SVB report follow-up: What? The wine business worry?

Want to see how little the wine business understands its existential crisis? Follow the headlines

The Wine Curmudgeon has a stock photo he uses for stories likes this – a man with his head in a hole in the ground, based on the myth about ostriches burying their head in the sand when there’s danger. They supposedly do this because, “if they can’t see the predators, then the predators can’t see them.”

Ostriches don’t actually do that, but it’s a useful metaphor when someone or something acts in ignorance of the facts. The assumption is that if they hide from the crisis, then the crisis won’t happen.

Cue the wine business.

Wednesday’s Silicon Valley Bank report, an annual survey of the state of the wine business, says wine may well be facing an existential crisis thanks to climate change and water shortages in California, as well as what looks to be the continuing collapse of the restaurant wine business.

Most importantly, the report notes, people younger than 50 aren’t especially interested in wine. That means, as the Baby Boomers die off, fewer people will drink wine – a lot fewer people. Which, the report says, “poses a primary threat to the business. That issue has yet to be addressed or solved, and the negative consequences are increasingly evident.”

So how did the wine business react? Save for the San Francisco Chronicle, which didn’t pull any punches – “New report rings a desperate alarm for wine” – it was business as usual for news coverage of the report, as well as similar, wine-related news.

Call it the perfect Alfred E. Neuman storm:

• U.S. wineries report bumper year

• Global Wine Market Size Expected to Reach $456 Billion In 2028, for a release issued the same day as the report and which noted wine’s “increased consumption pattern.”

• Wine’s Premium-Plus Tier On The Rise As Total Market Slips, from our friends at the company that owns the Wine Spectator.  My favorite bit: “premiumization remains a key driver of value for the industry, with higher-priced segments significantly outperforming less expensive categories.” In other words, nuts to everyone who doesn’t buy $40 wine.

• Survey: After robust 2021, winery owners face long-term challenges

Know something else here. The report’s author, Rob McMillan, is a banker. Bankers typically don’t call out their clients for – to be polite – acting like ostriches. That Rob did speaks to how serious the problem is. And, frankly, it took guts. One person, who knows how the report is compiled, told me that Rob may face intense criticism for what he wrote: “That’s the price of a widely released report and trying to provide leadership for change. People resist change, so he’ll get a few arrows over this.”

In which Rob shows more concern for the wine business than it shows for itself.

Full disclosure: I wrote a trade piece about the report, but I didn’t gloss over the issue. The second paragraph said: “The bad news? Wineries may well need those two banner years to offset the aging of the industry’s Baby Boomer base, the continued decline in on-premise sales, and the beginning of climate change-related water shortages and restrictions.”