Is the US wine consumption boom over?

The IWSR says overall US wine consumption down for first time since 1994
Silicon Valley Bank report says sales of premium US wines are still growing
But it said ‘the wine supply chain is stuffed’ and consumers can expect discounts in 2020

Consumption of wine in the US dipped by 0.9% in 2019 versus 2018, said global drinks research group The IWSR this week.

That’s IWSR’s first recorded decline in the US since 1994 and it attributed this to ‘changing generational habits’.

It appeared that more young people were opting for spirits, although sparkling wine sales still rose by 4% in volume in 2019.

The US is the world’s biggest wine consuming nation, a title that it has held for nearly 10 years.

But IWSR’s report will add to concerns that millennials are not drinking wine to the same extent as the so-called baby boomer generation, many of whom are now retiring.

‘We aren’t yet effectively marketing to young consumers,’ said Silicon Valley Bank (SVB) in its own state of the US wine industry 2020 report, released this week.

‘We aren’t doing a good enough job of giving them a reason to buy wine,’ it said, echoing similar protests from its 2019 report.

Premium wines still growing

However, SVB painted painted a slightly more optimistic picture of the market and said that most US wineries would describe 2019 as a good year.

Sales of premium wines at $10 per bottle and above in the US were still growing, even though momentum was slowing, said SVB’s report, written by Rob McMillan, the founder and executive vice president of the bank’s wine division.

It estimated premium wine sales in the US would rise by between 3% and 7% in value in 2020, based on data analysis and winery survey responses.

Data already collected by SVB suggested premium wine sales were up by around 7% in value for the first nine months of 2019.

‘Consumers should buy up’

There may be more deals on US wines offer for wine lovers in the year ahead, due to an oversupply of grapes.

‘Today, the wine supply chain is stuffed,’ said McMillan.

‘This oversupply, coupled with eroding consumer demand, can only lead to discounting of finished wine, bulk wine and grapes. US wine consumers will discover unprecedented retail value in 2020 and should buy up.’

A new era

SVB said that wineries would increasingly have to focus on organisational efficiency as much as selling wine.

‘The past 25 years was an era where the rising tide of consumer demand lifted the boats of everyone in the wine business.’

It added, ‘As we evolve into this new era where the tide is slack or receding, all boats won’t float, and we will have winners and losers.’

A significant factor in 2020 could yet be the potential repercussions of extra import tariffs on the US wine industry in general, but that situation remained uncertain.