The US Wine Industry in 2020 – Slowing Sales, but Opportunities Still Present (with COVID-19 Update)

UPDATE: Impact of COVID-19 on US Wine Sales – a Silver Lining?

When I first wrote this annual article in February 2020, who knew that in just a few weeks the world would be ravaged by the COVID-19 virus, causing most major countries to shelter in place and global stock markets to fall. Despite the fact the restaurants, bars, and winery tasting rooms were forced to close, causing US wine sales in on-premise establishments to plummet, the uptick in off-premise wine sales was amazing. People flooded to grocery and discount stores to stock up on food and alcohol, with a stunning 66% increase in off-premise wine sales by the end of the week March 21, and an even more jaw-dropping 225% increase in online retail wine sales, according to Danny Brager in an April 3 webinar sponsored by Wine Market Council.

Though these numbers are startling, experts predict that they are not sustainable as noted in this article by Adam Andrews of Wine Analytics Report. Instead, it is considered to be a similar phenomenon as the increase in wine sales seen at major holidays, such as Thanksgiving and Christmas, which fade back to normal after the rush. Despite this, there seems to be a silver lining in all of this worry and upset:

  • It Has Forced US Wineries to Market and Sell Wine Online – which is something they needed to spend more time doing in order to reach new consumers. Now the innovation seen in virtual tastings, social media ads, and unique virtual experiences such as that offered by Gary Farrell this week, is causing wine consumers to purchase more wine online from wineries.
  • It Has Encouraged New Consumers to Buy Wine Online – apparently there has been a 72% increase in new alcohol buyers online compared to this time last year, with a large increase in seniors who had not previously purchased this way in the past. According to Brager, “once buyers go online for the first time, they tend to repeat.”

Though this is a very stressful time, with many people negatively impacted by this terrifying virus, it has forced some changes in the US wine industry, that may be considered, in the long run, to be a faint silver lining.

IMG_2928

A faint silver lining?

ANNUAL US WINE SALES REPORT FOR 2019-2020

It’s true. Wine sales volume is slowing in the US market, and there is currently an oversupply of wine grapes, but that doesn’t mean there are not opportunities for increased wine sales. With more than 270 million Americans of legal drinking age, and only around 49% consuming wine, there is room to grow the market. However, wineries need to pay attention to changing consumer trends, which means modifying products and packaging to meet their needs.

Wine statistics from 2019 have been reported by most of the major research firms, and they confirm less volume in wine sales, but still show decent revenues. According to bw166, total US shipments in 2019 were 409.1 million cases, a modest increase of 1.1% compared to the previous year. Of these, 277.8 million cases were domestic wine, with 131.3 million cases of imported wine.

Slide1

Gomberg-Frederickson shows preliminary consumer expenditures for both on and off premise wine sales were $72.4 billion for 2019 compared to $69.7 billion in 2018, or a 3.9% increase. Of this figure, domestic wine revenues were $47.9 billion, or a 3.7% increase over the previous year, and imports totaled $24.5 billion, a 4.1% increase over 2018. This illustrates that even though volume is down, the US wine consumer is still spending a positive amount.

Best Selling Wine Varietals in the US Market

US consumers primarily purchase wine by varietal, and it is also tracked this way by Nielsen scan data. The graph below illustrates the top 5 best-selling varietals in both volume and dollar value, with chardonnay still in first place, followed by cabernet sauvignon, red blends (a new category in the past decade), pinot grigio/gris, pinot noir, and fast-growing sauvignon blanc. In terms of wine color, in 2019 red wine comprised 46% of volume sales, white wine 44%, and pink wine 10%. See bottom of article for more information on Hot Wine Trends in the US market.

Slide2

Wine Sales Channels & Major Distributors in the US

Approximately 80% of wine in the US is sold in off-premise establishments (bw166), with the remainder sold on-premise, via export, and winery direct to consumer (DTC). According to Sovos, winery DTC sales grew to $3.2 billion in 2019, a 7.4% increase at a volume of 6.6 million cases.  Wine ecommerce sales are slowing increasing, with more grocery stores and wine shops shipping directly to consumers, along with wineries; however, the overall rate is still estimated to be around 5%.

According to Wines & Vines Analytics, there are 958 wine distributors in the US market. The five largest are: 1) Southern Glazer’s Wines & Spirits, 2) RNDC/Young’s Market Co,    3) Breakthru Beverage Group, 4) Winebow Group, and 5) Empire Distributors.

US Wine Imports/Exports & Top 10 Brands

The top 5 countries from which the US imported the most bottled wine by 9-liter case volume for 2019 are: Australia at 11.7 million cases, Italy at 10.4 million, Chile at 3.8 million, New Zealand at 3.6 million, and Argentina at 3.5 million, according to Nielsen.

