US Wine Industry Dynamics 2006 - 2007

Lanzrote Vineyard

Wine by the Glass competes with bottled wine sales in US restaurants.  In 2005, wine by the glass sales accounted for 40 – 60 % of all wine sold in American restaurants.  Wine by the glass selection has climbed from nine wines by the glass, the average in the 1990’s, to between 13 and 36 wines, according to Motto, Kryla Fisher, wine industry consultants.  We forecast that number to hold steady or even strengthen, which may mean that wine by the glass will actually outsell wine by the bottle in restaurants for the first time. 

Producer Implications:  Study US pricing spreadsheets to determine under which wholesale price category your wine will fall.  Choose target price points that allow distributors to feature your wine by the glass, and if your wine doesn’t quite make the price point, offer regular incentives to see how much volume can be gained through feature pricing.

International producers of Sauvignon Blanc and Malbec take note:

Pinot Grigio replaces White Zinfandel as the fourth most popular varietal.  Chardonnay, Merlot and Cabernet Sauvignon retain their longtime crowns as the most popular three varietals in US wine sales.  However, Pinot Gris/Pinot Grigio sales are vigorous and are forecast to outstrip sales of White Zinfandel as early as 2006. 

Vineyard acreage of Pinot Noir and Syrah increases in California.  Plantings of Pinot Noir and Syrah grape varietals are increasing strongly. 

Evaluation:  There is room in the market for beautifully made, smartly priced ‘alternative’ varietal wines, especially in sophisticated urban coastal markets such as new York, Miami and San Francisco.

Constellation Brands pinpoints Six consumer segments.  Constellation Brands, the largest seller of wine by volume in the world, has released a study that identifies six basic types of wine consumers—the Enthusiast, the Image Seeker, the Savvy Shopper, the Traditionalist, the Satisfied Sipper, and the Overwhelmed.  While each category of consumer has its quirks and characteristics, it is interesting to note that the largest category of consumers calls itself Overwhelmed.  These poor folks rely on shelf talkers, which outline wine flavors and food affinities, and on personal recommendations from waiters and retail sales clerks.

Implication:  Money invested in development of educational materials is well spent, so long as the materials are meaningful to the US consumer.

Peregrine Strategies US Market Planning

Current Market Trends Look Positive for Small International Wine Producers

Current US Wine Industry Sales Trends:

  • Overall Sales Dollars Increase Faster than Volumes. 
  • Sales of imports continue to outpace sales of domestically produced wine. 
  • The end of the run comes for ‘extreme value wines.’ 

In 2005, wine sales by volume rose 3.2 percent in the US, while wine sales measured by dollars increased 7.7 percent.  Wine Business Monthly magazine reported that “Demand for the best wines continued to rise, although at a somewhat slower pace than during the boom years of 1998 – 2000.”  Imported wine sales outstripped domestics slightly with an increase of 8.1 percent as compared to domestic wine sales’ increase of 6.9 percent.

The noticeable spike in extremely low priced wine, the under $6.00 category, appears to have flattened out entirely.  In fact, wine sales in this price point were no greater than a year ago.  The strongest price category in terms of sales is $US11.00 and over per bottle.

Implications:  If you’re a boutique grower, take heart.  Competing with Australia’s Yellowtail wines at $US5.00 per bottle, or even worse, Californian Charles Shaw, aka “Two Buck Chuck,” at $1.99, was next to impossible as a small producer.  American consumers appear to be branching out in terms of varietals and price points.

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