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

Profile of the US Wine Consumer in 2014

(Originally published in Wine Business Monthly as “Snapshot of the American Wine Consumer” in 2014 by Liz Thach, Janeen Olsen & Tom Atkin)

Wine with FlagWho is the American wine consumer today? What types of wine do they prefer and where do they purchase their wine? How much do they spend on a bottle of wine in a restaurant? These and other questions are addressed in a new annual survey that researchers at Sonoma State University Wine Business Institute have recently designed.

About the Sample

The online survey was launched in early 2014 with a total of 1028 wine consumers responding to the questions. The data was gathered by a third party market research firm supplying panel data of household wine consumers in America. All fifty states were represented, with more consumers responding from states with higher wine consumption rates. For example, 12 % of the sample were from California, 9% from Florida, 7% from New York and Illinois, and 6% from Texas.

Demographics showed 49% male and 51% female respondents; 59% had a college degree; and 61% made over $50,000 per year. In terms of age, 36% were Millennials (21 – 36), 22% Gen Xers (37 – 48), 34% were Baby Boomers (49 – 67) and 8% were Traditionalists (68 +). The ethnic breakdown of the sample was 72% Caucasian, 12% African-American, 8% Hispanic, 5% Asian with the remaining 3% Mixed or other. These demographics are very similar to other research portraying the American wine consumer.

Wine Consumption Frequency and Preferred Varietals

When asked how often they consume wine, 20% of the sample reported drinking wine on a daily basis, 48% several times a week, 18% once a week and the remainder were occasional drinkers at 14%. Respondents were given a list of the 12 most popular varietals in the US, according to Nielsen scan data and asked to select their favorites. Results were slightly different than current scan data with 55% selecting Merlot as a top favorite, followed by Chardonnay at 52%, Cabernet Sauvignon at 45% and Pinot Grigio at 44%.

Average Price Spent on Wine

When buying a bottle of wine to drink at home, the most common price point was $10 – $15 per bottle with 35% of the sample, whereas 22% spend $8 – 10, 16% spend $15 – 20, and the remainder spent either less or more. When dining at a restaurant, the most common price was $20 – 30 per bottle at 27% of the sample, 17% spending $30 – $40, 12% spending over $40, and the remainder spending less or more. Interestingly, 21% of the sample reported only buying wine by the glass at restaurants. The most common price point for this was $5 – 10 per glass at 61% of the sample.

Preferred Location to Purchase Wine

Since this was a national sample, and wine is not sold in grocery stores in every state, it was not surprising to see that the most common location to purchase wine was in a Wine or Liquor Store. Participants were asked to rate how often they purchase wine at these locations with possible responses of Never (0), Rarely (1), Sometimes (2), Often (3), and Almost Always (4). In this study, 25% of the respondents said they purchase wine in a Wine/Liquor store almost always, which caused the overall rating to be 3. 6, whereas only 17% said they almost always purchase wine in a Grocery Store, resulting in an overall rating in that category of 3.21. Online wine sales is still quite small with only 4% of the sample reporting they almost always purchase wine Online.

Decision-Making Cues to Buy Wine

In addition to using Price and Varietal as decision-making cues when buying wine, 74% of the sample reported that wine Brand was very important, followed by Country at 52%, then Region at 44%. The way the Label looked was important to 38% of the respondents. Least important was Appellation at 12%.

Organic, Sustainable and Biodynamic Wines

Though the Organic Trade Association reports that 41% of American consumers are now buying organic food, this number is not as high with organic beverages. That could explain why only 16% of this sample said they look for organic wine as part of their decision-making process. Listing “sustainable” on the label only was important to 10% and “biodynamic” to 6%. Other research indicates that many Americans assume that most wine is organic anyway and therefore don’t look for these cues, and some consumers confuse the term “biodynamic” with “genetically modified,” which can be a deterrent to purchase.

Social Media and Wine Apps

Social media is being adopted in large numbers by American wine consumers with 80% of the sample reporting they use Facebook, 41% Youtube, 39% Twitter, 28% Linked-In, 25% Google+, 24% Pinterest, and 20% Instagram. Only 9% of the sample said they don’t use social media. Of those that do, 13% reported they frequently use social media to get information about wine, look up wine pricing, and ask friends for wine recommendations. An amazing 76% of the sample own a smart phone with around 24% using wine apps.

