelines.
• Tariffs and trade. State excise taxes vary widely, and federal trade policy cuts both ways: 2025 U.S. tariffs on EU wine (10%, later 15%) [29] raise import costs and invite retaliation against U.S. wine exports.

8. Competitive dynamics and consolidation

The industry is a barbell: thousands of tiny wineries at one end, a few giants at the other. Concentration by revenue is moderate at the top — the four largest firms hold about 37.8% of receipts, the top eight ~46.2%, the top 20 ~56.1%, and the top 50 ~66% [8] — but volume is far more concentrated than that, since Gallo alone ships ~90 million cases and the top five suppliers command over 58% of case volume [18].

The downturn is accelerating consolidation and shakeout:

• Constellation Brands exited mainstream wine, selling those brands to The Wine Group for $846.5 million in 2025 to concentrate on beer and premium labels [12].
• Duckhorn went private (Butterfly, $1.95B) [16]; Vintage Wine Estates went bankrupt [17].
• Distributor consolidation (a shrinking number of mega-wholesalers) squeezes small wineries' access to shelves — a key reason many double down on DTC.
• On the supply side, California growers pulled out ~38,000–40,000 acres of vineyards in 2024–25 (~7% of state acreage) to work off a grape glut, with an estimated 30% of the 2025 crop going unsold [30].

9. Risks

• Structural demand decline. The generational shift away from wine is the defining risk; premiumization softens but does not reverse it.
• Health and regulatory overhang. Cancer-warning labels and tighter drinking guidelines could permanently dampen demand [28].
• Oversupply / price pressure. The grape glut and heavy discounting compress margins even as vineyard removals try to rebalance supply [30]. A strong vintage is not necessarily financially positive if the market is already overstocked — it can increase working-capital needs and future discounting.
• Capital intensity and illiquidity. Land, barrels, and multi-year aging inventory tie up cash; assets are slow to sell in a downturn — as Vintage Wine Estates' collapse showed [17].
• Climate and agricultural risk. Wildfire smoke taint, drought, frost, excessive harvest rain, heat spikes, pests, grapevine red blotch, and phylloxera can reduce yield or make grapes commercially unusable. Changing growing conditions may also alter which varieties thrive in established appellations. Insurance may be unavailable or uneconomic for some smoke and crop risks [2].
• Trade. Tariffs raise costs and threaten export retaliation [29].
• Distribution power. Dependence on a consolidating wholesale tier limits pricing and shelf access; franchise laws can impede changing distributors.

10. How to invest, and the outlook

Public routes (limited).

• Constellation Brands (STZ) — a way to own a great beer business with only token wine exposure; not a wine bet [11].
• Willamette Valley Vineyards (WVVI) and Crimson Wine Group (CWGL) — genuine pure-plays, but micro-cap and thinly traded, with all the liquidity and volatility risk that implies. WVVI's 2025 results illustrate the challenge: 60.5% gross margin but a $1.44 million operating loss as gross profit declined while selling and administrative expenses remained high [2][13][14].
• Treasury Wine Estates (TWE) — large, wine-focused, but foreign-listed [15].
• Indirect land exposure: farmland REITs such as Gladstone Land (LAND) hold some California winegrape acreage inside a broader permanent-crop portfolio [31] — exposure to vineyard land, not winery equity, and only a small slice of the REIT.

Private routes (where most capital actually goes).

• Private equity in wine (Butterfly, Sycamore, family offices like Bill Foley's) — buying distressed or premium portfolios.
• Direct ownership of a winery or vineyard — operationally demanding, capital-heavy, long payback, but with real-estate optionality. Private diligence should separate land value, vineyard economics, winery capacity, brand value, and distributor relationships; reconstruct inventory by vintage and SKU; test depletion rather than shipment data; distinguish full-price DTC sales from discounted wholesale placements; and model grape commitments under declining demand.
• Equity crowdfunding / Regulation A offerings (a path WVVI pioneered) let small investors buy into individual wineries.
• Note: "fine wine investing" (buying bottles/cases as collectibles via platforms like Vinovest) is a commodity play on specific vintages — not an investment in winery businesses.

