US Flashcards
US Outlook
Wine sales by volume in the US have dropped by around 3%, while turnover has remained flat. Predictions suggest a continued contraction in wine sales into early 2024.
According to Shanken, 2023 will mark the third year
of negative volume growth for the wine category and the first time in 45 years that the spirits market will surpass the wine market in total volume sales.
The annual Silicon Valley Bank wine industry report highlights near 0% value growth and anticipates an increase in flash sales and discounts in the US.
US People US People
Resons to drink less:
41.7% beverage preference.
26.5% health
23.0% budget.
The decline in consumption in the wine category can’t be put neatly into one variable
Appealing affordable alternatives such as RTDs, spirits, cannabis or have been abstaining all together.
National Institute of Health reported that between 2012 and 2022, for those aged 19 – 30, monthly cannabis use increased from 16.6% to 28.8% of the cohort, while alcohol use declined from 68.4% to 67.5%.
US People Consumer Behavior Adjustments
US drinkers are still consuming wine but are increasingly relying on their existing supplies. The behavior is partly attributed to reducing the stockpiles amassed during Covid, with “noise in the channel from Covid” affecting current sales trends.
US Place DTC
Direct-to-consumer volume and value sales were lower in 2023 and tasting room visitation dropped for the second straight year.
Still, small wineries continue to increase their direct sales, which now average almost 70% of total sales. That is a twenty basis point growth from past years.
US Price
Overproduction+ covid = inventory excess
Increases discounting and price reductions.
High-production wineries will find price increases more difficult. (lower vintages in the past 4 years)
Pressure starting from the grower will create inventory bulges and drive higher-than-needed inventory turns in 2024.
Wine demand under $12 is dicreasing turned negative, pulling the entire category down.
Wine volume sales above $12 have remained positive.
Premium wineries will end 2023 with slightly negative volume sales. Value sales growth between 1% to 4%
US Price Napa Market Dynamics
A survey by SVB highlighted that Napa prices have risen to an average of US$108 per bottle.
US wineries have become over-dependent on tasting rooms, prompting a recommendation to open a second tasting room in a satellite area to boost sales.
US Product Champagne
Nathalie Doucet notes that 2024 might see an improvement as the US market is currently out of stock.
Price Increases: Concerns over the price of Champagne, which rose by 10-12% in 2023, are part of the reason for the current sales slowdown and are expected to increase again.
Tariff Threats and Market Stock: Potential tariffs of 10-50% by former President Trump could adversely affect the market.
US Product Overstock
Continued over-production noted in California and Washington, with sales declining for three years. The planted acreage in CA and WA is exceeding current demand.
Total wine consumption is decreasing by volume.
Retail inventories are backing up into wholesale.
Wholesale inventories are bulging, and wineries are being more cautious about carrying inventory in a reduced-demand environment.
Without improving demand, retailers can only rebalance inventories by buying less from wholesale while selling through their existing inventory.
The report suggests a likely market correction for grapes and bulk wine in 2024, especially affecting larger, high-volume producers.
inventories at 1.61 times sales The report notes that the ideal inventory-to-sales ratio in a flat volume growth scenario should be 1.0x but may be lower in the current negative growth environment.
US Product Yields
California fourth consecutive year of below average yields. Avg 3,5 mm gallons vs +4 in 2018
US Product Rose
Rosé has benefited from its positioning as a gender-neutral beverage
US Packaging BIB- Cans
2020(The Nielsen Report)
BIB +31.5%
cans + 69.2%
US Packagking Bottle weight
- Ron Rubin Winery: Uses plastic bottles 85% lighter than traditional glass, enhancing transport efficiency.
US Packagking Sustainable
- Revino: Refillable glass bottle system aims to reduce carbon footprint by up to 85%, refillable up to 50 times.
US Trends NOLO
USA grew by +31% 2021- 52% of adults who drink alcohol in the us are either trying now or have tried before to reduce their alcohol intake.
Nielsen found that 78% percent of non-alcoholic drinks buyers in the U.S. are also purchasing alcoholic beer, wine, or spirits, an indication that many customers are paying closer attention to how much they are drinking and managing it more mindfully.
Great price range Fre- Ariel- (8$) Pierre Chauvin (FR) from 6$ to 25$. Trinchero Family Estates- Luminara premium range (20£ DTC)
US Trends Regenerative Viticulture and Sustainability
Regenerative viticulture is gaining traction as the new global standard for sustainable wine production.
Example: Stephen Cronk of Maison Mirabeau, along with Mimi Casteel of Oregon’s Hope Well Wine, co-founded the Regenerative Viticulture Foundation (RVF). This initiative is supported by major industry players like Jackson Family Wines and Möet Hennessy, emphasizing a holistic approach to viticulture that enhances biodiversity and soil health.