Table 1: Use of Smart Phone & Wine Apps

Have a smart phone 76%
Use smart phone to check prices on wine 36%
Have wine apps on smart phone 24%
Use apps to get coupons on wine 24%
Use wine apps to decide which wine to buy 23%

Wine Tourism

Wine Tourism Word Cloud

Wine Tourism Word Cloud

Reports about wine tourism growing appear to be true, according to this sample. When asked if they had visited wineries in other regions to taste wine, 67% of the sample responded positively. They were then asked to type in the names of some of the regions they had visited for wine tourism, which resulted in the “word cloud” picture below. This diagram illustrates the 27 most important words listed, with the larger and darker the font reflecting a higher number of responses. The statistical analysis confirms that in the US, Napa was typed into the data box slightly more times than California, followed by Sonoma (misspelled a few times), New York and Oregon. Outside the US, France was documented slightly more than Italy.

Ongoing Research on Wine Consumers – Additional Questions?

This article reports on the highlights of the American Wine Consumer Survey for 2014. Additional research questions were included on other wine business topics and will be analyzed and published in the future. Researchers at the Sonoma State University Wine Business Institute have received grant money to conduct this American Wine Consumer study on an annual basis. If you have suggestions on additional questions or topics to include, please do not hesitate to contact the authors.

12 Best Practices in Global Wine Tourism

(NOTE: This article was originally published in Fine Wine & Liquor Magazine, Dec. 2012 and Jan. 2013 in both English and Chinese)

Chateau Changyu Moser XV in Ningxia China

Chateau Changyu Moser XV in Ningxia China

Wine tourism has been increasing steadily around the world for the past decade.  Tourists who are interested in visiting new wine regions are spending millions to taste different wines and enjoy a wine vacation experience.  For example, in California in 2012 more than 20 million tourists visited wineries and spent $2.1 billion on wine and related activities.

Defining Wine Tourism

But what is the definition of wine tourism?  According to Don Getz it is “travel related to the appeal of wineries and wine country.”  Today wine tourists can be found in most every major wine region including France, Italy, Spain, Germany, Australia, Hungary, Austria, Greece, Croatia, South Africa, Portugal, Australia, New Zealand, Chile, Argentina, the USA, China, and Japan.

Motivations of Wine Tourists

Wine tourists around the world are motivated by several different factors, and some of these vary by country.  For example in parts of Europe and Asia, consumers will often visit a wine region not only to taste wine, but because of the health benefits of wine consumption in moderation.  Tourists in the US and Australia may go winetasting with a group of friends because it is a fun activity.

At the same time, there are smaller segments of wine consumers who are motivated to visit wine regions because of the architecture or art in the wineries, to see nature and participate in eco-tourism, for food and wine matching, or for cultural or romantic reasons.  A motivation that research shows is common to the majority of wine tourists, however, is the desire to taste new wines, learn about them, and see how the wine is made.

The 12 Best Practices of Global Wine Tourism

The most successful wine regions have adopted some best practices which enable them to provide tourists with memorable experiences that keep them coming back time after time – and bringing their friends and relatives.  So what are these best practices?

#1 – Wine Roads – Any wine region that wants to be taken seriously has taken the time to develop maps which list their wineries and provide information on hours of operation, website, phone numbers, and directions.  In addition, the wine maps may also include local restaurants, hotels, and other tourist sites.  The maps are provided free on the web and in brochure format, and are very helpful for tourists planning a trip.   

#2 – Wine Community Partnerships – Successful wine regions work in partnership with local hotels, restaurants, airports and transportation companies to make sure that tourists have a way to find them.  Often they hire an Executive Director of Wine Tourism and Marketing for the region that is responsible for developing these community partnerships and tours.  A good example is in the Hunter Valley of Australia where they pick-up visitors at the Sydney airport and transport them 2 hours to the valley where they spend 4 days visiting wineries, including hotel and meals.  The wineries of Hunter Valley work together with local tour operators to create this beneficial partnership. 

#3 – Special Wine Events and Festivals – Many wine regions host special events and festivals, but the most innovative regions think “out of the box” in developing unique events.  For example, in Lodi, California they have an annual “Wine and Crane Festival,” and at Melton Wine Estate in New Zealand they host a “Cabaret & Wine Show” with comedians and singers.

#4 – Experiential Wine Programs – Related to special events is the new practice of offering wine tourists unique experiential programs.  For example, in Napa and Sonoma valleys of California, it has become common for visitors to participate in wine blending seminars where they mix together different types of wine to create their own customized bottle – such as a Bordeaux blend with merlot, cabernet sauvignon, and malbec.  Next they design their own wine label and get to take the wine home with them.  Another example of an experiential program is “Dog Walks in the Vineyard,” like that offered by Martha Clare Winery in New York.