US export data for 2019 has not yet been reported, but in 2018 it totaled 41.7 million cases at a value of $1.46 billion, according to the Wine Institute. Top export markets were the European Union, including the UK, followed by Canada, Hong Kong, and Japan.

The US still ranks as #1 in terms of creating the top global wine brand for volume in 2018. The winner is, once again, Franzia, at 26.5 million 9-liter cases, created by The Wine Group. This is followed by Don Simon from Spain, Barefoot (USA), Concho Y Toro (Chile), Robert Mondavi (USA), Yellow Tail (Australia), Sutter Home (USA), Carlo Rossi (USA), J.P. Chenet (France), and Martini (Italy), according to the 2019 Impact Databank report.

Number of US Wineries

 As of February 2020, there were a total of 10,472 US wineries up from 10,043 year to date (Wines & Vines Analytics). California has the largest number at 4,613 wineries, producing 86% of wine, followed by Washington (812), Oregon (809), New York (411), and Texas (406). All 50 states produce wine.

Slide3

 Wine Consumer Demographics

Each year the Wine Market Council in the US conducts several very useful research studies on the US wine market and consumer. Following are high-level results from their 2019 US wine consumer segmentation study. Some of this information is also displayed in the corresponding Infographic above.

  • Percentage of Adult Americans who drink wine= 49% of legal drinking population
  • Wine Consumption Frequency: High Frequency Wine Drinkers= 14%, or those who drink wine more than once a week, and Occasional Wine Drinkers = 35%, or those who drink wine once a week or less
  • Gender of Wine Drinkers= 54% female and 46% male
  • Age/Generation of Wine Consumers= Matures: ages 74+, 5% of wine market; Baby Boomers: ages 54 – 73, 34% of wine market; Gen X: ages 43-54, 21%; Millennials: ages 25 – 42, 34%; Gen Z: ages 21 – 24, 7% of wine market.
  • Per Capita Wine Consumption= 11.17 liters per person (2.95 gallons). Even though US is largest wine consuming nation by volume, per capita rates are less than many other countries (Wine Institute, 2018)

Ten Hot Trends in US Market

Every year at the Unified Wine & Grape Symposium, Danny Brager from Nielsen shares the latest hot trends observed in the US wine market. These are based on Nielsen Measured Off Premise Outlets, and include a large majority of US wine sales.

  • Rose Continues to Gain Favor – rose has become a staple in US market, with all styles, but especially Provence rose. It continues to grow at double digits in both volume and value
  • Sparkling Wine Shines On– wine with bubbles continues to captivate US consumers, with Prosecco still widely in favor, along with American sparkling and Champagne.
  • Private Brands Grow by 17% – an increase in private wine brands from super markets, restaurants, and other establishments is occurring in the US wine market
  • Sauvignon Blanc Accelerates – as the trend for fresh and light wine styles expands, sauvignon blanc has increased in value and volume, especially those from New Zealand
  • Oregon Grows at Double Digits – though still at a small volume compared to California, wine from Oregon – especially pinot noir – continues to be well-regarded by Americans, and grew at double digits in both value and volume in 2019.
  • Portability More Important – consumers have embraced wine in cans and tetra packs, and appreciate the smaller serving sizes of 187 ml as well as portability. Non-glass packaging grew at 22% of volume and 11% of value in 2019.
  • Small and Large Sizes Attractive – both 375 ml bottles and 3L bottles/boxes have experienced positive growth in the past year
  • Wine Cocktails, Sangria, and Flavored Wine Growing – as younger consumers seek new experiences, the growth of wine cocktails, sangria and flavored wines, such as E&J Gallo’s reintroduction of Bartles & Jaymes wine coolers, have increased 20 to 30% in dollar sales in the past 2 years.
  • The Sweet Spot for Wine Pricing – the sweet spot for wine pricing in US off-premise continues to be $11 to $14.99 and $15 – $19.99, with both growing 5% to 6% in value and volume. Wine priced at under $10.99 continues to be negative in both value and volume, but still comprises 74% of all wine sold in the US. Wine priced at $20 – $24.99 showed around 6% value and volume increase, but at smaller quantities.
  • Fear of Cannabis Over-Inflated – only 2% of wine drinkers report they will drink less due to cannabis usage; whereas 2% report they will consume more wine with cannabis.

