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Americans trade down and keep wine market stable

Recent sales figures suggest that despite the American mortgage crisis, economic weakness and the low dollar, Americans are still bullish on wine.

Industry experts believe that though sales growth may slow, many segments of the business remain quite strong.

There is strong growth at the high end – although that only accounts for 9% of the market.

In the last three months there has been a 19% dollar sales increase in the luxury $15 to $20 price, and a 12% increase by value in the super luxury $20 and up category for the same period, Chris Fehrnstrom of Constellation said.

Sales in the super premium ($8 to $11) category during the same 12-week period saw a 9% rise, while premium wine-by-the-glass sales ($5 to $8) were flat.

Bill Leigon, president of Hahn Family Wines, agreed the economy is weak, but he said the weakness is hidden as consumers trade down in price, particularly Millenial generation buyers. ‘It’s no accident that Costco retail sales were up 32%.’

Leigon, who said sales were also well up at Wal-Mart but down at ‘non-discounters’, is optimistic.

‘But it’s going to be the under $15 retail sales that carry the day.’

Of all wine categories, the fastest-growing is the cask, or ‘premium box’ segment, with sales up 33.9% over the past year. Perceived value and eco-friendly packaging are driving the category.

The weak dollar continues to pressure imported wine pricing and sales. According to Fehrnstrom, Italian, Australian and French imports are declining, but Chilean, Spanish, New Zealand, Argentinian and South African imports have seen increased sales.

Written by Tim Teichgraeber in San Francisco

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