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).

Exports – US wine exports fell slightly in 2018 to $1.47 billion, down 5% in value from the previous year. Case volume was also slightly down to 41.7 million cases, a 1.2% decrease. Part of this had to do with higher tariffs in China. The top export markets for US wine continue to be the European Union, including the UK, followed by Canada, Hong Kong, and Japan (Wine Institute, 2019)

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 = 10,043 as of February 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 73+, 5%), Baby Boomers (ages 54 – 72; 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.

Which Wine Varietals Do Americans Prefer in 2018?

Every few years at Sonoma State University Wine Business Institute we launch a survey of the American wine consumer in order to understand their wine drinking preferences and shopping behavior. This year we surveyed a representative sample of 1,191 American wine consumers living in all 50 states. The results of the survey – some quite surprising and others similar to previous years – have been reported in an article with WineBusiness.com entitled “Snapshot of the American Wine Consumer in 2018.” To read the article, CLICK HERE.

Choosing wine for dinner.

American Wine Consumers. Photo Credit: Fotolia

But What Varietals Do Americans Prefer?

However, one item we left out of this year’s survey was a question asking Americans about the wine varietals they prefer. Instead we asked them about preferred style of wine. The reason we left out the varietal question was because every year we received the same exact response as that reported by Nielsen Scan Data in Wine Business Monthly. Therefore in order not to duplicate questions, we refer people to this great magazine. Despite this, I still receive numerous emails from people around the world asking me about the varietals that Americans prefer. So, here is the answer to the question based on the Nielsen Table Wine Category Segments for 52 weeks ending Sept. 9, 2018. This information was published in table format in the most recent issue of WBM January 2019 on pages 216-217.

Most Popular Wine Varietals in the US by Volume

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Figure 1: US Wines Sales By Volume for 52 weeks ending 9/9/18. Source: Nielsen & WBM

From this chart, we can see that chardonnay is still number one in terms of volume, followed by cabernet sauvignon, pinot gris, red blends, and merlot. Volume is reported here in 1’000s of 9-liter cases. The most growth in terms of volume in the past 52 weeks was sauvignon blanc at 4.3%. The biggest losses were syrah at -7.4%, white zinfandel at -7.4%, and malbec at -6.3%.

Most Popular Wine Varietals in the US by Dollar Sales

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Figure 1: US Wines Sales By Dollar Revenue for 52 weeks ending 9/9/18. Source: Nielsen & WBM

Figure 2, illustrating sales volume during the past 52 weeks in the US market, reported in US$ millions, shows that cabernet sauvignon edged out chardonnay by $26 million to assume first place. This is followed by reds blends, pinot gris, and pinot noir. Predictions that cabernet sauvignon may soon replace chardonnay as America’s favorite wine varietal appear to be coming true in terms of sales revenues, because chardonnay showed zero growth in sales in the past 52 weeks, whereas cabernet sauvignon showed a sales growth rate of 3.7%. The other winner here was sauvignon blanc that grew at 5.7%. Biggest losers were white zinfandel and malbec that both lost -7% in sales during the past 52 weeks.

Top 5 Best Selling Wine Varietals in US Market by Volume and Sales

In combining these two graphs, keeping sales in US$ millions and converting volume to 10,000s 9-liter cases, it becomes clear that currently the top 5 best selling wine varietals in the US market for the past year are: 1) Cabernet Sauvignon, 2) Chardonnay, 3) Red Blends, 4) Pinot Grigio/Gris, and 5) Pinot Noir.

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Figure 1: Top 5 Selling US Wine Varietals by Volume & Value for 52 weeks ending 9/9/18.     Source: Nielsen & WBM

One caveat about the Nielsen wine scan data is that it primarily reflects off-premise wine purchases, and doesn’t include direct to consumer wine sales from wineries or restaurant/bar wine sales. However, since more than 80% of wine in America is sold via off-premise (grocery stories, wine shops, etc.) this is still a good reflection of wine sales in the US. Furthermore, the Nielsen scan data has always reflected the same preferences as we receive on our surveys.

 

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

Highlights of American Wine Consumer Survey

Shopping for Wine

The US is the world’s largest wine market, achieving $37.6 billion in wine sales in 2014. But what wine styles does the American consumer prefer; where do they like to buy wine, and why do they drink it? These are just a few of the questions explored in the annual American Wine Consumer Preference Survey launched by Sonoma State University (SSU) and the Wine Business Institute.

Highlights of the 2015 survey results are shared here in a Powerpoint presentation developed by the researchers.  It is intended to be shared with others to provide basic information and statistics for the wine industry.

The American Wine Consumer Survey Results from SSU Wine Business Research

(Photo credit: fotolia-06photo.jpg)

Summer in Sonoma

Sonoma and Napa Counties are a wonderful place to spend the summer. The weather is usually in the mid 80’s during the afternoon, but fog gently covers the landscape most mornings and some evenings.  This is especially the case in Carneros and Sonoma Coast appellations, which are closer to the Pacific Ocean and San Pablo Bay.  This cooling marine influence is what allows us to grow world-class pinot noir and chardonnay in these areas.  However, if the fog is too cool for some (as it was for Mark Twain when he spent a summer in even cooler San Francisco), you only need to drive a few miles inland to find the hotter areas of Alexander, Dry Creek, and Calistoga where cabernet sauvignon and zinfandel thrive.

This summer on campus we are offering classes in both the June and July sessions.  Many students can accelerate their studies by taking for-credit classes during this time.
I am not teaching this summer, because I am working on research and a new book.  In addition, I have much travel planned, including trips to France, Italy, Croatia, Wisconsin and Arizona.

During the summer I also work much in my vineyard.  We got off to
a cool start with unseasonably cold and wet weather at the end of May and first
of June.  This caused delays in fruit set and increased threats of powdery mildew.
I have had to spray the vineyard with sulfur and Serenade (both organic products) more than usual.  Everyone is predicting a delayed harvest again in this area. Interestingly France is experiencing a drought with no rain in April and May including heat in the 90’s.  Their vines are much more advanced than ours at this time, and they are predicting
one of the earliest harvests on record – perhaps in August!  It is amazing how much control Mother Nature wields, and so for the summer months, I offer a few quotes in honor of her power.

“We cannot command Nature except by
obeying her.” – Francis Bacon

“Let us permit Nature to
take her own way; she better understands her own affairs than we.” – Michel de
Montaigne