Trends in the US Wine Industry for 2014 – Sunny Cellars with Some Cobwebs

Dr. Liz Thach, MW

Dr. Liz Thach, MW

The numbers for 2013 are in, and most experts are more optimistic about the 2014 wine market in the US. Though there are still some areas recovering less quickly from the recession (parts of the Midwest and some on-premise wine sales), in general “cellars are sunny but with a few lingering cobwebs.”

Following is a brief review of trends in the US wine market for 2014 and highlights of 2013. Sources include the Wine Marketing Council, Nielson, Silicon Valley Bank, ImpactRabobank, Euromonitor, ShipCompliant, GuestMetrics, OIV, Wine Institute, Constellation Brands, Wine.com and Frederickson at the Unified Wine Symposium.

Wine Sales in the US in 2013

  • According to Impact Databank, US wine volume was 329 million cases in 2013, a 1% increase from 2012. This includes both domestic and imported wine, and makes the US the world’s largest wine market with France in second place at 313 million cases.
  • The estimated retail value of 2013 wine shipments is $36.3 billion, a 5% increase from 2012. This makes the US the largest wine market in terms of revenues.
  • Approximately 34% of sales were from imports, with California comprising 57%, and other states making up the remaining 9%.
  • Wine sales have been growing at a rate of 2 to 3% per year in the US market for the past 21 years.

US Wine Consumption Rates

  • The US is either the 1st or 2nd largest wine-consuming nation depending on the statistic source: OIV 2012 states the US consumes 29,000 hectoliters behind France (30, 269 hectoliters); whereas the Wine Institute (2011) states the US consumed 3,282,500 liters verses France at 2,891,700 liters.
  • Approximately 44% of all US adults drink wine, but only 35% per capita.
  • For per capita wine consumption, the US ranks #62 at approximately 11 liters per person or 3.08 gallons. The Vatican ranks #1.
  • Of the 330 million people in the US, 101 million now drink wine.

US Wine Consumer Demographic Trends

  • Of adult wine drinkers, 15% are High Frequency drinkers (consuming wine at least once a week or more) and 29% are Occasional drinkers.
  • In terms of gender, 55% of American wine consumers are women and 45% are men, with more men adopting wine over the last decade .
  • Babyboomers are still spending the most on wine, with Millennials (ages 21 to 36) in second place.
  • Major reasons Americans drink wine: 1) they enjoy the taste, 2) like to pair with food, 3) to socialize with friends, and 4) to relax.

Trends in Wine for 2014

  • The most popular varietals in off-premise continue to be: 1) Chardonnay, 2) Cabernet Sauvignon, 3) Pinot Grigio, 4) Merlot and 5) Blends.
  • The fastest growing varietals, with double digit growth, are still moscato, malbec and blends.  Blends include red and white blends in both dry and sweet categories. Expect more growth and experimentation in this segment.
  • The sweet spot for wine pricing is $9 – $11.99, but Americans are trading up and spending more on wine.
  • Sparkling wine, especially Prosecco, continues to be popular, with forecasted growth.
  • Dry roses, often from Provence, are desirable in summer months. Expect new entries from other countries and US wineries.
  • Syrah and white zinfandel continue to decline in popularity.
  • Favorite imported wines by value include: 1) Italy, 2) Australia, 3) Argentina, 4) Chile, and 5) France, but largest value growth in Argentina and New Zealand.
  • Keg wine continues to gain in popularity in on-premise settings, including ultra-premium wine in this new style of container.
  • Craft beer is growing faster than wine, and experts suggest that the wine industry needs to be more innovative to compete.
  • Creative opportunities for wine include seasonal wines, new types of containers, e.g. mini 6-packs of wine, new varietals, blends, innovative labeling, wine cocktails, and additions, such as flavors, vitamins, energy, etc.
  • People are interacting with wine much more on social media, with 80% of wine drinkers using Facebook; wine is the third most popular subject on Pinterest; and wine drinkers talk about wine online 63 times every minute.  See Constellation’s great video with more statistics on this at: http://www.youtube.com/watch?v=wfxPR7XtBUE

Trends in Wine Channel Distribution

  • Approximately 80% of wine sold in the US is off-premise with 16% on-premise. Direct to Consumer (DTC) and Direct to Trade make up the remainder.
  • There are 7762 wineries in the US (Wine Business Monthly, 2014)
  • The number of retail outlets to sell wine has grown to 522, 420 (Nielson, 2014).
  • Off-premise remains healthy with significant growth in the $9 – $11.99 range showing Americans trading up, with $9.19 average bottle prices (Nielson, 2014).
  • On-Premise volume and value still not back to 2007 levels, but slowly making progress with the average bottle price at $46 and by the glass at $10.67 (Guestmetrics, 2012).
  • Online wine sales (ecommerce) have grown 17% in the past year, but still only maintain about 1.5% of total wine sales (Wine.com, 2014).
  • Within online wine sales, retailer to consumer is 5.9% of off-premise wine sales (Nielson, 2014)
  • Winery to Consumer (DTC) online sales up 9.3% to 3.47 million cases in 2013 with value at $1.57 billion (ShipCompliant, 2013).
  • The three largest wine corporations in the world, E&J Gallo, Constellation and The Wine Group, are headquartered in the US and own approximately 51% of the market.