#5 – Link Wine to Regional Tourism – Smart wine regions make sure to link to other local tourism sites.  This is a win-win strategy for everyone involved because the more activities that can be advertised, the more likely the region will attract greater numbers of tourists.  For example, tourists visiting Beijing for the first time always want to see the Great Wall and the Forbidden Palace, but now many also want to taste the local wine and visit famous wineries such as Chateau Changyu and Jinshanling.

#6 – Unique Partnerships – Linking up with different types of partners, rather than just the usual marriages of food, wine, music, and art, is another best practice of successful wine regions.  For example the wineries in Okanagan Valley of Canada have joined forces with the many golf courses in the area to provide experiences that include both golf and winetasting, such as their “Chip & Sip” experience.  Likewise, the Sonoma Mission Inn Spa in California has teamed up with local wineries to offer afternoon wine-tastings for visitors who have spent the day at the spa enjoying such wine-related treatment as a Chardonnay Scrub and massage.

#7 – Wine Villages – Some wine regions have committed the time and resources to create a “wine village.”  This is a town in the wine region that is designed specifically around the theme of wine.  There are generally multiple winetasting rooms within walking distance that tourists can visit.  Restaurants in the village cater to the wine tourist and provide food that matches local wines.  Hotels offer rooms and packages designed around a wine theme.  In some cases, these wine villages are quite old and have been known as a wine center for generations, such as Chateauneuf du Pape in the Rhone Valley of France or the mountaintop wine village of Montalcino in the Brunello region of Italy.

However, other regions have created their wine villages from scratch.  Examples include the town of Healdsburg, California in Sonoma County where they have expanded from 5 winery tasting rooms to over 20 in the past five years.  They also have many hotel and restaurants that cater to wine tourists.  Another example is the town of Grapevine, Texas outside of Dallas.  Not only does the name of the town proclaim their linkage to wine, but they have more than 12 wine tasting rooms and many wine-related tourist experiences, plus souvenirs advertising Texas Wine.

#8 – Focus on Art & Architecture – Some wineries attract visitors by adding art galleries, sculpture gardens or other unique art-related items.  For example, both Bodegas O Fournier Winery outside of Mendoza, Argentina and the Hess Collection Winery in Napa Valley, have famous art collections that visitors can see while tasting wine.  Other wineries use architecture to attract crowds, such as Vina Mar Winery in Casablanca Valley, Chile with its beautiful Moorish-influenced building, and the impressive Chateau Changyu Moser XV in the Ningxia wine region of China (featured photo above).

#9 – Food & Wine Matching – Another best practice is targeting tourists who enjoy the culinary aspects of wine tourism.  Generally this is implemented by a wine region organizing special food and wine tours or events.  A good example is the Wine & Paella Event held every spring in Baja, Mexico where the local wineries match their wines to many different types of paella rice dishes.  Another case is the Wine & Food Showcase celebrated every autumn in Sonoma County where the local restaurants pair up with wineries to showcase their food and wine pairings.  There are also many food and wine tours offered in the various wine regions of France and Italy throughout the year to attract tourists. 

#10 – “Green” or Ecotourism Focus – For wine tourists who seek organic and biodynamic wines, or those who enjoy begin around nature and in the outdoors, a newer best practice is an emphasis on “green” or ecotourism aspects of wine.  For example, some wineries offer special tours and educational programs on how they craft organic and biodynamic wines.  Parducci Winery in Mendocino County of California is the first carbon neutral winery in the US, and they provide special tours of the vineyards to describe their environmental practices.  Likewise, Banfi Winery, in Montalcino, Italy, that has the distinction of being the first winery in the world to achieve environmental certification in ISO14001 and SA8000, also offers tours and explanations of their special “green” practices.  Also, Saturna Island Winery in Canada responds to ecotourists by encouraging them to taste wine and then go boating around the island in search of whales.

#11 – Unique Wine Tours – Another cutting edge practice is offering very unique tours for winery visitors.  These are usually targeted at the more adventurous wine consumer or for those who have already visited a specific wine region and are looking for something different.  An example is “wine & kayaking” as offered by Chatham Winery in Virginia, or a “river-rafting and wine tasting” as offered by Southern Oregon Wineries working in partnership with a local tour company.  Other examples include 4-wheel jeep drives through Steinbeck Vineyards in Paso Robles, California, or wine and hiking tours.

