Forecasts for 2019:
- Millennials aren’t yet embracing wine consumption as many had predicted. Damaged financial capacity is a major component, but cannabis legalization and a cumulative negative health message surrounding alcohol have combined to temporarily stall the growth and adoption of wine among young consumers.
- Baby boomers, who still lead in total wine purchases, are moving into retirement, adjusting to living on a fixed income and declining in both their numbers and per capita consumption.
- The premium wine segment – which we define as above $10 per
bottle – will grow in the range of 4 to 8 percent in 2019, roughly flat from the 2018 sales growth estimate. For the off-premise retail store channel, dollar sales will grow between 0.5 percent and 2.5 percent, while volume sales will grow between negative 0.5 percent and positive 1.5 percent. Both volume and dollar sales growth will end lower than 2018.
- The M&A cycle is approaching a natural end and will noticeably slow in 2019 as many of the major buyers continue to digest earlier purchases and execute on new brand strategies.
- Bottled imports will take additional market share from US producers.
- Grape and bulk prices will noticeably drop in the California market in 2019.
- Overall retail pricing should be flat for premium wine as the industry works through sluggish volume growth and a slight surplus of wine.
- Oregon will be the bright spot regionally as consumers continue to find consistently good value in the region’s offerings.
STATE OF THE WINE INDUSTRY REPORT 2019
In this 18th annual State of the Wine Industry Report, Rob McMillan finds that while business once again had record sales, the growth rate is slowing and total volumes are trending into negative territory. He also offers perspectives on how the industry may recover growth rates by changing sales and marketing tactics.Download report
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PREMIUM WINERIES’ FINANCIAL BENCHMARKS
Premium wineries are still showing modest growth and profitability. That’s the good news.
TOTAL OFF-PREMISE SALES IN DOLLARS AND CASES
Total volume of off-premise US wine sales has tipped into negative growth territory for the first time since 1993.
AVERAGE WINE CONSUMPTION BY AGE GROUP
While baby boomers are showing longer-than-expected buying strength and still hold the largest market share of wine consumption, millennials are disappointing expectations by not growing their share of the market as wine consumers.
CURRENT CONSUMPTION OF ALCOHOL AND CANNABIS BY COHORT
Millennials tend to prefer craft beer, craft spirits and cannabis – but have the lowest share among the cohorts for wine. With the oldest millennials now 37 years of age, will they adopt wine like prior generations?
SVB Wine News
- January 18, 2019 - Wine Enthusiast Millennials to Blame for Expected Shrink of Wine Sales in 2019 More
- January 18, 2019 - Forbes The Next 5 Years Will Challenge the U.S. Wine Industry, Says Report More
- January 16, 2019 - Forbes How Family Wineries Will Get Your Attention In 2019 More
- January 16, 2019 - Napa Valley Register Napa premium wine industry challenged to appeal to millennials More
- January 16, 2019 - North Bay Business Journal Millennials still missing as fine-wine core consumers, says Silicon Valley Bank report More
- January 16, 2019 - Company News Silicon Valley Bank Predicts Premium Wine Sales Growth Will Decline Again in 2019 More
- October 31, 2018 - Company News Institute of Masters of Wine announces Silicon Valley Bank as a Supporter More
- February 23, 2018 - Meininger's Wine Business International The US Market Tipped to Slow More
About SVB Wine Division
Silicon Valley Bank’s Wine Division
Founded in 1994, SVB’s Wine Division offers financial services and strategic advice to premium vineyards and wineries. With one of the largest banking teams in the country dedicated to the wine industry, SVB’s Wine Division has offices in Napa and Sonoma counties and primarily serves clients in the fine wine–producing regions along the West Coast of the United States.
Learn more at www.svb.com/winedivision.
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