Other New Trends Presenting Opportunities for Wine

Health & Wellness Trend Impacts Wine – the US consumer is now more concerned with health and wellness. A joint survey by Nielsen and the Harris Poll shows that almost 50% of American alcohol drinkers say they are trying to reduce alcohol consumption, but this number escalates to 67% with younger drinkers aged 21 to 34. Beer and spirits companies have responded by introducing new lower alcohol and lower calorie drinks, such as the widely popular White Claw at 5% alcohol and 90 calories, but the US wine industry has been slow in responding to this trend. There appears to be an opportunity to create more “low or no alcohol” wines for the US market, as is being done in Europe and New Zealand.

Desire for Ingredient Labeling – The joint Nielsen/Harris Poll survey also shows that 67% of Americans want to know everything going into their food and drink. However, US law does not require ingredient labeling for alcohol, though it is optional to include on packaging. This presents an opportunity for wineries to include this information to meet consumer needs, and could assist many dry wines, which at only 87 to 120 calories per 120 ml serving and relatively low carbohydrates, could be appealing for consumers. Likewise, information on organic, biodynamic, or sustainable winemaking practices, and labels such as “paleo-friendly, gluten-free, plant-based, natural flavors, no artificial sweeteners, low carb and low calorie” – which are often true for wine – would be useful to add.

Online Purchasing – Wine Ecommerce – More than 80% of Americans now shop online, according to Pew Research, and online wine sales are growing slowly, but not as fast in other countries, due to complex regulatory issues. More grocery stores are now delivering wine with groceries, and winery DTC sales, many of which are online, reached 7 million cases in 2019 – a 4.5% increase over 2018. However, there is still plenty of opportunity in this channel for innovation and expansion. According to Rich Bergsund of Wine.com, only 3% of wine is currently sold online in both DTC and off-premise retail. Furthermore, in a comprehensive review of online alcohol sales, Rabobank recommends that the US wine industry “take assertive action” to improve online wine sales as soon as possible, or risk “profound consequences.”

References

 

 

 

 

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.

slide3

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

IMG_5939

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 

Presentation1

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

FullSizeRender

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

Trends in the US Wine Industry for 2015 – Surging Forward with Renewed Optimism ($37.6 billion in 2014 revenues)

DSCF0893Even though wine consumption in the US has increased every year since 2000, some of those years were a bit bumpy due to the recession and a tendency for consumers to purchase value-priced wines. Now in 2015, the trend of buying more premium-priced wines has resurfaced, and there is a renewed optimism in the US, spurred on by the strengthening dollar and a more buoyant economy.

A review of the 2014 wine statistics and buying trends for 2015 are primarily positive. The only gray cloud on the US wine horizon may the growing popularity of craft beer and spirits. However if the wine industry continues to innovate and assists in promoting a larger market share for all adult beverages, then the positive growth trend can continue.

Sources for this posting are primarily from speakers at the 2015 Unified Wine Symposium as well as recent reports. See references at end for details.

Statistics for the US Wine Industry in 2014

  • Revenues for US Wine Sales = $37.6 billion (Wine Institute, 5/19/15); 1% increase from 2013
  • Total  cases shipped: 375 million (Frederickson,2015)
  • Percentage Imports = 31% (down from 34% in 2013; mainly from bulk)
  • Percentage from California = 60% ($24.6 billion in revenues, up 6.7% from 2013)
  • Percentage from Other States = 9%
  • US is the largest wine consuming nation since 2010 (Wine Institute, 2015)
  • 2014 is the 22nd consecutive year of grown for US wine sales

US Wineries & Consumption Rates

  • Number of US Wineries in 2014: 8287 (Gordon, 2015)
  • 5 Largest Wine Producing States: 1- California, 2- Washington, 3- Oregon, 4- New York, and 5- Virginia
  • Wine Consumption in the USUS Wine Consumption per Capita: 3.14 gallons (11.9 liters) in 2014 (Wine Market Council, 2015)
  • Percentage of US Adults who drink wine: 40%
  • Consumption Frequency: 33% drink wine several times per week and 67% drink wine occasionally

Channel Growth & Competition in 2014 

  • Off-Premise – more than 80% of wine in the US is still sold off-premise, with double digit growth in the $12-15; $15-20; $20 – 30; and over $30 categories (Brager, 2015). Still 75% of wine sold was under $9 per bottle (Frederickson, 2015)
  • Direct to Consumer Shipping (DTC/Ecommerce) – 3.95 million cases shipped at $1.82 billion in sales, a 15.5% increase from 2013 (ShipCompliant, 2015). Average bottle price $38. Wineries can now ship to 90% of US states.
  • On Premise Sales – slight increase in 2014 over previous years with wine value up 1.3%, but volume down 1.1% (Guest Metrics, Nov. 2014)
  • Competition – number of craft breweries and craft spirits have increased more than 50% since 2008 (Frederickson, 2015), creating intense competition for wine

