Recently, Silicon Valley Bank released its 2023 State of the Wine Industry report, and it highlights some worrying trends for California's wine industry at large. Here are some of the key takeaways:
◼️ Growth is only happening with customers over 60
The report found that consumers under 60 have a lower share of wine consumption compared to what they did in 2007. Consumers over 60 are still showing growth. In fact, the report found that consumers over 60 were responsible for more than 32% of all direct to consumer wine sales.
◼️ Younger drinkers aren't loyal to wine
It isn't that young people aren't drinking wine. It's that they're drinking wine, spirits, beer, hard seltzers, vaping, smoking marijuana, and who knows what else. The report found that 35% of 21- to 29-year-old consumers drink alcohol, just not wine. That number drops 7 percentage points to 28% for individuals 50 to 59 years old. There have never been so many choices available to drinkers, and they seem to be taking full advantage of them.
◼️ The premiumization trend is slowing
For years, we've seen consumers gravitate to higher end brands, and wineries adjust their sales tactics to follow. Luxury brands have seen steady growth for years, and this has led to a decrease in sales for bulk, commodity wines, but even the premium brands' sales are beginning to slow.
◼️ "Wellness" and sober-ish trends greatly affect wine
Surely you've noticed how seemingly everything is now related to "wellness." I think that word has lost all its meaning, but the fact remains that it's still top on the mind for consumers. Battling press narratives about how good or bad "x" can be for you only muddy the waters. This, coupled with budding trends toward sober-ish lifestyles (dry January, sober September, and California sober, for example), mean that more and more people — young folks especially — are putting the brakes on their alcohol consumption in favor of their health.
◼️ The cost of wine continues to be an issue for consumers
This is a bit of a no-brainer. Wine is just expensive. From the cost of land or grapes, the cost of labor, even things like the price of glass have gone up — due to inflation. As wine prices rise, drinkers are going to look elsewhere. Climate change will also play a large role in this in the years to come. Might this also be a factor in why the boomer generation is leading wine sales? How can we millennials afford wine when we're so busy buying avocado toast that we can't even afford a house?!
As always, you can see what I'm drinking on Instagram at @sethebarlow and send your wine questions and quibbles to firstname.lastname@example.org