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.