The US Wine Industry in 2019 – Slowing but Steady, and Craving Innovation

After 24 years of continuous growth in wine consumption the US market slowed to only 1.2% in volume in 2018 (bw166). Despite this flattening of volume growth, dollar value still grew at a 3.7% suggesting that, though Americans may be drinking less, they desire higher quality wine and are spending more per bottle. This indicates that wine still maintains it place as an important American beverage, but wine marketers need to get more creative in order to bring new consumers into the category. The total dollar value of the US wine market in 2018 was $70.5 billion, with $23.3 billion (33%) derived from imported wine (Wines & Vines Analytics, 2019).

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Why the Decrease in Volume Growth?

Experts suggest a series of reasons for the decrease in volume growth: 1) the aging Boomer generation who are drinking less wine due to health reasons; 2) Millennials not adopting wine as much as had been predicted; 3) the growth of new substitute products, such as cider, cannabis, and creative entrants from craft beer and spirits (see Hot Trends  below); and 4) a growing focus on healthy food and less alcohol (McMillan, 2019).

US Still Largest Wine Consuming Nation and a Target for Exporters

Despite these challenges, the US remains the largest wine consuming country in the world, and therefore is a target for many foreign wine producers. Indeed, 26% of the wine volume sold in the US last year was imported, with Italy in the lead for overall sales, followed by Australia, New Zealand, France, and Argentina (Swindell, 2019). The following paragraphs provide a high-level overview of the current state of the wine industry in the US, including “hot categories” desired by American consumers.

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Wine Case Volume by Channel

Total volume of wine sold in the US in 2018 was 408 million 9 liter cases (bw166, 2019), up 1.2% from 2017.

Off Premise – wine sales via grocery stores, wine shops, and other off premise establishments remain the largest channel in terms of both sales and volume in the US market. Volume was 331 million, according to Wine & Vines Analytics, but this figure included the 6 million sold DTC, so this was updated to 325 million. There are an estimated 194,000 off-premise establishments that sell wine (Brager, 2019).

On-Premise – wine sales at restaurants, bars, and other on-premise establishments is the second largest channel at around 77 million cases, according to Wines & Vines Analytics.  There are around 373,000 on-premise establishments that sell wine (Brager, 2019).

DTC (Direct to Consumer) – selling wine directly to consumers via winery tasting rooms, events, ecommerce, and other direct methods continues to be a fast growing channel in the US market, but still at a very small percentage of overall volume. According to Sovos, volume increased by 9% to 6 million cases shipped, and value increased by 12% to achieve $3 billion in sales. The price of the average bottle sold DTC was $39.70, and Sonoma, Oregon, and Washington wineries showed the most volume growth in this channel in 2018. There are currently 9997 US wineries (Wines & Vines Analytics, 2019b).

Top 5 Most Popular Wine Varietals in the USA

The most popular wine varietals/styles in the US market based on volume continue to be: 1) Chardonnay, 2) Cabernet Sauvignon, 3) Red Blends, 4) Pinot Grigio, and 5) Pinot Noir (Nielsen, 2019b).  It should be noted that this year cabernet sauvignon ($2.595 billion) has just inched past chardonnay ($2.549 billion) in dollar value. It is expected that cabernet sauvignon will be the number one varietal in volume as well in the next year or so.

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Number of Wineries and Wine Consumer Demographics

US Wineries = 9997 as of January 2019, up from 9645 year to date (Wines & Vines Analytics, 2019b).  California largest at 4,425 wineries, producing 85% of wine, followed by Washington (776), Oregon (773), New York (396), Texas (323) and Virginia (280).