Near-term outlook (forward-looking judgment). Expect the demand slump to persist in the near term: SVB expects demand deterioration to moderate with the market bottoming in 2027–2028 [3], while volume keeps sliding and value holds up better as premiumization does the heavy lifting [4][6]. Vineyard removals should gradually rebalance California's grape oversupply — possibly firming grape prices within a couple of years as winery inventories normalize [30] — which would help growers before it helps volume. The overhangs to watch are the health/labeling debate [28] and trade policy [29]. Consolidation and closures are likely to continue, rewarding scale (Gallo, The Wine Group) and defensible luxury/DTC brands while squeezing the undifferentiated middle. For most investors, the practical conclusion is that wine is largely a private-market and real-asset industry with a demanding demand backdrop — approached selectively, not as a broad public-equity theme.

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Sources

1. U.S. Census Bureau, 2022 NAICS Definition — 312130 Wineries. https://www.census.gov/naics/?input=312130&year=2022
2. Willamette Valley Vineyards, 2025 Form 10-K (harvest timing, inventory, financials, risk factors). https://www.sec.gov/Archives/edgar/data/838875/000119983526000061/wvvi-10k.htm
3. Silicon Valley Bank, 25th Annual State of the U.S. Wine Industry Report (January 2026): market size $74.3B, 329M cases, -2.0% volume, -1.6% value; 2027–28 bottom forecast. https://www.svb.com/news/company-news/silicon-valley-bank-releases-25th-annual-state-of-the-us-wine-industry-report/
4. Liz Thach / Forbes, "$115 Billion U.S. Wine Market Enters 'Reset' Amid Shifting Consumer Trends," 2026. https://www.forbes.com/sites/lizthach/2026/05/12/115-billion-us-wine-market-enters-reset-amid-shifting-consumer-trends/
5. Wine Institute, U.S. Wine Consumption (1.06B gallons in 2021 → 870M gallons in 2024). https://wineinstitute.org/our-industry/statistics/us-wine-consumption/
6. The Drinks Business, "US wine trends 2025: premiumisation dominates as volume drops," 2025. https://www.thedrinksbusiness.com/2025/08/us-wine-trends-2025-premiumisation-dominates-as-volume-drops/
7. Vinetur, "US Wine Sales Drop to 329 Million Cases in 2025 as Industry Faces Prolonged Demand Slump," 2026. https://www.vinetur.com/en/2026011594880/us-wine-sales-drop-to-329-million-cases-in-2025-as-industry-faces-prolonged-demand-slump.html
8. U.S. Census Bureau, County Business Patterns (2023) and Economic Census (2022) — Concentration statistics, NAICS 312130; U.S. Small Business Administration, Table of Size Standards (2023). (Histometrics ingested federal ground-truth figures.) https://www.census.gov/programs-surveys/cbp.html
9. Vinetur, "U.S. Winery Count Drops by 3% in 2025 as Closures Hit Nearly Every State" (Wine Business Monthly data), 2026. https://www.vinetur.com/en/2026031197407/us-winery-count-drops-by-3-in-2025-as-closures-hit-nearly-every-state.html
10. Wine Institute, "California & U.S. Wine Production," 2025. https://wineinstitute.org/our-industry/statistics/california-us-wine-production/
11. Constellation Brands, Inc., Full Fiscal Year and Fourth Quarter 2026 Financial Results (net sales $9.14B; beer ~91%; wine & spirits ~$824M), 2026. https://ir.cbrands.com/news-events/press-releases/detail/336/
12. Nasdaq / Constellation Brands, "Constellation Brands Completes Divestiture of Mainstream Wine Brands to The Wine Group" ($846.5M), 2025. https://www.nasdaq.com/articles/constellation-brands-completes-divestiture-mainstream-wine-brands-wine-group
