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

 

Preferences of American Wine Consumers

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

Wine degustation on the vineyard

What Do American Wine Consumers Want?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Wine Pricing and Luxury Purchases

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

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

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

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

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

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

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

Label and Packaging Preferences – “Both Adventurous and Traditional”

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

slide5Conclusion – Americans Continue to Evolve as Wine Consumers

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

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

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

References

Photo Credit: Fotolia 118526264

 

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.