Overview of the US Wine Industry in 2018: Stable Growth Forecasted – Based on 2017 Stats

Many of the statistics for 2017 US wine sales are in and the results show steady growth, but with increasing competition from imports and other beverages. The outlook is still positive because it is expected that 2018 will continue to see steady growth pattern of previous years, at around a 2% increase in US wine sales value. According to Wines & Vines and BW166 (2018), total US wine sales were $62.7 billion in 2017, with $41.8 billion in sales from domestic wine and $20.9 billion from imports.

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Positive Revenue Stats for US Wine Industry in 2017

  • Revenue for 2017 US Wine Sales = $41. 8 billion, a 2% increase in value from 2016 (Wines & Vines, 2018)
  • Revenue for 2017 Imports to US = $20.9 billion, a 5% increase in value from 2016 (Wines & Vines, 2018)
  • Total 2017 US Wine Sales Revenue including imports = $62.7 billion, a 3% increase in value from 2016 (Wines & Vines, & BW166, 2018)
  • Good News on Tax Break: US wineries have been given a tax break by the US government called the Craft Beverage Modernization and Tax Reform Act. It reduces excise tax payments, which can save US wineries thousands of dollars per year (WBM, 2018).

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2017 US Domestic Wine Vs. Imports by Volume

  • California Wine Shipments (including imported bulk) = 268 million cases (9 liters), equaling 66% of total wine shipments in the US market.
  • Other States (including imported bulk) = 31 million cases (9 liters), equaling 8% of total wine shipments in the US market.
  • Imported Packaged = 104 million cases (9 liters), equaling 26% of total wine shipments in the US market.
  • Total Wine Shipments into US Market by Volume = 403 cases (9 liters), up 1.3% from 2016. (Sources: GFA, 2018; BW166, 2018)

25th Year of Volume Growth: 2017 is the 25th consecutive year of growth for US wine sales, though a bit slower in 2017 than previous years. 2017 volume was 1.3% compared to 2.6% in 2016 (Brager, Nielsen, 2019).

Activity in Major Wine Sales Channels

Off-Premise – estimated at 78% of US market with an average bottle price of $10. According to Nielsen (2018) volume grew at double digits in the $15-$19.99 price segment this year with negative growth below $8 per bottle. Despite this, 55% of wine sold in the US is still under $8 per bottle, not including boxed wine. There are nearly 192,000 off premise wine retailers in the US market.

On-Premise = estimated at 20% of the US market with an average bottle price of $40, on-premise volume was up 1.3% and sales 1.9% as of October 2017, but still very competitive with spirits. There is some concern that too many new restaurants and bars have been established, with the current number of on-premise establishments around 373,000. (Wine Industry Insight and Nielsen, 2017, 2018).

Winery Direct to Consumer (DTC) = though still only less than 2% of the total US market in terms of volume, DTC sales continue to increase with 5.78 million cases shipped in 2017, estimated at $2.7 billion, an increase of 15.5% higher in value than 2016 (Sovos and ShipCompliant, 2018) – despite wildfires in California (SSU, 2018).

Note: Online wine sales in the US are now estimated at around 4% total volume, primarily from DTC sales and online retailer websites. The estimated total volume of global online wine sales in 2016 was 5% at $9.8 billion (Kedge, 2017)

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Number of US Wineries and Export Figures

  • Number of US Wineries in 2017 = 9,654, up 9% from 9,091 in 2016 (Todorov, 2018)
  • Five Largest Wine States by # of Wineries: California 4392, Oregon = 774, Washington = 772, NY = 395, Texas = 391
  • US Exports – US exports were down 7.9% in volume in 2017, primarily due to a stronger dollar. An estimated 42 million cases (9 liters) of both packaged and bulk wine were shipped abroad in 2017, totaling $1.53 billion (Wine Institute, 2018)

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US Remains Largest Wine Consuming Nation by Volume & Value

  • Percentage of Adult Americans who drink wine = 40% (WMC, 2017)
  • Gender Percentage of Wine Drinkers = 59% female and 41% male (WMC, 2017)
  • Wine Consumption Frequency: (WMC- 2017)
    • High Frequency Wine Drinkers = 35% drink wine more than once a week
    • Occasional Wine Drinkers = 65% drink wine once a week or less
  • Largest Wine Consuming Generations = Baby Boomers (37%, ages 53 – 71) and Millennials (32%, ages 23 – 40) (WMC – 2017)
  • 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)

 Hot Varietals and Trends Now and for 2018

The Five Most Popular Wine Varietals/Styles by revenue remain the same as in 2016: 1) chardonnay, 2) cabernet sauvignon, 3) red blends, 4) pinot grigio, and 5) pinot noir (WBM and Nielsen, 2018). This is expected to continue in 2018, but chardonnay has fallen to .9% growth, with predictions that cabernet sauvignon could overtake it as most popular varietal in the next year or two.