#12 – Social Media for Wine Tourism – Finally many wineries and regions are catching onto the benefits of using social media to attract wine tourists.  This includes making sure those tourists who use their mobile phones and the Internet to seek information on which winery to visit can easily locate the winery.  They do this by ensuring GPS directions are correct, that they are easily found in search engines, and that they have a website that is also designed for mobile phone users.  Several wine regions have gone so for as to develop “apps” that can be downloaded onto a mobile phone to provide winery information, maps, and even coupons and tasting fee discounts.  Finally, savvy wineries have set up Facebook fan pages and work with other sites, such as Trip Advisor, to make sure they can interact with wine tourists.

In conclusion, as wine tourism continues to increase about the world in popularity, and wine regions recognize the positive economic benefits derived from wine tourists, the adoption of these twelve best practices will spread to even more countries.

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.

Statistics on the US Wine Industry – 2011

428047_4187596921499_1003172458_n (1)As the 4th largest wine producing country in the world, the US wine industry has steadily increased in size and revenue over the past decade.  In 2010 the US became the leading wine consuming nation at 330 million cases (Wine Institute, 2011).  This equates to Americans drinking 3.96 billion bottles of wine in comparison to France’s record of 3.85 billion bottles (Press Democrat, 2011).  According to the Impact Databank Report, Americans spent more than $40 billion on wine in 2010, and wine consumption recorded its 17th annual increase in the US.  California, the largest wine producing state in the nation, currently accounts for 61% volume share of the US market (Wine Institute, 2011).

Wine Production in the US

Wine is produced in all fifty US states.  According to Wine Business Monthly (2012), the total number of wineries in the US reached 7,116 in 2011 showing a 9% increase from the previous year.  Of these, 6,027 are bonded wineries with a physical location, whereas the other 1,089 are virtual wineries.   California is the largest wine producing state with a current count of 3,458 wineries.  The next largest wine producing states are Washington, Oregon, New York, Virginia and Texas, respectively.

According to the US International Trade Association (2011), in 2010 grape production in the US was 6.86 million tons with 944,800 bearing acres.  The top 5 wine grape varieties grown in the US are Chardonnay, Cabernet Sauvignon, Zinfandel, Merlot, and Pinot Noir.  The highest price per ton of wine grapes in the US is Napa County with an average of $3,389 per ton paid in 2011(USDA, 2012).

Wine Consumers in the US

Of the more than 313,000 million inhabitants in the US, approximately 35% drink wine at a per capita rate of 3.03 gallons or 11.5 liters (Wine Market Council, 2012).  In terms of demographics (SVB, 2012), 69% are white, 14% Hispanic, and 11% African American, with the remainder 9% from other races.  The average age of the American wine consumer is 49, with Millennials, or those who fall between the ages of 21 and 34 making up 26% of wine consumers,  ages 35-44 at 19%, ages 45 to 54 at 21%, and those over 55 at 34%.  College degrees are held by 24% of American wine consumers.  Consumption rates are growing amongst Millennials and men.

Preferred varietals of Americans in terms of sales are chardonnay, which holds first place in the US, at 21% market share and cabernet sauvignon in second place at 15% (Nielsen, 2012).  Though sales are decreasing, merlot still holds third place, with pinot gris and pinot noir as fourth and fifth favorites, respectively.  Fastest growing categories are Moscato, Malbec, Riesling and sweet red blends.  The most popular price point in 2011 was the $9 – $11.99 category.  Some of the best selling brands include Sutter Home Moscato, Cupcake Chardonnay, Barefoot Pinot Grigio, Gnarly Head Zinfandel, Menage a Trois Red, and Gallo’s Apothic Red.

Americans also enjoy drinking imported wine, with 1 out of every 4 bottles sold from a foreign country.  In 2010, the top imported wines countries were (ITA, 2011):  Italy (30%), France (24%), Australia (14%), Chile (7%), Argentina (6%), and Spain (6%).  These accounted for 87% of the total value of imported US wines.

Future Prospects

In general, the future prospects for continued wine growth in the US market are positive.  American consumers are adopting wine at a strong level with 17 years of continued growth (Wine Spectator, 2011) and prospects for this trend to continue.  On the negative side, the US wine industry has experienced two years of poor weather resulting in lower crop loads.  This indicates a looming shortage in US wine supply, which will require supplements from foreign sources