A Toast to a Growing Industry - PowerPoint Presentation

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A Toast to a Growing Industry

The Wine Institute reported the total retail value of 2017 wine sales from California, other states and foreign producers distributed in the US was $62.2 billion, or 403.4 million cases, increases of 2.0% and 1.0%, respectively.

According to Silicon Valley Bank’s annual State of the Wine Industry (2018), the trend continued during 2017, with decreasing sales of wines priced less than $9 and increasing sales for higher-priced wines in the $15–$19.99 and $20+ categories.

Direct-to-consumer (DTC) sales generated double-digit increases during 2017, or +15.5%, to $2.69 billion in consumer spending, and +15.3%, or 5.78 million cases. DTC sales are forecast to exceed $3.0 billion during 2018, or an increase of 11.5%.

California Wineries Continue to Lead the Way

According to The Wine Institute, 2017 California wine sales increased more than all sales in the US market, or 3.0%, from $34.3 billion for 2016 to an estimated retail value of $35.2 billion.

Total 2017 shipments of 9-liter cases to the US market were 240.7 million, a 1% increase from 2016’s 239.1 million cases.

With a 56.6% share of all 2017 wine sales, California continues to be the #1 wine-producing state and the world’s 4

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largest winemaker. The state exported 37.2 million 9-liter cases, which represented 90% of all US exported wine.

2018: A Good Year for the Grape

California vineyards benefited from a longer 2018 growing season and almost perfect weather, allowing for the maturing of higher quality grapes.

The year started strong, according to Nielsen data, with a 3.0 increase in total table wine sales for the four weeks ending March 24

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, or $1.07 billion, while the 52-week period ending on the same date increased 2.1%, to $14.13 billion.

For the four weeks ending July 14

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, the increase was a more moderate 0.7%, to $1.04 billion, and the 52-week period increased 1.7%, to $14.21 billion. Then, the 52-week period ending August 12

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was even better, with a 2.9% increase, to $14.22 billion.

Despite Its Allure, Wine-Making Is Still a Business

Wineries’ direct sales to consumers are important. More people have been traveling to major US wine-growing regions, but the average winery visitation has decreased in California, but increased in Oregon, Virginia and New York.

Although there were fewer new wineries during the 2013–2017 period (1,500) than 2008–2012 (2,480), the number of wineries with newly opened tasting rooms during the latter period was approximately 2,700.

According to

Wine Business Monthly

’s 2018 Vineyard Survey Report, labor shortage and high labor costs was wineries’ #1 concern, citing it as having a major impact, while laws and regulations and vineyard pests/diseases had steady impacts.

Raise a Glass to Classy Spirits

Supplier sales for the spirits industry increased 4.0% during 2017, to $26.2 billion, and volumes increased 2.6%, to 226 million cases, according to the Distilled Spirits Council.

2017 was the 8

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consecutive year the spirits industry gained market share relative to beer, adding another 0.7 points for a 36.6% share of the total beverage alcohol market, or approximately an additional $504 million in supplier sales revenue.

Among the spirits categories, vodka generated the largest supplier gross revenues, or $6.22 billion; followed by American whiskey, $3.37 billion; tequila, $2.73 billion; cordials, $2.36 billion; and rum, $2.33 billion.

Pinpointing Americans’ Imbibing Preferences

Findings from Silicon Valley Bank’s annual State of the Wine Industry reveal Millennials and Gen Xers’ share of purchased wine increased from 2016 to 2017, or 17% to 19%, and 33% to 36%, respectively, while purchases decreased among Baby Boomers.

According to the August 2018 American Drinking Preferences & Alcohol Industry Trends from Morning Consult, most Americans still prefer vodka to other spirits, or 62%, compared to tequila, 55%, and flavored vodka, 52%.

The Morning Consult report also found women preferred wine more than twice as much as men, or 34% and 15%, respectively, and mixed drink/cocktail almost twice as much, or 37% and 19%; however, men preferred liquor straight, 15%, to women, 7%.

Advertising Strategies

With the concept of “premiumization” dominating many consumers’ tastes, wine and spirit shops and general beverage retailers may benefit from promotions that provide a “luxury” incentive, such as a high-end retailer gift card, for a qualifying purchase.

Although women prefer wine twice as much as men, beverage retailers should consider enticing more men to buy wine by offering small-bottle samples whenever men purchase spirits, which they prefer to drink straight twice as much as women.

As members of Generation Z reach legal-drinking age, beverage shops should consider displays targeting these youngest adults, specifically, using cultural icons and images that will attract this audience.

New Media Strategies

As part of attracting the youngest adults of legal-drinking age, beverage shops can employ the use of the appropriate social media platforms to post short videos explaining the basics of wine types, selecting wine, how to open a bottle, etc.

Beverage shops can demonstrate their community involvement by using social media to share information about the healthy enjoyment of wine and spirits, and even tips about how to imbibe responsibly and hangover cures.

Other social media content that should attract customers’ interest is how to pair various wines with food, as many Millennials and Gen Xers also enjoy cooking, as well as interesting historical facts about the development of wines and spirits.