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Wednesday, March 29, 2017

The Changing U.S. Wine Market

Business is booming in the domestic wine market. Sales are up, exports are up, people are moving up to more expensive wines. There may be a few gray clouds on the horizon, however.

Baby Boomers

Beginning all the way back to the late 1960s as the Baby Boomers started reaching drinking age the popularity of wine has increased. Per capita wine consumption has doubled since then and the Boomers are now responsible for 40% of U.S. wine consumption. The U.S. now drinks about 12% of the world's wine.  This generation, however, is now aging out of the wine market.

Millennials

There's competition for premium wine as the younger folks are drinking craft beer and spirits, also.  Some wine industry people fear the legalization of marijuana will hurt wine sales.

Good news

The current good news is that the dollar value of wine sold in the last ten years has gone up 25% as people have moved to more premium wines. This is part because of the economic conditions are part because the Millennials have aged enough to have some disposable income and can buy $20 wine instead of the $5 stuff.

In the past ten years U.S. wine exports have gone up nearly 80%.

Bad news

In the last few years the consumption per person has started to drop as has the number of daily wine drinkers.

Consolidation

There is a lot of consolidation in the domestic wine market right now meaning the big guys are buying up the little operations. This gives them the clout to control retail store shelf space. The smaller, family wineries have to depend more on direct-to-consumer sales. Right now the state laws over DTC shipping are slowly loosening up. If, in the future, that changes and shipping becomes more difficult it will be because the big conglomerate wine companies want it that way.