Thursday, May 26, 2022

US: Premium wine sales strong but challenges remain – Decanter

Data from the latest State of the Industry report from Silicon Valley Bank’s (SVB) wine division shows that sales of premium wines in the U.S. surged last year, continuing a general trend toward higher-priced bottles.

It reported a sales growth rate of 21% in 2021 based on data from premium wineries in its database. This is the biggest increase since 2007, it said, adding that the average case cost among this group was $271 in 2021, up from $241 in 2020 and $262 in 2019.

The growth was driven by the reopening of restaurants and tasting rooms – closed due to COVID-19 – and ongoing strong online sales, SVB said in its report,

In a survey by the bank, nearly 30% of premium wineries reported 2021 as their best year on record. SVB said it expects another good year for premium wines in 2022, albeit with slower growth.

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Yet the broader wine market hasn’t been so rosy. SVB said that in 2021, total alcohol sold through wholesale declined for most of the year, despite rooms, restaurants, hotels and travel resuming business.

Looking longer, it returned to a key theme of its report in recent years, highlighting the concern that younger consumers are not showing the same preference for alcohol as older generations.

Baby boomers have seen significant increases in access to wine in the U.S. over the past few decades, but more people in this group are reaching retirement age and wine is losing market share overall, SVB said.

It also highlighted the challenges posed by climate change.

“The wine industry overcame many obstacles to achieve a tough, solid year of sales,” said report author Rob McMillan, founder of Silicon Valley Bank’s wine division.

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“Looking at longer-term trends, this year reveals issues of both consumer demand and the ongoing climate crisis that could impact business conditions for the industry in the coming years,” he said.

‘With reduced interest in alcohol among young consumers, encroachment retirements and declining alcohol consumption among wine-loving Baby Boomers, the business has become a primary threat.’

On climate, McMilland said: ‘More frequent droughts, fires and storms – resulting from climate change – will have a trickle-down effect across the industry, affecting everything from crops to insurance.

‘The wine industry needs to seriously consider these issues, as the negative consequences are becoming increasingly apparent.’

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