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Fastest Growth Wine Categories continue to be Rose, Sparkling and Sauvignon Blanc – with Rose in the lead with a 59% increase in value from the previous year! Top selling Rose by country is France at 51% of the market, followed by the US at 37% and Italy at 5%. The largest Rose category by price point is the $11 – $15 bottle at 31% of the rose category (Brager, Nielsen, 2018).

Fastest Wine Growth by Country/Region is Oregon in first place, up over 15% in both volume and value. This is followed by France and New Zealand – both growing at double digits (Brager, Nielsen, 2018).

New Packaging – innovation in packaging seems to be well-accepted by Americans, with 49% growth rate of wine in cans, 37% wine on tap, 18.5% tetra-pak, 15.2% box, and 7.5% plastic. Considering that most of these containers –with the exception of boxed wine – are relatively new to the US market in the past few years (though available in other countries for decades), this is pretty amazing (Brager, Nielsen, 2018).

New Places to Drink/Buy Wine – another interesting trend is that wine is now available in more new locations in America. Off-premise it is now being sold in more natural/gourmet grocers (up 5.5%) and limited assortment grocers (up 8.1%). On-premise there is more wine available in theaters, sports stadiums, sports and up-scale premium bars, and fast casual restaurants. (Brager, Nielsen, 2018).

Top 5 Largest Wineries and Distributors by Volume in America 

Info Graphics

Top 5 Top Selling US Wine Brands by Volume 

1)      Franzia
2)      Barefoot
3)      Robert Mondavi
4)      Sutter Home
5)      Carlo Rossi   

(Shanken, 2017)

References:

 

The Future is Bright for US Wine in 2017: Statistics from 2016 Paint Rosy Picture

Many of the statistics for 2016 US wine sales are in and the results are rosy. Optimism is high that 2017 will continue to see the small but steady growth pattern of previous years, at around 1 to 3% volume and 2 to 4% in value. According to Wines & Vines (2017), total US wine sales approached $60 billion in 2016, with an estimated $39.8 billion in sales from domestic wine and the remainder from imports.

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US Wine Consumption Positive in 2016

Hot trends continue in brisk sales of red blends, sparkling, and rose, with a surprising surge in sauvignon blanc sales in 2016 (Nielsen, 2017). Sangria continues to be a sought after wine choice at an estimated 9.3% volume increase (BW166, 2017). The most positive news, however, comes in the form of premiumization, with many Americans “buying up” and spending more money per bottle. The average bottle price is now $10, making the US wine market the largest in both volume and value (Nielsen, 2017).

Positive Stats for US Wine Industry in 2016

  • Revenues for US Wine Sales = estimated $39.8 billion, a 5% increase from 2015 (Wines & Vines, 2017)
  • Total US Wine Sales Revenue including imports = estimated $60 billion (Wines & Vines, & BW166, 2017)
  • Total Cases Shipped = 399 million, up 3% from 2015 (GFAWine, 2017)
  • Growth: 2016 is the 24th consecutive year of grown for US wine sales slide1

Imports Vs. Domestic Markets by Volume

  • Domestic Wine Sales = 67.1%
  • Imported Packaged = 25.4%
  • Imported Bulk = 7.5%

(Source: BW166, 2017)

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Wine Sales Channels

 Off-Premise – roughly 78.75% of US market with an average bottle price of $10. According to Nielsen (2017) volume grew at double digits in the following categories: $11-$14.99, $15-$19.99, $20-$24.99, $25+, but only at 3.2% for $8 -$11.99 and negative growth below $8 per bottle. Despite this, 58% of wine sold in the US is still under $8 per bottle, not including boxed wine.

On-Premise = estimated at 20% of the US market with an average bottle price of $40, but is still relatively flat with only .2% value growth and -1% volume. It is presumed the higher cost of wine at restaurants/bars compared to beer and cocktails, as well as other factors are creating this lack of growth. (BW166, 2017; Nielsen, 2017).

Direct to Consumer (DTC) = though still only 1.25% volume of the total US market, DTC is booming with 5 million cases shipped, an increase of 17.1% over 2015. Even more positive are the revenues at $2.33 billion, an increase of 18.5% over 2015 (Kirschenmann, 2017; ShipCompliant, 2017).

Amazing Fact: In the US, there are now 550,000 locations that sell wine, an increase of 120,000 outlets over the past ten years. Some of the innovative new locations to sell wine include bookshops, movie theaters and car washes. (Nielsen, 2017).