Percentage of Adult Americans who drink wine = 40% of legal drinking population (240 million) (WMC and bm166)

Wine Consumption Frequency: (WMC- 2018)

  • High Frequency Wine Drinkers = 33% drink wine more than once a week
  • Occasional Wine Drinkers = 67% drink wine once a week or less

Gender of Wine Drinkers = 56% female and 44% male (WMC, 2018)

Age/Generation of Wine Consumers = Matures (ages 72+, 5%), Baby Boomers (ages 54 – 77; 34%), Gen X (ages 42-53; 19%), Millennials (36%, ages 24 – 41), I-Generation (ages 21 – 23; 6%) (WMC – 2018)

Per Capita Wine Consumption = 11 liters per person (2.94 gallons). Even though US is largest wine consuming nation by volume, per capita rates are less than many other countries (Wine Institute, 2016)

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 Hot Trends & Opportunities in the US Wine Market

A major benefit of attending the Unified Wine Symposium (largest wine conference in America) each year is the keynote speech delivered by Danny Brager with Nielsen. He analyzes top wine sales trends in the industry and shares the results. Here are some of the highlights (Brager, 2019):

  • Pink Wine – rosé wine continues to be extremely popular, with double digit growth across all price points.
  • Bubbles & Freshness – Sparkling wines and zippy sauvignon blanc wine continue to show growth, especially in dollar value.
  • Big Reds – Cabernet Sauvignon and red blends continue to be very popular, with cab starting to inch out chardonnay as the favorite US varietal
  • Cider, Sangria & Wine Cocktails – are gaining ground as variety-seeking Millennials explore new beverage options
  • Healthy Wines – though it is not legal to advertise health benefits of wine in the US, consumers are becoming more attracted to wines that use these types of descriptors: “no taste additives, gluten free, low carb, vegan friendly, sulfite free, low calorie, low alcohol, light, lighter, organic, paleo friendly, etc.” This is because of the new focus on healthy food and beverages that is sweeping the nation.
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Hot Trends: Rosé, Sparkling & Wine Cocktails. Photo Credit: Pexel

  • Cans & Creative Packaging – wine in cans is no longer a fad. It is here to stay and growing at double digits, achieving $70 million in sales by the end of 2018. Other alternative containers (tetra, box, and mini-bottles), as well as clever packaging, such as augmented reality labels (see 19 Crimes and Bogle Phantom), are capturing the attention of younger wine consumers. I-Generation is especially fascinated by the AI labels.
  • $11.99 – $19.99 Sweet Spot – the sweet spot for off-premise sales continues to be $11.99 – $14.99 with 8% volume growth and $15 – $19.99 at 10% volume and value growth. Wine priced at less than $10 showed no volume growth, indicating that premiumization continued to thrive during 2018.
  • Oregon, NZ & France –continue to show most volume and value growth, maintaining their popularity with US consumers during 2018. Oregon led with pinot noir, NZ with sauvignon blanc, and France with rose and sparkling wines.
  • Cross-Overs & Cannabis – when the car industry introduced “cross-over vehicles” several years ago (SUV/car hybrid), they started a trend that has crossed over into food and beverage. Thus the US market has seen hundreds of new beer, spirit, juice, and now even cannabis beverages in which wine is a featured ingredient. Consider Oenobier beer aged on muscat wine and Rebel Coast Cannabis infused sauvignon blanc. This type of creativity is very attractive to many buyers who enjoy experimenting with new products.

References

About the Author: Dr. Liz Thach, MW compiles this data each year to assist in teaching wine business classes at Sonoma State University.

Preferences of American Wine Consumers

(Originally published in Winebusiness.com, Dec. 6. 2016)

Wine degustation on the vineyard

What Do American Wine Consumers Want?

With a hotly contested election in the US, Britain exiting the European Union, the Zika virus arriving from South America, and thousands of Syrians fleeing the Middle East, no one can claim it has been a boring year. Perhaps this is why American wine drinkers seem to be more adventurous in some aspects of their wine preferences in 2016, yet seek tradition in others.

The results of the 2016 Survey of American Wine Consumer Preferences have just been released, and these themes as well as others are highlighted. As always the information gives a glimpse into the types of wines Americans are drinking, as well as their reasons for doing so, average prices paid for wine, shopping locations, social media usage, and the answers to a few new questions on luxury wine, packaging and label design.

