Highlights of Silicon Valley Bank 2018 wine report
- Consumers continue to leave lower-price segments in favor of better-quality offerings, but total sales growth is leveling off.
- For the industry as whole, sales will rise by 2% to 4% while volumes will increase up to 1%.
- Overall pricing will remain flat with price increases difficult to pass through to consumers.
- The premium wine segment – wines above $10 per bottle – will grow in the range of 4 to 8%, down from the estimate of 10 to 14% in 2017.
- Overall supply is balanced, with Chardonnay demonstrating particularly strong demand.
- Cabernet is balanced with flat to downward pressure at the high end of the market.
- Increasing imports will continue in the lower premium price points.
- Acquisitions will cool somewhat from the torrid pace of the past three years.
- We still will see foreign purchases of US wineries and significant transactions for vineyard properties.
- North Coast grape prices, which have seen rapid growth in the past five years, should slow their growth rate.
- Millennials are migrating away from red blends and introductory wines and are starting to have a positive impact on other lower-priced still wine categories, both domestic and foreign.
- While boomers are still the leading consumers of fine wine, they are consuming less as they age, are changing their spending patterns in dollars spent and are moving away from the high price points as they adjust to living on a fixed income.
Source: Silicon Valley Bank 2018 Wine Report