‘Dark clouds’ for US wine trade, report says

Wine consumption in the US will drop for the first time in 20 years in 2016, a new report has said.

Vineyards in California’s Napa Valley. Shortages of premium growing sites are expected to push prices up further (Photo: Wiki)

The Silicon Valley Bank’s annual State of the Wine Industry Report, published today, presents the darkest outlook for US wine trade in years.

Tens of thousands of grape acres will also be permanently removed from the California Central Valley this year, it says, while the supply of land for premium grapes across the country will continue to dry up, pushing up prices even further.

Imported wine is also expected to continue eating into the domestic fine wine market, while the growth of the fine wine category will slow to 9-13% from 14% last year.

However, premium wine and value sales will remain strong, the report predicts.

“While demand for premium wine will increase this year, there are clouds on the horizon that should be considered,” its author Rob McMillan said.

Generational shifts are being blamed for the predicted drop in per capita wine consumption, as the spending power of baby boomers becomes replaced by more thrifty millennials with less of an attachment to wine.

This latest report appears to go against IWSR analysis commissioned by Vinexpo this time last year which predicted that wine consumption in the US would grow by 11% between 2015 and 2018.

But the potential for the premium category in the country will continue to improve. Domestic wine over $10 per bottle will show growth of between 4% to 8% in 2016, the report says.

It backs up research by Rabobank last year that called the US “the most attractive major market for premium wines, as it offers both growth and acceptable margins.”