Old World Wines Gaining Share Across US On-Premise

CGA by NIQ’s latest On-Premise Measurement Research explores the share of total wine, with a focus on domestic white and red wine categories across the US, to highlight the opportunities for suppliers as old-world wines continue to gain share.

Using insights from the latest 52-week period of CGA’s OPM data to 12/31/2022, it is apparent that domestic wines account for the largest share of total wine across the US On-Premise (66.4%), but opportunities emerging for suppliers and operators to capture changing consumer preferences as they explore and consume old-world origin varietals.

At a total US level, domestic wines still hold the largest share of the market, however, old-world wines have continued to gain share. While domestic share has largely been maintained (-0.8pp), recent share changes demonstrate that US consumers are increasingly opting for old-world wines, specifically of regions including Italy (+0.5pp), New Zealand (+0.3pp) and France (+0.2pp).

Within red, domestic wine continues to hold a significant proportion (72.8%) of the share of red wine, up 0.8pp vs YA – continuing to increase its importance in comparison to all other major origins. Within the category, international origin wines tracked are losing share, including Italy (-0.1pp), Argentina (-0.4pp) and Spain (-0.1pp).

Whereas, white domestic wine has lost share (-1.6pp) and holds 61% of total share of white wine. Consumers are increasing looking to old world regions for white varietals in the US On-Premise. Most notably, from Italy (+0.9pp) has seen the largest increase in share gain, followed by New Zealand (+0.5pp) and France (+0.3pp).

Andrew Hummel, Client Solutions Director for North America, states: “Category and varietal insights are so important to help shape effective strategies for the On-Premise. Consumer preferences are changing, and being armed with the knowledge and insight to adapt offerings will enable success in 2023. While domestic wines still hold the largest share of the market across the US, increasing competition and innovation is gaining traction with consumers. OPM data tracking over time gives a comprehensive view of how the channel is evolving and helps identify opportunities for growth.”

Here is the research link: https://cgastrategy.com/unlock-the-potential-of-opm/

 

 

SVB Wine Report: The US wine industry sees some challenges in 2022

According to the latest Silicon Valley Bank Wine Report shows that although 2021 proved to be a good year for the US wine industry, several serious challenges signal uncertain times ahead.

The report points out that underlying trends remained a big concern, with the most serious being that younger consumers are not getting interesting in wine, and wine is losing market share to spirits, craft beer, RTDs and other alcoholic drinks.

“This issue has yet to be addressed or solved, and the negative consequences are increasingly evident,” Rob McMillan, EVP and Founder, Premium Wine Division warned in the report. “Wine as a product has lost the lustre it once had with the consumer 20 years ago and is probably entering a phase of negative volume growth.”

“By 2025, 27.9 million Americans will cross normal retirement age at 66, while 30.3 million will cross age 40.5. That will be too many consumers leaving their best buying years, and too many consumers entering their best buying years, to ignore,” McMillan states.

The report also points out out the homogeny and lack of transparency of many entry level wines that was failing to appeal to younger, more health-conscious potential wine drinkers, who wanted to drink less but better, while the high price of more premium offering was another deterrent.

“Premium wine producers haven’t figured out how to produce their wine for an entry-level consumer. Without an on-ramp, it’s going to be hard to grow the wine category,” McMillan further states.

Declining volume sales

Across the on and off-trade, data from SipSource shows that growth in wine compared to spirits stalled at the onset of 2021, having both shown comparable volume growth during 2020. As the report showed, when businesses reopened in January 2021, that comparable trend took a dramatic turn and while spirits finished the year in 6.1% growth, wine was down -8.9%.

Although the report highlighted a number of tailwinds, it criticized the “lack of leadership within the wine industry to counter these obvious trends and cooperate to form a marketing organization to promote the wine category”.

This points to the potential decline of restaurants as an important channel for the wine industry in the US, the report also warned.

“The restaurant industry will likely continue to decline in its importance to the wine industry as a viable sales channel due to overpricing on the menu and consumers who value other alcoholic beverages over wine,” the report said. “Restaurants may find that wine is not in demand at the prices charged and that the cost to maintain deep stocks of wine is becoming senseless.”

There was evidence that the amount of wine sold through the wholesale channel fell throughout the year despite tasting rooms, restaurants, hotels and travel resuming business. This indicates that as restaurants reopened, wine inventories are being streamlined into smaller wine lists.

“The investment in long wine lists might be limited going forward,” McMillan said.

Other highlights:

• Consumer behaviour has irrevocably changed as a result of the pandemic – the switch to homeworking is set to stay, and the move to online purchasing is also set to remain.
• Premiumization has continue to accelerate, however the higher price points are being offset by lower total volumes.
• The industry needs to invest to accelerate, looking at online and ecommerce driven by data, rather than focusing on more traditional channels, such as the cellar door.
• A key warning came around anti-alcohol messaging, which it said continued to grow while guidelines from a variety of government and health organizations “loosely apply science to influence consumption and taxes”. However the greater threat was a push to place “additional and more dire cancer warnings on wine”. “The industry can’t allow that to become a reality.”

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#USwinemarket #SipSource #instawine #vin #instawine