US wine, beer, spirits consumption 'in a holding pattern' as public leans toward less alcohol

A grape harvester parked outside a downtown Napa icon for celebrating the best in California Wine Country's food and wine experiences on Wednesday underscored the direction experts inside the building said the North Coast wine business needs to take to win the palates of consumers who are reaching for other adult beverages - or cutting back on alcohol all together.

As such consumption appears to be slowing while sales are growing for certain drinks competing with traditional table wine, the upper end of the industry is increasingly embracing mechanization and other technology once eschewed, now that labor availability and cost are becoming a greater issue, according to experts at the 24th Vineyard Economics Symposium, held at The Culinary Institute of America at Copia. And how the business of growing grapes needs to evolve after the devastating Northern California wildfires of the past few years also was a hot topic at the gathering.

The huge size of the 2018 wine grape harvest in the North Coast and California and the changing tastes of U.S. consumers other beverages were evident in sobering sentiments of industry professionals and consumers presented at the outset of the event.

More than three-quarters (76%) of industry professionals, largely from the North Coast, don't plan on putting new acres of vines in the ground this year.

“It looks like we will have a gap year,” said Lise Asimont, director of operations for Napa Valley's Cakebread Cellars, while presenting the survey findings.

Vintners, brewers and distillers all are getting buffeted by the buzz around non- or low-alcohol beverages and fast-growing categories such as cannabis-infused beverages, according to Jeff Nowicki, chief strategy officer of Bump Williams Consulting.

“Alcohol per-capita consumption in the U.S. is in a holding pattern,” he told the symposium audience of nearly 300.

He pointed to sobering statistics: Nearly half of wine consumers are making efforts to cut back on how much alcohol they drink.

“That's over two-thirds of 21- to 23-year-olds we know we need to have in our arena,” he told the gathering of industry professionals. Also consuming less are “occasional” consumers, who reach for wine at least once a month.

Of adult-beverage regular consumers, 46% want to consume less wine, 52% less beer and 48% fewer spirits, per IRI Consumer Network Panel data for 2018 Nowicki cited.

Dollars spent on wine per household is up 1.4% and the amount spent per trip is up 2.0%, but trips per buyer is down 0.6% and the number of households buying wine is down 0.2%, according to Wine Market Council research Nowicki cited.

Households led by those ages 21-34 is up by 12.6% in their wine consumption overall, but they are spending less (down 0.4%), he noted.

“If we lose this group totally, and we lose the group ahead of them totally, we're going to continue to see some really dramatic drops in our business,” Nowicki said.

He said the wine industry needs to embrace cannabis-friendly consumers, even inviting them to connect vaping with the tasting room experience.

While sales of spirits, wine and beer overall have been flat for the past several years, according to BW166 figures Nowicki cited, cannabis beverages such as nonalcohol wine and beer with buzz-inducing (THC) or nonhalucinogenic medicinal compounds (CBD) added grew 61% between September 2017 and September 2018, according to hemp industry market research firm Headset. That's coming from nothing just a few years ago, when the first states started legalizing the herb and California did recreationally at the beginning of last year.

“The beverage alcohol industry is deteriorating by a thousand cuts,” Nowicki said. In addition to cannabis, ready-to-drink brands, Mexican beers, hard seltzers, low-calorie or -carbohydrate drinks, and sparkling wine are among the beverages competing for consumer attention. “They are going to continue to come into our space.”

Cannabis beverages are gaining converts fastest among younger adults and women, he said. That growth could get a boost if federal regulators open the door to cannabis-alcohol blends. Currently, California and federal beverage alcohol regulators prohibit the mixture of cannabis compounds, even CBD, with adult beverages, which is why Rebel Coast wine and Lagunitas beer with bud blends from the North Coast don't have alcohol.

Health figures highly in consumer and social media research as to why partial or complete teetotaling is en vogue, Nowicki said. He recommended the industry revive medical research from years past that connected moderate consumption - two glasses of wine daily - with healthfulness.

“Fact is, we've given up on talking about something that is very important for the industry,” he said.


As the market for selling wine is getting more challenging, North Coast vintners and growers are facing increasing supply-side challenges and seeing technological advances that are making the case for shifting more tasks to machines, according to a panel of growers at the symposium. Those hurdles include the rising cost of labor from competitive pay and health care benefits plus regulations such as new overtime and sick leave state requirements.

Since 2014, Napa-based Walsh Vineyard Management has seen its farmworker wages compounding annually at about 8%, which would put that cost on a path to double every 10 years, said Towle Merritt, general manager.

“I don't think our bottle prices are going to double as fast, in most cases, as wages are going up, so there is (margin) compression and there is a need to relieve labor (costs),” Merritt said.

Wages for farmworkers in the North Coast are about $19-$21 an hour, and entry-level positions in Napa Valley are paying $16-$18 an hour, according Justin Leigon, viticulturist for Napa Valley-based Pina Vineyard Management, citing state and trade group figures.

While that's better than the $14-an-hour average for the state, under pressure from Southern California farmers paying $15 recruit help, even the North Coast pay scales can't match the cost of housing, Leigon said.

But what puts North Coast growers at a big disadvantage is the cost of housing, Merritt said. He compared similar rentals in Willows near Sacramento, at $750 a month, and in Napa at $1,800 a month. Walsh was one of 14 businesses that participated in a survey of 589 workers by Malcom Hobbs and found that commuting was a major area of dissatisfaction among workers.

“People can't afford to live and work here,” Leigon said. He pointed to state employment and federal agricultural data that suggests the number of North Coast vineyard acres per worker has decreased from 10 in 1990 just before the red-variety planting boom to 20 now.

Grape growing already has moved to do more with fewer workers. Merritt pointed to University of California Cooperative Extension farming cost studies that suggest the average proportion of labor in vineyard costs fell from 56 cents per dollar in 2012 to 38 cents per dollar in 2016.

That's where the machines roll in. While Australia moved heavily into mechanization in the 1990s, the California North Coast largely hadn't until the past few years, noted Leigon and panelist Pete Opatz, a longtime viticulturist in the North and Central coastal areas. Big reasons for the delay in implementing mechanized harvesting, pruning, sucker and leaf removal, trellis wire positioning, spraying and other tasks in the North Coast is the equipment itself wasn't ready for prime grapes, and viticultural approaches had to be adapted.

Mechanical harvesters that once were tough on fruit and vine now are being built and adjusted locally to deliver to the winery less MOG (material other than grapes) than some hand-picked loads, Opatz noted.

Show Comment

Our Network

The Press Democrat
Sonoma Index-Tribune
Petaluma Argus Courier
North Bay Business Journal
Sonoma Magazine
Bite Club Eats
La Prensa Sonoma
Sonoma County Gazette