One of the most popular wine posts on this site was a story I did five years ago on the demographics of U.S. wine consumption. So it’s past time for me to return to the U.S. wine market and see what’s changed over the past five years.
Silicon Valley Bank produces an annual report on the U.S. wine market that is chock full of stats and information. Here are some top level findings:
- Overall 2018 sales growth of 4 to 8 percent, down from 2017’s 10 to 14 percent
- Retiring Baby Boomers and frugal Millennials are driving a “rotation of consumer preferences”
- In 2021 the Generation X cohort will surpass Baby Boomers as the largest fine wine consumer demographic
- In 2026, Gen X will be surpassed by Millennials as the largest demographic
Here’s more detail on what the report means regarding the pricing dynamic of retiring Boomers and frugal Millennials:
“In an interesting collision of consumer preferences, as millennials age and become more substantial in the workforce,they will gradually spend more on wine. At the same time, retiring boomers will move down the price ladder and into more-modest bottle prices as they also pull back in their volume purchased. The result is that both generations will consider price more important than the average consumer does today. In the next 10 years, there will be a price range for premium wine sales where the cohorts meet; that sweet spot will grow and become important to all wine companies.”
The report also hits the wine industry hard for missing a huge e-commerce opportunity. While direct to consumer is on the rise, due to the growth of wine clubs and the loosening of ridiculous Prohibition era shipping regulations, most wineries fail to offer a modern online experience that engages the customer. Web sites are static, visitor information isn’t harvested and social media marketing is rare (still – this was a point made in 2013!) Data driven and friction less e-commerce could go a long way towards replacing much of the reliance on distributors for sales and marketing, thereby increasing margins.
It’s a good read for anyone interested in the business of wine – here’s the full report.
Generational Preferences
National top sellers
The post U.S. Wine Market Update appeared first on chrisparente.com.