Wine shipments in US increase in 2021 as industry grapples with attracting young consumers

SACRAMENTO — Wine shipments in the U.S. increased by almost 3% in 2021 from the previous year, despite challenges that include competition from other alcoholic beverages.

American and foreign wineries shipped an estimated 448 million cases last year across the country, an increase from 435 million cases in 2020, according to a preliminary analysis of federal excise taxes by alcohol beverage industry consulting firm bw166.

The data comes as wine leaders and analysts grappled with pressing issues facing the industry during a Wednesday forum at the Unified Wine and Grape Symposium, the largest wine trade show in North America. The event was to attract an estimated 6,000 attendees over three days at the SAFE Credit Union Convention Center.

Topping the list of pressing issues was attracting younger consumers who don’t drink wine at a rate of older generations.

Danny Brager, an industry consultant who previously worked at the Nielsen research firm, noted the hard seltzer market in this country had $5 billion in sales in 2021, more than either chardonnay or cabernet sauvignon. The hard seltzer market is largely driven by millennial consumers.

“Huge numbers,” said Brager, who added that another $5 billion was spent on other nontraditional alcoholic beverages such as ready-to-drink cocktails.

“These are products that are riding consumer interest in flavor variety or some who are looking for effervescence. Some (consumers) are looking for convenient packaging like cans.”

Brager and other allies are pushing for a greater marketing effort to reach younger consumers. They argue the industry can’t rely on growth that is has experienced over the past 25 years as a result of the French Paradox, research that showed a Mediterranean diet accompanied by moderate drinking of red wine helped to curb heart disease. They have started a group called WineRAMP to help start an industry-funded research and promotion program to boost wine sales.

“Shouldn’t the industry collectively look at a potential solution to market our category to the consumer?” Brager said.

The conference featured speakers from across the industry, including grape growers, brokers and lawyers who all play a role in the U.S. industry, which is largely dominated by California companies.

Steve Fredericks, president of Turrentine Brokerage in Novato, said that there was an effort like what is being proposed by Brager and his allies in the 1960s and 1970s under the auspices of the California Wine Advisory Board.

“It fell apart because some of the politics involved in it,” Fredericks said. “But I think it had some success at the time.”

While challenges exist with younger consumers, other parts of the wine industry are more stable at the start of 2022. For example, the grape market is more balanced than in recent years when harvests resulted in less tonnage below historical averages.

“Overall, I would call our situation right now very stable,” said Jeff Bitter, president of Allied Grape Growers, a grower cooperative that has more than 125 members in the North Coast. “I would say it’s stable with a chance of oversupply.”

The overall California wine grape crush should total more than 3.5 million tons for 2021 when the results are published next month by the U.S. Department of Agriculture, Bitter said. That would be a slight increase from the 2020 crop that was affected by wildfires, he added.

There were more mergers and acquisitions last year among wine companies that were aiming to gain greater market share, a trend expected to continue.

“I think that momentum will certainly carry forward to 2022,” said Mario Zepponi, principal of Zepponi & Co., a merger and acquisition advisory firm in Santa Rosa.

For last year, imported wine was the biggest driver in shipments, making up for some inventory shortage in 2020, said Jon Moramarco, managing partner at bw166. Sparkling wine and imported vermouth also helped with volume growth.

There are some new wine segments that also have experienced growth, such as agave wine that is made from fermented agave sap, Brager said. Three such agave wine brands were in top 30 overall that experienced major growth in 2021.

“The price point of those products are not in the luxury market,” Brager said. “They are targeting a certain demographic that is younger generally.”

You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.