The Growth Opportunities for Wine in the US
In recent years, the US wine industry has faced stagnant consumption rates and a category-wide slowdown in retail sales. This is partially attributed to a slower influx of younger consumers reaching the legal drinking age compared to previous generations. Total category sales for wine were down 2% for the 52 weeks to September 9, according to a recent report from Zepponi & Company, but despite the declines, some growth opportunities persist within the category.
Mid-tier premium wines priced between $15 to $20 dollars were a bright spot in the 52-week period, as the only price segment showing volume growth (+ 2.9%) in the off-premise channel. While this price segment has been consistently solid in recent years, it may also be benefitting from consumers trading down from the over $20 segment as they navigate a challenging economic environment.
Going forward, the Oregon wine region is uniquely positioned to capitalize on the increasing demand for wines in the $15 to $20 price segment as the state’s average price for 750mL sits at $17.37 in 2023, while Washington and California’s average prices are $11.01 and $8.48, respectively.
In California, the US’s largest wine market, 6 of its top 10 brands in the under $20 tier showed significant growth in the face of the wine industry faltering on the whole. Meanwhile, 7 of the state’s top 10 brands in the over $20 tier grew as well.
The Top Premium Wine Brands (<$20) Powering Growth in 2023
- Josh Cellars 6.7%
- Bota Box 2.2%
- Kendall-Jackson 3.2%
- Black Box 8.8%
- Meiomi 6.6%
- Substance 10.7%
- Liquid Light 45.3%
- Acrobat 2.9%
- Portlandia 31.5%
- Duck Pond 2.7%
The Top Luxury Wine Brands (>$20) Driving Growth in 2023
- Caymus 16.2%
- Sonoma-Cutrer 7.8%
- Justin 5.1%
- Duckhorn Vineyards 2.8%
- Daou 19.2%
- Bonanza 35%
- Decoy 14.2%
- Chateau Ste. Michele 17.9%
- Novelty Hill 2%
- De Lille 15.3%
- Willamette Valley 10.4%
- Four Graces 27.8%
- King Estate 3.7%
- Ken Wright 27.7%
- Stoller 2.6%
Additionally, merger and acquisition activity of late has reiterated the importance of premiumization to wine, largely revolving around the above $20 segment. In fall of 2022, Moët Hennessy, the luxury wine and spirits division of LVMH, acquired leading Cabernet Sauvignon producer Joseph Phelps Vineyards. This purchase enhanced Moët Hennessy’s luxury wine positioning in California and demonstrated its interest in crafting a portfolio along the lines of premiumization trends.
This trend was echoed by Constellation Brands as the strategic sold off a one-million case portfolio of six premium-priced brands to The Wine Group in an attempt to reshape its portfolio in favor of high-end fine wines. Efforts towards portfolio rationalization like this can be seen across US strategic buyers as brands look to expand their market share within targeted price tiers and bolster their relevance with retailers.
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