Are you ready to participate in the survey this year?
SVB on Wine
The Business of US Fine Wine
Monday, March 11, 2024
What are you doing to improve club signups away from the tasting room?
Sunday, January 21, 2024
The 2024 SVB State of the Industry Report & replay is available for download
Nearly 3,000 attendees from dozens of the wine-producing countries of the world tuned in on January 18th to hear from Rob McMillan, EVP & Wine Division Founder, Crimson Wine Group CEO Jennifer Locke, industry innovator Paul Mabray, and Enolytics SVP of Professional Services Ed Thralls as they discussed the trends and findings identified in SVB’s 23rd annual State of the US Wine Report.
Watch the Replay: SVB State of the Wine Industry - 2024 Virtual Event (youtube.com)
Read the Report Here: State of the US Wine Industry Report 2024 | Silicon Valley Bank (svb.com)
Recognizing the Need for Change
The key findings indicate that the alcohol beverage market across the board is in a period of change, driven by evolving consumer dynamics, including the aging of older wine-focused boomers, who are being replaced by a new set of primary consumers who drink across categories, drink less wine, and consume less alcohol.
“With the current messaging about alcohol as it relates to health and wellness, premium wine is well suited to meet the prevailing guidance around benefits and moderation,” said Jennifer. “We don’t have to reinvent what we are making; we have to retell our story and tell it collectively.”
Premium wineries experienced mixed success during the past year. The value of premium wine is still growing, but we anticipate volume sales will finish lower this year. The industry will need to find collaborative solutions to link wine attributes with the segmented values of newer consumers to increase demand while at the same time finding efficiencies in sales, marketing, and production to retain margins.
Minor headwinds contributed to the mixed outcomes at premium wineries.
Direct-to-consumer volume sales were lower in 2023. Tasting room visitation dropped for the second straight year leading to lower premium sales through nine months in 2023. However, strong 2023 holiday sales should lead to positive growth in value at year-end.
Consumer demand for the total wine category continues to decline.
As reported over the last several years, in addition to wine, U.S. consumers have been drinking across categories such as ready-to-drink (RTD) options, spirits, beer, and cannabis or have been abstaining altogether.
There is an oversupply of planted vineyards, given current sales volumes.
Conditions are ripe for overproduction, which may lead to inventory excess in more price segments, discounting, and eventually price reductions. Pressure starting from the grower will create inventory bulges and drive higher-than-needed inventory turns in 2024.
Monday, January 15, 2024
The 2024 SVB Wine Report will be released Thursday. Last chance to Sign up!
Register here for the videocast, replay, and copy of this year's report.
In 1992, I wrote the original SVB Wine Division Business Plan in which I said,
"U.S. table wine entered a seven-year period of declining volume in the late 80s. Industry observers attributed the decrease to changing consumer attitudes concerning alcohol consumption, health concerns, drunk driving issues, and overall changing tastes as consumers drank less but better wine."
Despite that gloomy soundbite, I got bank approval to start this first-of-its-kind focused wine division. Why create this business for the bank with all the gloominess? I believed and predicted the premium wine industry was about to take off, driven by the boomer generation.
I did pretty well with that prediction.
Sunday, October 1, 2023
I Need Your Help with the 2024 State of the Industry Survey
It's been quite a roller coaster ride over the past six months. The banking industry has undergone many changes; my bank was no exception. Given our specific challenges, I didn't think this day would come again. So, I'm happy to report that we are today launching the 23rd annual State of the Wine Industry Survey. It is open now through October 22.
Sunday, August 20, 2023
2023 SVB DTC Video Replay, and DTC Report
The 2023 Videocast is in the books, and what a performance from some of the smartest people in the business who do DTC all day, everyday. Thank you!
- Susan DeMatei, President of Wine Glass Marketing,
- Andrew Walleck, COO of Wine Access,
- Jessica Kogan, Partner of Connect the Dots Collective.
Sunday, August 6, 2023
Sign Up for the 2023 SVB Direct to Consumer Report Release & Videocast
Much better than some might think!
- 2020 was the toughest year for direct sales in the last ten years due to the COVID-19 pandemic. The closure of tasting rooms and restaurants made it difficult to sell premium wine. I'm glad we're past that whole mess!
- 2021 was a huge rebound year for wineries selling direct. The rollout of vaccinations, reopening, and the early stages of travel normalization improved the market opportunity. Hospitality as a whole had a very good 2021 as you probably noticed with hotel prices soaring during the year.
- Compared to the best year of the decade, 2022 may not have been as good, but for those who sell DTC, business was still quite successful. By the end of 2022, the Peer Group Financial Database of Silicon Valley Bank reported that the premium segment had a sales growth of 13.8%, and three-quarters of wineries in that segment saw an increase in revenue.
- Narrowing down to the DTC channel, tasting room purchases increased in most wine regions. The wine club also accounted for a larger portion of sales for the average winery. Additionally, wineries producing under 5,000 cases reported that their direct-to-consumer sales continued to grow and now make up 81% of total sales. The average bottle price also saw growth, and most regions reported an increase in volume. This is especially noteworthy for the west coast, which experienced three consecutive years of light red wine yields.
Saturday, June 17, 2023
What's the next business issue facing the wine industry?
Rabbit Island Sunset, Hawaii |
I enjoy looking at vacation photos, especially now that
COVID is no longer a problem. I’m presently taking a much-needed vacation where
I’m spending time admiring the stunning Waimanalo sunsets on the island of
Oahu. While I don't post many pictures on social media when I travel to Hawaii, or on cruise vacations I do enjoy learning about the history of an area and
sharing it.
Many people believe that the wine industry is cyclical, and
while true particularly in grape growing, there are also distinct periods in the industry that
are characterized by unique events that don’t repeat themselves and shape the
industry. Those eras typically last from seven to 10-years.
THE LAST GENERATIONAL CHANGE