Total wine category sales were expected to have fallen by 2% to 4% in volume 2023, according to preliminary figures published in Silicon Valley Bank’s (SVB) 2024 ‘state of the US wine industry’ report.
It continued themes from previous reports in questioning whether enough younger consumers were buying wine, and also highlighting competition from spirits.
‘Fewer US consumers see wine as their preferred alcoholic beverage; instead – they drink across categories. The sales of wines produced below $12 have been dropping for years,’ said the report.
It noted that more people were also choosing not to drink alcohol.
Faced with a gradual decline in demand, it warned the US wine industry ‘is presently built to overproduce’ – echoing concerns in several other wine-producing nations, such as France.
Rob McMillan, report author and founder of SVB’s wine division, said, ‘Future [consumer] demand improvement will rely on the industry’s ability to attract new and younger consumers, take market share from other beverage and cannabis producers, and counter overproduction that will likely lead to widespread discounting in out-of-favour brands and price points.’
Premium wine value still rising
Premium wine above $12-a-bottle continued to offer a silver lining, and the report said it expected sales to have risen by between 1% and 4% in value terms in 2023.
‘The value of premium wine is still growing, but volume sales will finish lower for the 2023 calendar year, partly due to the light 2020 vintage sold in 2023,’ it said.
‘Those same wineries come into 2024 with one of the best quality harvests in years and with balanced inventory positions, giving the segment a level of flexibility should the economic conditions in the US soften.’
Napa Valley Vintners recently described the region’s 2023 harvest as the ‘vintage of a lifetime’.
In a survey of more than 500 US wineries by SVB, around 70% of respondents said their financial health was either strong, very strong or rock solid.
Direct-to-consumer wine sales and prices
The report also updated its view on direct-to-consumer wine sales, predicting that these would improve in 2024.
Average bottle prices have continued to rise, although this has not always been adequate to cover wineries’ rising costs, said the report.
Its analysis found average direct-to-consumer prices in key regions were:
Napa – 2023, $84.2 | 2022, $79.4 | 2013, $57.7
Oregon – 2023, $57.7 | 2022, $47 | 2013, $32.1
Sonoma – 2023, $50.6 | 2022, $46.7 | 2013, $37.6
Washington – 2023, $45.2 | 2022, $34.1 | 2013, $25.8
Other major trends highlighted by the latest SVB report were that winery tasting room visits looked set to fall for the second year in a row in 2023.
‘Although this trend has raised concerns among many, I’m less concerned,’ said report author McMillan.
He argued high airline travel figures suggest people were still catching up on ‘deferred’ holidays outside the US in 2023, after Covid. ‘I believe we will see improved tasting room traffic in 2024 as travel normalises.’