 Growth of US Wineries and Exports

  • Number of US Wineries in 2017 = 9,091 (Fisher, 2017), up 4% from 8702 wineries in 2016.
  • Five Largest Wine States by # of Wineries: California 4202, Washington = 747, Oregon, 713, NY = 385, Texas = 287
  • US Exports – $1.62 billion in 2016, up from 1% from 2015. Volume = 412.7 million liters or 45.9 million cases. (Wine Institute, 2017)

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US Consumers Continue to Embrace Wine

  • 120 million Americans drink wine – approx. 36% of 330 million (Nielsen, 2017).
  • Per capita global ranking = #42
  • Gender Percentage = 57% female and 43% male (Nielsen Spectra, 2016)
  • High Frequency Wine Drinkers = 38% drink weekly (Nielsen, 2017)
  • Largest Wine Consuming Generations = Millennials and Baby Boomers (Wine Market Council, 2016)
  • Americans continue to prefer wine and spirits over beer, even with popularity of craft beer (Nielson, 2017).

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 Hot Varietals and Trends Now and for 2017

The Five Most Popular Wine Varietals/Styles are 1) chardonnay, 2) cabernet sauvignon, 3) red blends, 4) pinot grigio, and 5) pinot noir (WBM, 2017). This is expected to continue in 2017, though chardonnay is not growing as fast as the other categories.

Sparkling Wines continue to sizzle with double digit growth. Prosecco leads at 17% of category with $12 – $20 as a sweet spot (Nielsen, 2017). There is room for additional sparkling in the market, as consumers are expected to crave more bubbles in 2017.

Rosé is still all the rage, with Provence rosés in the lead with a 64% dollar share. However, all price points over $5 per bottle are doing well (Nielsen, 2017), and expected to continue in 2017.

Sangria continues to surge with a 9.3% volume increase in 2016, though most Americans prefer to drink it in warmer months, so summer of 2017 should be positive for Sangria (BW166, 2017).

Sauvignon Blanc, especially from NZ, captured strong increases in both volume and dollar value, with expectations for increased sales in 2017 (Nielsen, 2017).

Innovation in wine containers, packaging and product will continue in 2017. For example, the introduction of wine in aluminum cans in 2015 was appealing to some consumer segments (Thach & Chang, 2016).

Premiumization – with a higher consumer confidence rating in 2017, it is expected that consumers will continue to trade up to more expensive wines.

Acquisitions and start-ups within the wine industry are expected to continue in 2017, even with higher interest rates (McMillan, 2017).

Sources:

BW166 (2017). Wine Imports and Exports Report. Available at: http://bw166.com/product/wine-import-export/
Fisher, C. (2017). Number of US Wineries Reaches 9,091. Wine Business Monthly, Jan. 2017, p. 72-77.
GFAWine. (2017). Total wine shipments to the US expanded 3% to 399 million cases in 2016.  Available at: https://www.gfawine.com/blog/1
Kirschenmann, E. (2017). State of the States: 2016 Banner Year for DTC Shipping. Winebusiness.com, Jan. 13, 2017. Available at: https://www.winebusiness.com/news/?go=getArticle&dataid=179038
McMillan, R. (2017). 2017 SVB Wine Report. Silicon Valley Bank. Available at: https://www.svb.com/wine-report/
Nielsen (2017). State of the Industry – What’s Selling. Presentation by Danny Brager at Unified Wine Symposium. Sacramento, CA: Jan. 25, 2017.
ShipCompliant (2017). 2017 Direct to Consumer Report. Available at: http://go.sovos.com/rs/485-CPP-341/images/DtC_17_012516_web.pdf
Thach, L. & Chang, K. (2016). Adventure, Tradition, and Semi-Sweet Wines Highlighted in 2016 American Wine Consumer Survey. Winebusiness.com, Dec. 6, 2016. Available at: https://www.winebusiness.com/news/?go=getArticle&dataid=177492
WBM (2017). Retail Sales Analysis – Off Premise Wine Sales up .08 Percent. Wine Business Monthly, Feb. 2017. P. 142.
Wine Institute (2017). California Wine Exports Reach Record $1.62 Billion in 2016. Feb. 14, 2017. Available at: https://www.wineinstitute.org/resources/pressroom/02142017
Wine Market Council (2016). Overview of US Wine Industry. Presentation by John Gillespie at 11th Annual Wine Market Council Research Conference on U.S. Wine Consumer Trends. Jan. 25, 2016. New York, NY.
Wines & Vines (2017). Domestic Wine Sales Nudge $40 Billion in 2016. Winesandvines.com. Jan. 13, 2017. Available at: https://www.winesandvines.com/template.cfm?section=widc&widcDomain=USwineSales
Photo Credit: Veer BLP0011526