About the Survey and Sample – 1081 American Wine Consumers from 50 States

First conducted in 2014, this is the third annual survey, and was launched in May of 2016. It was developed by SSU researchers who contracted with Survey Sampling International to collect household panel data from wine drinkers across the nation.

The final sample included 1081 American wine consumers (58% women and 42% men) with all 50 states represented. In terms of age, 29% were Millennials ages 21-39; 22% were Gen Xers ages 40-50; 40% were Baby Boomers ages 51-69, and 9% were from the Greatest generation, aged 70 and above. It should be noted that in the 2015 survey there were 56% Millennials and no members of the Greatest Generation, which could explain some of the changes observed in this year’s survey results.

The median annual income of the sample was $50,000 – $69,999, but 25% made over $100,000 per year. Ethnicity was 81% Caucasian, 5% Hispanic, 7% African-American, and 5% Asian. The sample was highly educated with 62% having a college degree compared with 32% of the US population (US Census, 2014). In terms of marital status, 58% were married and 30% had children under the age of 18 living at home.

Preferred Wine Varietals and Style – “Semi-Sweet Trumps Fruity”

American wine drinkers in this year’s sample included 48% high frequency drinkers who consume wine daily or several times per week (Wine Market Council, 2015). The remaining 52% are considered to be occasional drinkers.

The top five favorite varietals for the 2016 sample were the same as in previous years with chardonnay, cabernet sauvignon, merlot, pinot noir and pinot grigio as the most preferred. This matched with Nielsen scan data as the five most popular selling varietals in the US (52 weeks ending 09/10/16). Overall, American wine consumers in 2016 said they preferred the following types of wine: red (73%), white (68%), rose (36%), sparkling (31%), dessert (13%) and fortified (5%).

In 2015, a new question regarding preferred style of wine was added: How do you prefer your wine to taste? Check all that apply. Interestingly semi-sweet replaced fruity as the most preferred style in 2016. It is possible this may be due to the popularity of red and white blends in the US market, of which many include a small amount of residual sugar. At the same time, the 2016 sample also shows an increased preference for dry wine styles compared to 2015 respondents.slide1

Wine Knowledge and Reasons to Drink Wine – “Taste and Relaxation”

When asked to describe their level of wine knowledge, 57% of the 2016 sample said they had intermediate wine knowledge, while 26% identified as wine novices, 15% as having advanced wine knowledge and only 1% claimed to be wine connoisseurs or experts.

Enjoying the taste of wine remained the number one reason why Americans like to drink wine, at 80% of the sample. Relaxation (at 61%) and pairing with food (55%) were the second and third reasons. In general the 2016 sample cited fewer overall reasons for drinking wine, which could be attributed to differences in the sample or interest in other beverages.slide2

Decision-Making on Which Wine to Purchase – “Price and Brand Rule”

In 2015 and 2016, price (at 80%) and brand (at 67%) continue to be the two most important factors considered by American consumers when purchasing wine (See Graph 3). Moreover, varietal appeared to be more important to the 2016 consumer, and region/appellation to some extent.

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Similar to 2014 and 2015, fewer American wine consumers make wine purchase out of environmental concerns. Only 7%, 4%, and 2% of the sample indicated that they looked for organic, sustainable, and biodynamic wines, respectively, as part of their wine purchase decision making. Such results are consistent with prior research in that many Americans believed wine to be a natural drink. A possible confusion about many environmental and organic certifications advertised on the market (Sullivan, 2010) may have made these attributes less important.

