ST. HELENA, Calif.,
Jan. 18, 2017 /PRNewswire/--
Silicon Valley Bank (SVB) released its annual State of the Wine
Industry Report today. The 16th annual State of the
Wine Industry report combines SVB's expertise in the U.S. wine
business with proprietary research to deliver forecasts and
predictions for the year ahead in wine.
Highlights from the 2017 report show strong market conditions
overall and identify notable trends that may signal adjustments in
consumption patterns and segment prices:
- Wines sold between $12 and $25
will grow in demand as will high-end luxury wines with an
established brand. We expect to see small price increases in these
segments, with volume and price drops for bottles priced under
$9.
- Sales growth is predicted between 10 to 14 percent for the
premium wine segment. The confluence of better retail conditions,
strong consumer demand and good supply will collide to deliver
improving industry performance.
- Overall supply is balanced with shortages of high-quality pinot
noir and cabernet, but excesses are evident in certain non-core
varietals and for grapes destined for lower-priced wine.
- Slightly higher per capita consumption can be expected if
economic conditions continue to improve despite retiring,
wine-loyal baby boomers being replaced by less affluent millennials
who are ambivalent about their alcoholic beverage of choice.
- Winery acquisitions to remain active through 2017.
- Farm labor supply and costs will be the dominant concerns in
the wine business in 2017.
"We foresee a strong year ahead for the wine industry,
particularly in the premium wine segment, with small price
increases in the $12-25 bottle and
luxury wine categories," said Rob McMillan, founder of Silicon
Valley Bank's Wine Division and author of the report. "However,
critical labor issues will be the dominant concern this year. The
reality in the wine business today is that the labor force is
inadequate in every growing area, which is leading to increased
costs and more incentive to mechanize."
Additional findings and predictions for 2017:
- Import growth in lower premium price points is expected, due to
a strong and strengthening U.S. dollar, available foreign supply,
foreign in-country marketing support and willing millennials.
- Millennials are beginning to affect the lower price range of
premium sales. Their presence is most visible in the $8 to $11.99 red blend category, but they will
gradually move away from blends and into varietal wines or imports
as their incomes improve.
- Total harvest in California
for 2017 is predicted to be 3.95 million tons crushed, 7 percent
above 2016.
McMillan is discussing the annual report and the state of the
wine industry in a live videocast online today at 9:30 a.m. Pacific time with Amy Hoopes, chief marketing officer and
executive vice president of global sales at Wente Vineyards,
Dan Leese, president of V2 Wine
Group, and Paul Mabray, vice
president of social media and reputation management at Avero. A
replay of the discussion will be available after the event.
Read the full report here: http://www.svb.com/wine-report/
To participate in Silicon Valley Bank's annual Wine Conditions
Survey in the future, contact the author Rob McMillan at rmcmillan@svb.com or
on Twitter @SVBWine.
About Silicon Valley Bank
For more than 30 years, Silicon Valley Bank (SVB) has helped
innovative companies and their investors move bold ideas forward,
fast. SVB provides targeted financial services and expertise
through its offices in innovation centers around the world. With
commercial, international and private banking services, SVB helps
address the unique needs of innovators. Learn more at svb.com.
Silicon Valley Bank's Wine Division
Founded in 1994, SVB's Wine Division offers financial services
and strategic advice to premium vineyards and wineries. With one of
the largest banking teams in the country dedicated to the wine
industry, SVB's Wine Division has offices in Napa and Sonoma counties and primarily serves clients
in the fine wine producing regions along the West Coast of
the United States. Learn more at
www.svb.com/winedivision
Silicon Valley Bank is a member of SVB Financial Group. ©2017
SVB Financial Group. All rights reserved. Silicon Valley Bank is a
member of FDIC and Federal Reserve System. SVB>, SVB Financial
Group, and Silicon Valley Bank are registered trademarks.
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SOURCE Silicon Valley Bank