A run of small harvests has positioned the US wine industry well to weather the threat of recession domestically, according to recent research.
Of greater concern, however, is the ageing of the wine consumer as younger LDA drinkers in the country “have chosen not to drink wine”.
In its latest annual ‘State of the US Wine Industry Report’, released this week, Silicon Valley Bank had good and bad news for domestic wine producers. On the plus side, the economic downturn in the country, a situation that historically results in wine discounting, has coincided with harvests comprising low volumes.
“If you run a winery, the worst place to find yourself entering a recession is with bloated inventory levels,” said the bank’s wine division founder, Rob McMillan. “That leads to rapid discounting.
“The good news … is that with three years in a row of short harvests and good-quality vintages, we have balanced cellar stocks of well-regarded vintages across the industry, so we are the best positioned we’ve ever been to successfully negotiate a recession, should that actually emerge.”
Longer term, however, the wine industry, both domestically and on the import side, has a battle on its hand regarding the consumer of the future.
“‘[Baby] Boomers’ still lead all cohorts in share of consumption,” McMillan added. “The opportunity to gain additional sales growth from a cohort with a median age of 66 will prove difficult.
“Consumers younger than 50 drink wine but more often drink across categories. But a sizable number of alcohol consumers under 50 fall into the category of consumers who imbibe but have chosen not to drink wine.”
For the year ahead, Silicon Valley Bank estimates a 4%-to-6% lift in sales for “premium wine”, while for the industry as a whole, “we will see volume stabilise in 2023 at negative growth levels.”
Click here to access the full report.
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