Hot Wine Trends Now and for 2015

  • Trading Up – wine sales have increased in the $12 – 30 range and are expected to continue with the strong dollar, lower oil prices, and desire for more premium products
  • Sparkling wine is “hot” – up 7% in 2014, and will continue to grow, especially Prosecco. There is opportunity for new brands in the sparkling market.
  • Red Blends are still very popular, with brands like Apothic and Menage a Trois Red performing well. Opportunity for higher-priced red blends.
  • Most popular varietals will continue to grow: Cabernet Sauvignon, Chardonnay, Pinot Grigio, Pinot Noir and Sauvignon Blanc from New Zealand
  • 428047_4187596921499_1003172458_n (1)Oregon & Washington coming on strong, with more interest in wine from these states
  • Rose over $12 performed well this past year, and is expected to continue into 2015
  • “Eco” Wines slowly gaining more attention with 16% of US wine consumers now looking for these labels. Potential increases for sustainable, organic, and biodynamic wine as consumers grow more concerned about environmental issues.
  • Tetra Pak and 3 L Boxes selling well with continued growth in this area.
  • Wine Kegs in restaurants selling both value-priced and premium wine by the glass are gaining positive attention from consumers, with expected growth here.
  • Wine Apps are growing in popularity with up to 36% of US consumers using them to check prices and reviews before purchase
  • Wine Cocktails are stirring positive reactions with Millennials (Franson, 2015). This could be an opportunity to create a new trend of “wine mixology.”

References 

Trends in the US Wine Industry in 2013 – Cautiously Optimistic

Liz Thach2Each year in January we are blessed with multiple reports on the state of the wine industry from such esteemed research bodies as Shanken’s Impact Databank, the Wine Marketing Council, Nielson, Silicon Valley Bank, and Unified.  This year the news is similar to 2012 in that most experts are cautiously optimistic of numbers and trends that continue to skew positive but without any large changes.  In general, the economy is better, but people are still cautious.

Wine Sales in the US

  • For the 19th year in a row wine sales have continued to grow in the US market, at a rate of 2.9% in 2012
  • The US is the largest wine consuming nation in the world with more than 100 million people now drinking wine, out of a total population of 316 million.
  • Per capita wine consumption in the US hit 3.08 gallons in 2012.
  • The US is  the world’s largest wine market in terms of revenue, with consumers buying more than 360 million cases of wine in 2012, up 2% from 2011.
  • In 2012 total wine sales in the US reached $34.6 billion, a 6% increase
    from 2011.
  • The US still imports almost 30% of all wine sold in the country.
  • Growth in on-premise wine sales is flat, but retail wine numbers are strong at $13.3 billion in 2012 (Nielson)
  • Online wine sales are finally coming into their own, with 74% of consumers purchasing wine from winery websites and 68% from Wine.com.  Wine e-commerce has grown 15% overall since 2011.
  • More wine is being sold in drug stores and other chains such as Walgreens and Dollar General.

US Wine Consumer Characteristics

  • Of all US wine consumers, 57% are now core (those who drink wine at least once a week or more often) and 43% are marginal (drink wine less often than once a week, but at least once a quarter).
  • In terms of gender, 55% of American wine consumers are women and 45% are men, with more men adopting wine over the last decade
  • People are drinking wine more often in different occasions and settings.
  • 80% of people talk about wine on Facebook and 40% chat about wine on Twitter.
  • Babyboomers are still spending the most on wine, but Millennials (ages 21 to 36) continue to adopt wine in high numbers with more than 15,000 per day coming of age.
  • The Hispanic population is growing very fast in the US with a forecasted population increase from 16% today to 30% by 2050.  There is a concern that wine is not doing enough to embrace this population, while beer and spirits are.

Trends in Wine

  • The hottest varietals are still moscato, malbec and sweet red blends.  Some producers are now experimenting with sweet white blends.
  • Chardonnay is still the most widely purchased wine varietal with cabernet sauvignon as second.  American consumers also still enjoy pinot grigio, sauvignon blanc and rose, but there have been further decreases in syrah and white zinfandel sales.
  • Hot new packaging trends include wine in 187ml bottles (16% increase) and tetra packs (27%  increase).  Pouches are also gaining traction.
  • Americans still enjoy buying wine from Argentina, New Zealand and Spain, but wine purchases have declined from Australia and Germany.
  • The sweet spot for wine pricing is $10 – $14.99.
  • Some wineries have suggested they need to raise prices due to a global grape shortage situation, but retailers are concerned that consumers are not yet ready for price increases.
  • Beer is growing faster than wine, with many consumers intrigued by beer’s new flavors, cider, malts, and artisan brews.  There is concern that wine needs to do something new, e.g. new varietals, new packaging, etc.