ST. HELENA, Calif.,
Feb. 15, 2018 /PRNewswire/
-- Silicon Valley Bank (SVB) released its "State of the Wine
Industry 2018" report today. The 17th annual report
assesses current conditions in the wine industry and provides a
unique forecast based on economic and behavioral trends.
Highlights and predictions from the 2018 report show that
industry sales growth is ebbing as younger consumers and retiring
baby boomers impact buying behaviors and preferences, which will
have implications for wineries and their direct-to-consumer
marketing efforts:
- Consumers continue to leave lower-price segments in favor of
better-quality offerings, but total sales growth is leveling
off.
- For the industry as whole, sales will rise by 2 to 4 percent,
while volumes will increase up to one percent.
- Overall pricing will remain flat with price increases difficult
to pass through to consumers.
- The premium wine segment – which we define as above
$10 per bottle – will grow in the
range of 4 to 8 percent, down from the estimate of 10 to 14 percent
in 2017.
- Overall supply is balanced, with chardonnay demonstrating
particularly strong demand. Cabernet is balanced with flat to
downward pressure at the high end of the market.
- Increasing imports will continue in the lower premium price
points.
- Acquisitions will cool somewhat from the torrid pace of the
past three years. We still will see foreign purchases of US
wineries and significant transactions for vineyard properties.
- North Coast grape prices, which have seen rapid growth in the
past five years, should slow their growth rate.
"2018 will be a good year for the wine industry, and while there
will still be sales growth, the rate of growth is slowing,"
said Rob McMillan, founder of
Silicon Valley Bank's Wine Division and author of the report. "The
successful wineries 10 years from now will be those that adapt to a
different consumer with different values – a customer who uses the
internet in new and interactive ways, is frugal and has less
discretionary income than their generational predecessors."
Additional findings and forecasts for 2018:
- Millennials are migrating away from red blends and introductory
wines and are starting to have a positive impact on other
lower-priced still wine categories, both domestic and foreign.
- While boomers are still the leading consumers of fine wine,
they are consuming less as they age, are changing their spending
patterns in dollars spent and are moving away from the high price
points as they adjust to living on a fixed income.
McMillan discussed the annual report and the state of the wine
industry in a live videocast on January 17,
2018 with Gretchen Boock,
Chief Executive Officer of Dobbes Family Estate, Mary Jo Dale, Marketing Director of the Americas
for Vinventions and Nomacorc, and Paul
Mabray, Director of Getemetry.com. A replay of the
discussion is available here.
Read the full report here: svb.com/wine-report/
About Silicon Valley Bank
For 35 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,
Sonoma and Portland, and primarily
serves clients in the fine wine producing regions along the West
Coast of the United States. Learn
more at svb.com/premium-wine-banking/
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SOURCE Silicon Valley Bank