NAPA, Calif., Jan. 13, 2021 /PRNewswire/ -- Silicon Valley
Bank (SVB), the bank of the world's most innovative companies
and their investors, today released its 2021 State of the
Wine Industry Report. Now in its 20th year, this
authoritative annual report assesses current conditions in the wine
industry and provides a unique forecast for the year ahead based on
proprietary research and economic and behavioral trends.
Highlights and predictions from the 2021 wine industry
conditions survey and report:
- As the hospitality, travel and entertainment industries
rebuild, there will be strong consumer demand and a bounce in
overall sales that will gain momentum in 2021, but may not be
sustainable into 2022.
- The wine sales growth rate across all price segments has been
declining for many years. The wine industry will need a national
marketing organization to deliver a unified consumer message.
Price
- Overall bottle pricing should hold in both off- and on-premise
sales, as well as in the direct-to-consumer channels, as demand for
alcohol and special occasions undergoes a temporary growth spurt in
2021.
- Premiumization, a move to higher-priced wine, is nearing an
apex but will continue into 2021 as deferred celebrations and
reduced supply stall the expected change.
Sales Channels
- Retailers with existing ecommerce strategies will have a strong
2021. Online sales could represent 20 percent of an average
winery's sales within 5 years.
- Surviving restaurants will come out of the pandemic financially
damaged and will require investment for new revenue-generating
strategies. Wine sales through restaurant channels will not recover
to pre-COVID levels in 2021, nor for many years.
- Off-premise grocery sales will show year-over-year
declines.
- Wineries with direct-to-consumer models will focus on COVID-era
sales strategies in the front half of the year and will likely
finish 2021 with strong tasting room sales.
Supply
- When 2020 totals are calculated, we forecast that California will have crushed 3.3 million tons,
resulting in the smallest harvest since 2011. The Pacific Northwest
harvests in both Oregon and
Washington will also come in
smaller than normal.
- Wine supply in California is
largely in balance after starting the year with an acute
over-supply. With limited growth in volume and an expected
reduction in wine sold at grocery stores, a large 2021 harvest
could put the industry back into a position of being over-supplied
once again.
Demand
- Retiring baby boomers will moderate their wine purchasing, both
in price and volume, as they age. Online sales to boomers at home
will be a growth channel.
- The under-40 cohorts are where the wine industry will find
growth in the next decade with 30.3 million Americans crossing age
40 in the next 5 years. The wine industry has to evolve its
messaging to attract this new consumer.
"2021 will be a year of two phases for the wine industry: the
continuation of a COVID-restricted mode during the first part of
the year, followed by a gradual reopening of businesses and a
resurgence in hospitality, travel and entertainment made possible
by the success of widespread vaccinations," said Rob McMillan, founder of Silicon Valley Bank's
Wine Division and author of the report.
"Those wineries that evolved in 2020, were creative in their
sales channels, and recognize the permanent societal changes that
will impact the industry forever will be successful in meeting the
anticipated demand post-vaccine and beyond."
SVB will host a live videocast with Rob
McMillan to discuss the annual report and the state of the
wine industry on January 13, 2021 at
9:00 a.m. PT with Amy Hoopes, President of Wente Family Estates;
Devin Joshua, Managing Director of
Merryvale Vineyards; Erik
McLaughlin, CEO of Metis; and Paul
Mabray, CEO of Pix.wine. Register for the live event
here. A replay of the discussion will be available after the
event.
Read the full 2021 State of the Wine Industry report
here: svb.com/wine-report
About Silicon Valley Bank
For more than 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