SVB wine report 2022
by Wine Curmudgeon Posted On
The annual wine industry survey is pessimistic about wine’s future, thanks to too high prices, too old wine drinkers, and too much plonk
The annual Silicon Valley Bank state of the wine industry report, released yesterday, is so depressing that I almost didn’t write about it.
But if study author Rob McMillan is going to say things that get him dirty looks at wine events, then he needs all the support he can get. The truth will set you free – and boy, is this report full of truth:
• Wine faces continuing, serious problems with “falling interest in wine among younger consumers, coupled with the encroaching retirement and decreasing wine consumption of baby boomers.” This, McMillan writes, “poses a primary threat to the business. That issue has yet to be addressed or solved, and the negative consequences are increasingly evident.”
• McMillan, who thought premiumization would start to recede last year, said that hasn’t happened. Instead, the “reality was that COVID continued to accelerate premiumization.” Hence, a devastating trade-off – less wine sold overall, but at higher prices. And he doesn’t necessarily see this ending any time soon.
• And why not, since the wine business has all but abandoned entry-level wine. Does this sound familiar? “The wine industry has allowed the lower-priced entry-level wines to be produced without transparency as to ingredients and in a homogeneous and uninteresting way,” which is unlikely to appeal to younger consumers. In other words, plonk. And, McMillan adds, without quality entry-level wine, “it’s going to be hard to grow the wine category.”
• And that post-pandemic party so many expected? “Throughout the reopening, wine lost market share to spirits. Worse yet, total wine sold through wholesale declined through most of the year. … We predicted there would be a reopening celebration, and it turns out we were correct, but the reopening celebration that took place in 2021 didn’t include the wine industry.”
And, finally, the most depressing news: That restaurant wine sales may never return to what they were, and what they were in the several years leading up to the pandemic was nothing to get excited about. The reason? Prices that are too high and that scare off younger consumers.
Hang in there, Rob. The WC has your back.
Photo: “Teddy Roosevelt” by JBrazito is licensed under CC BY 2.0