Wine Pricing and Luxury Purchases

Since the Great Recession of 2008, Americans have been slowly increasing their spending on wine. In 2016, this continued to be the case:

  • Buying Wine to Drink at Home: the most common price was $9 – 15 per bottle at 51% of the sample. However 15% will spend $15 to 20, and 5% will spend more than $20 per bottle to drink at home.
  • Buying Wine to Drink at a Restaurant: the most common price was $26 – 35 per bottle at 21% of the sample, but 12% will spend $36 to 45, and 8% will spend above $46. A surprising 25% reported they only buy wine by the glass at a restaurant, with 47% spending $7 to 10 per glass, 11% spending $11 – 15 per glass, and 3% spend over $15 per glass.
  • Luxury Wine Purchases: given the improving economy in the US, a question regarding luxury wine price was added. In 2016, 44% of Americans reported they have spent over $50 for a bottle of wine, 19% over $100, 5% over $200, and 2% over $1000 per bottle. Their main reasons for doing so were: 1) for a special occasion (60%); 2) to enjoy (53%); 3) as a gift (42%); and 4) for my cellar (12%).

Wine Purchase Locations – “Wine Shops and Grocery Stores Dominate”

As in previous years, the most common location for wine purchases in the US is a Wine/Liquor Store, followed by a Grocery Store, and then a Discount/Warehouse store, such as Target or Costco. Online wine purchases continue to be low with only 7% of the 2016 sample reporting they often or almost always make wine purchases this way, and 71% reporting they have never purchased wine online. It is possible that higher delivery prices in the US as well as concerns over temperature control, adult signature requirements, and other issues are contributing to this. Other countries, such as China, the UK and France have a higher percentage of consumers purchasing wine online (Bressolles, 2016).

Wine Social Media & App Usage – “Down Slightly in 2016”

Perhaps due to a lower percentage of Millennials in the 2016 sample, only 88% reported using social media compared to 94% in 2015. Despite this, the most popular platform – Facebook – remained in the number one position; however YouTube surpassed Twitter by a small percentage. When talking about wine online, 25% search for information about wine, 22% share a wine experience and/or label, 20% ask friends for wine recommendations, and 17% look at a winery fan page. Again these percentages are lower than the 2015 survey, perhaps because fewer Americans in the 2016 sample reported owning a smart phone, and the question format was changed to yes/no rather than a scale.

Wine app usage was also lower with the 2016 sample – perhaps again due to lower smart phone usage. The most popular wine apps were: Winesearcher in #1 position, Vivino at #2, and Hello Vino and Delectable tied at #3.

Label and Packaging Preferences – “Both Adventurous and Traditional”

A couple of new questions about wine packaging and label design were added to the 2016 survey. Americans were asked their opinion on five wine packaging options (see Graph 4) to see how accepting they are of alternatives. Results show that Americans may be more adventurous than previously thought with 89% happy with screw caps, 75% with single serving bottles, 60% with boxed wine, 40% with wine in pouches, but only 20% willing to buy wine in cans. This could be because the canned wine option is a relatively recent addition to the US market.slide4There have been several research studies showing that the majority of consumers prefer traditional style wine labels when determining which wine to select (Elliot & Barth, 2012; Boudreaux & Palmer, 2007). Therefore a new question illustrating three fictional wine label designs was included. Survey takers were asked “Which of the following wine label styles appeals to you the most?” Supporting prior research, 64% of American wine consumers favored the traditionally designed label, 23% the modern style label, and only 13% the fun and whimsical label. So though Americans may be more adventurous in accepting alternative wine containers, a larger majority still prefer traditional style labels.

slide5Conclusion – Americans Continue to Evolve as Wine Consumers

Based on this year’s survey, American wine consumers do appear to be evolving in their preferences when compared to research conducted a decade ago, when more Americans preferred white wine to red, and screw caps had a low acceptance rate. Today wine in America is not only consumed with meals, but used to relax with friends and family, or to enjoy as a delicious drink on its own. This may explain why semi-sweet wines are identified as a preference, because they can be enjoyed with or without food.

Price and brand continue to be important to Americans when selecting a wine, but they are also willing to pay more for wine, including luxury wine for special occasions. Social media has become a popular way to discuss wine online with friends and to gather information to assist in wine purchases. Finally Americans seem to be much more accepting of alternative wine containers, though a majority still prefers traditional label design.

