The American wine industry isn’t doing so hot.
That’s the overall sentiment expressed by Rob McMillan, a longtime wine industry analyst, in his new highly anticipated report, “State of the U.S. Wine Industry 2023.”
Released annually by Silicon Valley Bank, the report reveals wine sales data and trends from the prior year, as well as predictions for the next 12 months.
McMillan, who has been researching the wine industry for decades, also provides guidance to wine industry professionals on how to steer the ship during the upcoming season.
One of the industry’s main challenges continues to be attracting younger wine drinkers, and McMillan didn’t mince words in his advice to the industry.
“Whatever we’ve collectively tried to do to engage with the younger consumer in the last decade hasn’t been good enough,” McMillan wrote in the report. “In fact, if we are doing something, the results are getting worse, so you could argue that we should immediately stop doing it.”
The question remains: Will the wine industry listen?
Here are eight trends to watch in the wine industry in 2023.
1. Premium wine ($15 to $25 bottles) sales are up
First, some good news. Despite a shaky marketplace, consumers eschewed plonk for premium in 2022. Priced at $15 to $25, the premium wine segment saw the strongest growth in the industry, with a 9.7% increase in revenue on average. Clearly, consumers are thirsty for affordable quality.
Unfortunately, wines below $15 continued their downward trajectory, which resulted in a second year of negative growth in volume across the wine industry overall.
2. Boomers are still drinking the most wine, but don’t blame millennials.
Consumers over age 60 continue to purchase the most wine, despite repeated guidance from market analysts the industry needs to do a better job reaching a younger, more diverse consumer base.
But it’s not just millennials and Generation Z who are eschewing wine for the growing availability of craft beer, artisanal spirits, flashy hard seltzers and ciders, boozy kombucha and canned cocktails in the market.
Those younger than 60, including late boomers and Generation X, are also less apt to reach for wine, despite drinking more alcohol overall. As the older population declines, McMillan said, solving the riddle of appealing to younger consumers will be imperative to the wine industry’s long-term success.
3. Social responsibility and sustainability are driving forces
Have you ever seen the (hilarious) Portlandia “Farm” episode where Fred Armisen and Carrie Brownstein play a couple dining in a restaurant who request the name, diet, personality, photo and printed biography of the chicken they are about to eat?
Younger consumers are demanding similar transparency when it comes to wine.
Who grew the grapes (and do they have health insurance)? Does the winery use animal products for filtering or fining? What’s the winery’s carbon footprint? Does the company give back to the community?
“Social responsibility is important to millennial consumers (who are) insisting companies consider how they impact both the Earth and society as a whole,” McMillan wrote. “This is a factor embedded in their purchasing decisions ... with millennials willing to spend up to 75% more for environmentally friendly products.”
4. Three light harvests have balanced grape supply
In 2022, California experienced its third consecutive light harvest, with confirmed numbers expected to reach 3.72 million tons. The low inventories have evened out supply, which has made many growers better prepared for a potential recession in 2023.
A “normal” harvest in 2023, however, could tip the scales in the other direction, with a surplus of fruit and bulk wine affecting market prices.
As for demand, Allied Wine Growers, a grower-owned wine grape marketing association in Fresno, reports demand remains strong for chardonnay and pinot noir from Russian River Valley, as well as pinot noir from Carneros, Sonoma Coast and Green Valley.
For now, it’s a wait-and-see approach for both buyers and growers in 2023.
5. Sauvignon blanc is a beacon of light
Sauvignon blanc was one of the few wine success stories of 2022, when nearly every major still varietal — including chardonnay, cabernet sauvignon, pinot noir, merlot and zinfandel — saw negative growth.
In 2022, sauvignon blanc plantings in California more than doubled, with the addition of 1,744 acres across the state. While Sonoma County leads the way for the most sauvignon blanc acreage in California, the question remains whether growers and wine producers will be able to keep up with demand for this varietal.
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