13. StockAnalysis, "Willamette Valley Vineyards (WVVI) — 2025 revenue $37.2M," 2026. https://stockanalysis.com/stocks/wvvi/
14. StockTitan / StockAnalysis, "Crimson Wine Group (CWGL) — market cap ~$84.6M," 2026. https://www.stocktitan.net/overview/CWGL/
15. Treasury Wine Estates, 2025 Annual Report (U.S. brands: DAOU, Frank Family, Stags' Leap, Beaulieu Vineyard, Beringer, Sterling). https://announcements.asx.com.au/asxpdf/20250813/pdf/06mt6g6f8jsktk.pdf
16. The Duckhorn Portfolio / Butterfly Equity, "Butterfly Completes $1.95 Billion Acquisition of The Duckhorn Portfolio" (December 2024). https://www.duckhornportfolio.com/assets/client/File/BrandAssets/DWC/Butterfly_Transaction_Close_Press_Release.pdf
17. Wine Spectator, "What Does Vintage Wine Estates' Bankruptcy Mean for California Wine?" 2024. https://www.winespectator.com/articles/vintage-wine-estates-bankruptcy
18. VinePair (reporting AAWE / Wine Handbook data), "These Are the 25 Largest Wine Suppliers in the U.S.," 2024–2026. https://vinepair.com/booze-news/americas-25-biggest-wine-suppliers/
19. Silicon Valley Bank, 2026 State of the U.S. Wine Industry (tasting room/club share 53%, up to 78% regionally; top/bottom quartile dispersion). https://www.svb.com/trends-insights/reports/wine-report/
20. Sovos ShipCompliant, "2026 Direct-to-Consumer Wine Shipping Report" (volume -15% to 5.4M cases; value -6% to $3.7B in 2025). https://sovos.com/shipcompliant/blog/dtc-wine-shipping-2025-mid-year-report/
21. USDA/NASS, 2025 Preliminary California Grape Crush Report (2.7M tons, -6.2%; weighted avg $979/ton, -3.8%). https://www.nass.usda.gov/Statistics_by_State/California/Publications/Specialty_and_Other_Releases/Grapes/Crush/Prelim/2025/Grape_Crush_2025_Prelim.pdf
22. Silicon Valley Bank, Benchmarking the Premium Wine Industry (2024 gross margin 59.1%, pretax margin -2.6%; ~50% profitable vs. 76% in 2021). https://www.svb.com/globalassets/content/trends--insights/wine/benchmarking-the-premium-wine-industry.pdf
23. Gallup, Consumption Habits survey (share of U.S. adults who drink ~54%), reported via Robb Report / Morning Ag Clips, 2025. https://robbreport.com/food-drink/wine/california-winemakers-removing-acres-vines-1237351654/
24. TTB, Wine Labeling Requirements (COLA, appellation, varietal, health warnings). https://www.ttb.gov/regulated-commodities/beverage-alcohol/wine/labeling
25. TTB, Tax Rates; Winegrape Growers of America, "Federal Excise Taxes" (still wine ~$1.07/gal; CBMA credits). https://www.ttb.gov/taxes/tax-audit/taxes-and-filing/tax-rates
26. Granholm v. Heald, 544 U.S. 460 (2005), U.S. Supreme Court (via Wikipedia / Justia). https://en.wikipedia.org/wiki/Granholm_v._Heald
27. Wine Institute, State Direct Shipping Rules. https://wineinstitute.compliancerules.org/state-map/
28. STAT News, "Surgeon general calls for labels warning of cancer risk on alcohol," 2025. https://www.statnews.com/2025/01/03/surgeon-general-calls-for-labels-warning-of-cancer-risk-on-alcohol/
29. BeverageDaily, "EU wine sector reels from Trump tariff blow," 2025; CalMatters, "California wine industry torn on Trump tariffs," 2025. https://www.beveragedaily.com/Article/2025/04/03/eu-wine-sector-reels-from-trump-tariff-blow/
30. Farm Progress, "California on track to raze another 40,000 acres of vineyards," 2026; Vinetur, "California Vineyards Accelerate Removals," 2026. https://www.farmprogress.com/grapes/california-on-track-to-raze-another-40-000-acres-of-vineyards
31. Gladstone Land Corporation (LAND), "Farmland Portfolio" (permanent crops including winegrapes), 2026. https://www.gladstonefarms.com/farmland-portfolio