Caveat: Since this survey is based on a representative sample of American wine consumers, and not a random sample, it cannot be generalized to all wine consumers.

References

Photo Credit: Fotolia 118526264

 

State of the US Wine Industry in 2016 – Trends and Statistics

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In 2016 US consumers continue to reach for wine as an enjoyable beverage, even with craft beer grabbing an increased share of the alcohol beverage market.

A review of the 2015 wine statistics and buying trends for 2016 are generally positive. Most experts predict another good year for wine, at its usual 1 to 2% growth rate in the US. Despite fluctuating stock markets, a very competitive alcoholic beverage industry, whispers of recession, and fast-moving social media/apps that can influence trends overnight, in general wine seems to be well positioned for 2016. However it could be a pivotal year for American wine, if the industry doesn’t begin to innovate as fast as the competition.slide1

Statistics for the US Wine Industry in 2015

  • Revenues for US Wine Sales = $38 billion, a 1.3% increase from 2014 (Gord0n, 2016)
  • Number of Outlets in the US selling wine = 545,907 (Brager, 2016)
  • Total cases shipped: estimated 323 million, a .07% increase from 2014 (Impact Databank, 2016)
  • Percentage from California = 60%
  • Percentage from Other States = 9%
  • Percentage from Imports: 31%, (21 million cases in bulk)
  • The US continues to be the largest wine consuming nation since 2010 (Wine Institute, 2015)
  • 2015 is the 23nd consecutive year of grown for US wine sales 

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US Wineries & Consumers

  • Number of US Wineries in 2015 = 8702 (Fransen, 2016)
  • 5 Largest Wine States by # of Wineries: California 4054, Washington = 718, Oregon, 689, NY = 367, Virginia = 262
  • Percentage of US Adults who drink wine: 40% (Halstead, 2016)
  • US Wine Consumption per Capita: 3.14 gallons (11.9 liters) in 2014 (Wine Market Council, 2015)
  • Gender Percentage = 57% female and 43% male (Nielsen Spectra, 2016)
  • High Frequency Wine Drinkers = 35% of US wine drinking population, or those who drink wine several times per week; an increase of 2% since 2010 (Gillespie, 2016).
  • Percentage Sales by Wine Color = Red: 46.3%; White: 44.3%; Pink: 4% (Brager, 2016).
  • Largest Wine Consuming Generations = Millennials at 36% and Baby Boomers at 34% (Gillespie, 2016) 

Wine Sales Channel Performance in 2015 

Off-Premise– sales of wine in grocery stores, wine shops, and other off-premise establishments continued to perform well, with double digit value and volume growth in 4 price points: $11 – $14.99, $15 – $19.99, $20-$24.99 and over $25 (Brager, 2016). Despite this, 75% of the wine in the US is still sold at $9 and under. (Fredrikson, 2016)

On Premise – sales of wine in restaurants, bar, and other on-premise establishments continued to remained relatively flat in 2015. Dollar sales were up .1%, but volume was down by -4.1%. Varietals selling well on-premise were Prosecco, Sauvignon Blanc and Cabernet Sauvignon (Guest Metrics, 2016).

Direct to Consumer Shipping (DTC/Ecommerce) – online wine sales and shipping direct to consumer was a bright spot in 2015. According to ShipCompliant (2016), revenues hit $2 billion, an increase of 8.1% from 2014 with 4.2 million cases shipped. Thought still only 1 to 1.5% of total wine sales volume in the US, DTC is doing well and expected to increase over the next few years. Average bottle price was again $38, and wineries can now ship directly to 43 states (Fredrikson, 2016).

 US Wine Exports – though not a large wine exporter because the US tends to consume most of its own wine, in 2015 the US exported 51.2 million cases worth $1.61 billion in revenues (Wine Institute, 2016). This was up 7.6% in revenues and 4.1% in volume from 2014.

