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Top 5 findings from the SVB wine report

Silicon Valley Bank’s 2025 wine industry report, which analyses the state of the US market, suggests this “isn’t like any era” the trade has faced before. Roger Morris reports on the key takeaways.

According to the 2025 wine industry report by Silicon Valley Bank (SVB), released yesterday, the current decline in wine consumption in the US is part of a market correction – but there is still no indication of how long it will continue or what might eventually reverse it.

“People have asked me not to dwell on gloom and doom,” said Rob McMillan, EVP and founder of the bank’s wine division, but he insisted that negative industry metrics should not be ignored, pleading “we can’t be passive anymore” in finding solutions to the current problems.

“After 30 years of moving up and to the right, it is foreign to see wine industry metrics flatten out,” McMillan wrote in the report’s introduction. “This isn’t like any era before, so the solution will not be straightforward. We lack a historical solution set to emulate.”

Here are the top five takeaways:

1. The industry is going through a ‘demand correction’ with declining consumption

“The last demand correction [lasting eight years from 1986 to 1994] reversed its course because we got lucky with the French Paradox [‘60 Minutes’] broadcast,”  according to the report.

In November, 1991, US wine sales saw a huge boost after America’s most popular TV programme (with 20 million viewers) ran a segment on the impact of French and American diets on the health of each country’s residents. The answer to the difference in heart disease cases between the two nations, it suggested, was red wine consumption.

“Today, the ‘No Safe Amount’ anti-alcohol campaign is finally getting some pushback from grassroots organisations, and several articles have been published offering alternate views with credible scientific support,” continued SVB’s 2025 report.

“But is that effort sufficient to end this demand downturn? Luck is unlikely to fall into our laps twice.”

2. Prosecco and RTDs are the big success stories

“The weighted average of wineries produced a low single-digit decline of 3.4%,” the report found. “However, the top quartile experienced an average of 22% revenue growth, while the bottom quartile experienced a 16% revenue decline. Wholesale heavy wineries fared worse than DTC-focused brands.”

In terms of categories, wine-based RTDs saw big success, shooting up by 29.3% over the reporting period. RTDs  now represent US$18 billion in annual sales, says the report.

Prosecco, too, hit a home run, with sales of the Italian fizz growing by 2.7%, while almost every other grape variety and style saw declines. In the US market Syrah/Shiraz sales were hit worst, showing a 24.5% decline as of October 2024. Malbec also suffered a -17.4% sales slide.

Pinot Grigio and Sauvignon Blanc, while still experiencing a loss, were less severely impacted than other varieties at -3.9% and -3.3% respectively.

3. Inventory issues will persist throughout 2025

Inventory issues in the US have plagued international drinks companies exporting to America for several years.

“When interest rates went up, retailers started carrying less and less inventory,” Dale Stratton, analyst for Wine & Spirits Wholesalers of America (WSWA) told the drinks business last March.

There is also a hangover of surplus stock left over from the Covid-19 pandemic, which means US retailers have been less inclined to take on more stock. Evidence of this can be seen from data supplied by the French Association of Wine and Spirits Exporters (FEVS), which showed that exports of all French wines and spirits to the US plummeted by 22% in 2023.

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Throughout the pandemic, many restaurants and bars were either closed for long periods or remained open, but with fewer customers. Some auctioned off, or sold at discounts, much of their cellars, and they did not rush to fully restock. According to the 2025 SVB report, the off-trade “must positively evolve before we can return to normal wholesale alcohol inventory turns.”

“Clearing backed-up wholesale inventory and returning to predictable depletion volumes will likely take most, if not all, of 2025 and possibly continue into 2026,” the report says.

SVB predicts that the off-trade will move back to “zero percent inventory growth by volume between 2027 and 2029.”

4. Growers will continue to be hardest-hit

SVB notes that “given the acres of unharvested fruit in 2024, grape prices will drop in virtually all appellations but not in all vineyards. Producers with a strong history of quality and extended buyer relationships will be less impacted, if at all.”

California growers, particularly, will face a tough year.

“When 2024 totals are calculated, we estimate that California will have crushed 3.2 million tons, which will be the smallest crush in the state since 2008,” the report states. “Supply in the West is in a position of excess in every region, with some regions better than others. We can’t identify quantitatively what didn’t get harvested in California, other than knowing it was in the thousands of acres. The same will be true in 2025 with fruit that will not find a home.”

“Until retail sales improve, growers will have difficulty negotiating favourable contract pricing and terms. Given the other predictions for flat growth…the current market dynamics could extend past 2030 in many regions.”

5. Coastal wineries most favourable for buyers

“The trend of strong vineyards and wine brands changing hands will continue,” finds the SVB report. “More retirement-aged owners will be looking for exits in 2025 as part of another bubble, but smaller, average-sized wineries will have a more challenging time finding buyers at previously expected exit prices.”

SVB states that while some vineyard prices softened in 2024, “vineyard properties in coastal regions felt the least impact.”

Going into 2025, the report says, “there are many vineyards for sale without interested buyers. As comps start to come in for closed sales, 2025 will likely see average vineyard values drop in more regions regions as sellers greatly outnumber serious buyers.”

Find out more about the biggest drinks acquisitions of 2024, including Butterfly Equity acquiring The Duckhorn Portfolio in Napa, here.

 

 

 

 

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