SACRAMENTO — Consumer thirst for higher-quality wine has pushed the average bottle price in the U.S. into “premium” territory for the first time, and that’s putting ever more supply and pricing pressure on wineries and growers making or wanting to produce such wine, according to experts at a major wine industry symposium Wednesday, Jan. 25.
For the first time, the average price for the equivalent of a standard-sized 750-milliliter bottle of wine sold by U.S. retailers passed $10 a bottle, said Danny Brager, senior vice president of Nielsen’s Beverage Alcohol Practice, at the 23rd annual Unified Wine & Grape Symposium in Sacramento.
“That hasn’t happened before,” he told the more than 1,000 gathered to hear the latest on the direction of the U.S. wine business. “We’re moving into territory where things continue to move up over time.”
This consumer preference for higher-priced wines has been called “upscaling” or, in recent years, “premiumization.” This movement is shown in faster sales growth in dollars than in volume. Nielsen estimates U.S. wine retail sales grew 1.8 percent by volume and 4.4 percent by value. Sonoma-based BW166 figures the equivalent of 383 million 9-liter cases were sold last year, up 2.8 percent, and the dollar value grew 4.0 percent.
The good news is that wine is holding it’s own against beer — even craft beer — spirits and even marijuana, Brager said. In the past 13 years, spirits and wine have been steadily gaining share of the $234 billion American beverage-alcohol pour, rising to 32 percent and 18 percent last year, respectively, while beer has been slipping, to 50 percent, he said, citing BW166 research.
Only 22 percent of regular craft beer drinkers are drinking less wine, while 20 percent are pouring more and 57 percent the same, based on a Harris Poll for Nielsen conducted in July. When asked in a Nielsen-Harris poll last month how legalized marijuana would impact their consumption of wine, beer and spirits, the North Coast’s top agricultural product fared a tad better than the others, with 10 percent consuming less wine vs. 12 percent for the others.
TROUBLE RAISING PRICES
While consumers are shifting to higher-priced wine, many vintners are having a tough time shifting their retail prices higher, Brager said. The top 100 wines retailing for the equivalent of less than $3 a bottle raised prices 3 percent in the past two years, and those in the $20–$30 and $30-plus segments increased them 1 percent and 5 percent, respectively, according to Nielsen figures. But the top 100 wines in each of the $3–$6, $6–$10, $10–$15 and $15–$20 price points hadn’t boosted prices during that time.
“In the middle, between the $3 and $20, it is really hard to get price increases, at least all the way through to retail,” Brager said. “It’s just not happening. That region is very competitive. People who raise prices may pay the consequences that consumers may buy something else.”
Though “ailing” and challenged by premiumization, the under-$8 wine market is far from “dead,” Brager said. That’s because it still accounts for 58 percent of
WHITE, RED AND ROSÉ
Among varietal wines, chardonnay continues to dominate U.S. retail sales volume, but cabernet sauvignon’s growth trajectory is poised to pass chardonnay in about two years, Brager said.
While red blends continue to have strong growth, sales of rosés are “on fire,” he said.