Hot Wine Trends Now and for 2016

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Premiumization Continues– the desire to try a more premium product and pay more for it, or “premiumization” is expected to continue in 2016 for wine and other alcoholic beverages. This is reflected in consumers paying more for wine and the double digit increases in the $11 – 25 price range. This should continue unless something happens in the economy to spook consumers.

Hot Wine Styles: Sparkling & Sangria – though still table wine continues to grow in value and volume, sparkling wine, especially Prosecco, is extremely popular in America and grew at 11.7% in value, while Sangria grew at 9.8%, according to Nielson (Brager, 2016).

5 Most Popular Wine Varietals – surprisingly the slightly tart and refreshing style of Sauvignon Blanc won the prize for most increased value(13.3%) and volume change (10.7%). This was followed by the continuing hot trend of Red Blends, Pinot Noir, Cabernet Sauvignon and then Pinot Grigio (Fredrikson, 2016). However, the highest volume varietal sold in the US continues to be Chardonnay.

Most Popular Imports – Americans continue to be in love with wines from Italy and New Zealand. However both France and Portugal made great showings in 2015 with 10.8% and 8% increases in value for wines from both countries (Brager, 2016).

Fastest Growing Wine Containers – though the 750 ml glass bottle still dominates the US market at over 50% of the volume of wine sold, the 3 Liter Box and Tetra pack continued to grow in popularity (Fredrikson, 2016)

References

  • Brager, D. (2016). US Wine Consumer Trends – Battle for the Next Pour. 11th Annual Wine Market Council Research Conference on U.S. Wine Consumer Trends. Jan. 25, 2016. New York, NY.
  • Franson, P. (2016). Number of United State Wineries Reaches 8,702. Wine Business Monthly, pgs. 76-81, Feb. 2016 Issue.
  • Fredrikson, J. (2016). State of the Industry. Presentation at Unified Wine & Grape Symposium. Jan. 27, 2016. Sacramento, CA.
  • Gillespie, J. (2016). Overview of US Wine Industry. 11th Annual Wine Market Council Research Conference on U.S. Wine Consumer Trends. Jan. 25, 2016. New York, NY.
  • Gordon, J. (2016). U.S. Wine Sales Total $38 billion. Wines & Vines, Jan. 15, 2016. Available at: http://www.winesandvines.com/template.cfm?section=news&content=163380
  • Guest Metrics. (2016). ON-PREMISE TRENDS END THE YEAR ON A LOW NOTE, CRAFT SPIRITS BIG WINNER IN 2015. Guestmetrics.com Blog. Jan. 22, 2016. Available at: http://www.guestmetrics.com/blog/2016/1/22/january-2016-industry-report
  • Halstead, L. (2016). Industry of Tomorrow. Presentation at Unified Wine & Grape Symposium. Jan. 28, 2016. Sacramento, CA.
  • McMillan, R. (2016). 2016 SVB Wine Report. Silicon Valley Bank. Available at: http://www.svb.com/wine-report/
  • Nieslon Spectra (2015). The US Wine Consumer Report.
  • Quackenbush, J. (2016).  Wine sales growth slows to 2% as consumers upscale.  North Bay Business Journal. Available at: http://www.northbaybusinessjournal.com/northbay/sonomacounty/5139096-181/wine-sales-growth-slows-2015?gallery=5146124#page=2
  • Shanken Daily News. (2016). Wine Market Council Finds Generational and Involvement “Gaps” Increasingly Pivotal To Industry. Shanken Daily News. Jan. 27, 2016
  • ShipCompliant (2016). 2016 Direct to Consumer Report.
  • Wine Institute (2016). California Wine Exports Set Record in 2015: Worldwide Demand Grows, Despite Strong Dollar. Wine Institute Website. Feb. 25, 2016. Available at: http://www.wineinstitute.org/resources/pressroom/02252016
  • Wine Market Council (2015).  Research. Available at: http://winemarketcouncil.com/research/

Photo Credits: L. Thach