The US is heading for its first decline in wine consumption in more than 20 years in 2016, but those who do still buy wine will spend more per bottle, a new report from Silicon Valley Bank (SVB) has forecast.
US fine wine sales are likely to rise by 9-13% in 2016, says the 15th State of the Wine Industry Report 2016 from SVB’s Wine Division. Fine wines were classed as wines above $20 per bottle.
But, report author Rob McMillan said sub-$8 wine sales would fall and he repeated an earlier warning about retiring baby boomers potentially hitting consumption.
Sales of wine above $10 per bottle are expected to rise by between 4 and 8%, but imported bottled wine will resume its erosion of domestic fine wine’s market share in the US, the report forecasts.
‘While demand for premium wine will increase this year, there are clouds on the horizon that should be considered,’ said McMillan.
‘We believe total and per capita wine consumption in the US will drop for the first time in more than 20 years due to emerging generational shifts in consumption patterns that we see accelerating in the near term.’
This was being driven, he added, by a ‘permanent shift’ away from generic wine, and the replacement of aging baby boomers by more frugal millennial consumers.
The latter are as attracted to craft spirits and beer as they are to wine, impacting total consumption – and they are also more likely to see imported wines as a ‘permanent part’ of their wine-drinking habits.
The SVB report predicts that tens of thousands of vineyard acres will be ripped out of California’s Central Valley, thanks to the downturn in lower-priced wine sales, but land prices for premium vineyards will increase as demand grows.
Meanwhile, it forecasts a busy year of mergers and acquistions as companies – particularly those traditionally focused on volume wine sales – shift investment to premium vineyards and wineries.
The SVB report is based on in-house analysis and a survey of 650 wineries.
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