Finally, something Europe and the U.S. can agree upon: wine sales will rise as will prices for bottled wines, especially at higher price points, as well as bulk wines.
Traditional wine shipments saw volume growth of 1.3% or about half of that of 2016, Danny Brager, senior vice president of Nielsen Company, told a crowd of vintners, distributors, importers and retailers on Tuesday at the Nobu Eden Roc hotel in Miami for the Wine Market Council’s annual report on the state of the industry.
This year the WMC offered up a panel of wine executives from all aspects of the business to give their forecasts for the year ahead as well. The previous evening many in the audience and every panelist celebrated Wine Enthusiast’s 18th Annual Wine Star Awards at the same hotel.
Brager told the audience that the number of places selling wine continues to grow. In 2017, there were 565,000 off-and-on premise locations, up from 447,370 in 2003.
The types of places wine can be found have also changed.
“On the on-premise sites, there are about 18,000 fast casual restaurants, about 3,000 quick-service restaurants selling wine. But some of the highest growth rates among on-premise are at sports bars, theaters and concerts halls, stadiums and arenas,” he said. “So, the more places that wine is available, the greater the chance that a bottle or glass ends up in consumers’ hands.”
Brager predicts premiumization will be leading this year’s annual-growth rate.
Higher priced wines “continue to consistently out-perform the lower end.” He sees that trend continuing, saying, “Some people aren’t drinking a lot more, but they’re drinking better.”
The Wine Market Council’s John Gillespie said its annual survey of more than 2,500 wine drinkers, conducted last June and July, confirmed that more than half of those asked said they were buying higher priced bottles than they had in the year before. Forty percent said that they were spending more because their knowledge of wine had increased.
When Brager asked the panelists if $20 was the price ceiling for consumers, Wine Enthusiast Chairman, Publisher and Editor Adam Strum re-framed the question, recalling a conversation he had had with Bruno Prats, the former owner of Chateau Cos D’Estournel. “I asked Bruno if America will ever become a wine drinking country. And he replied, ‘If your first experience with wine is a great one, you’re going to be a wine drinker.’”
Strum then noted the industry, and the quality of wines, had come a long way since the 1970s. “Today, you can get phenomenal wines,” he added.
Meanwhile, in the Netherlands, Dutch bank Rabobank released its quarterly report on the industry. Noting that 2017 confronted the wine industry “with short-term challenges related to an unusual harvest… Some of these issues are temporary and unavoidable in the agricultural world. Others represent long-term structural changes.” The bank sees changing consumer behavior, global shifts in demand, as well as trading agreements driving a change in sourcing strategies for wineries and brands.
As a result of the smaller harvest, it expects higher prices, some of which are already being seen by grape buyers. Those higher prices for certain products can be relatively easy to pass on to the consumer. “In other segments and markets, higher prices are likely to result in lower volumes. The different players along the value chain have to make choices, at least for the time being,” the bank said. Most of the companies were still negotiating deals for 2018.
Trade agreements and changing tastes have now made China the world’s fifth-largest wine importer, and as operators there have gained experience and confidence the number of intermediaries between producer and consumer is declining, the Rabobank said.
U.S. wine imports also continued their upward trend with France and New Zealand driving bottled wine imports and Australia driving success in bulk wines.
Finally, the bank expects winery consolidations to continue and that France has been a particularly busy market as the largest players expand their business both inside and outside the borders. Guigal and Jadot have added new domaines to their portfolio, LVMH bought a 60% stake in Napa’s Colgin Cellar and Thienot took a stake in Paso Robles producer L’Aventure Winery, the bank said.