Silicon Valley Bank: The US wine industry will bound back in 2021

The US wine industry is poised to bounce back in 2021, according to a report by Rob McMillan, Founder, Silicon Valley Bank, with a consumer desire to celebrate set to help drive wine sales this year.

Silicon Valley Bank’s 20th annual review of wine industry prospects predicts that temporary gains will yield to long-term declines. The report raises doubts that this year’s expected sales momentum will carry very far into 2022.

Wineries that have established strong direct-to-consumer sales during the Covid-19 pandemic, as well as online retailers, can expect more gains in 2021, the report says, while bricks-and-mortar retailers, urban-based grocers and restaurants will take years to recover.

Restaurants will drastically need new investment to survive or to re-appear. Yet, the report predicts a quick recovery for the industry as a whole, although the relative importance of individual sales channels will shift dramatically.

Online wine retailers had major growth in sales during 2020, and that is expected to continue into 2021. This channel, and wineries’ own online efforts, “will represent 20% of an average winery’s sales within five years,” the report predicts.

McMillan stressed that wineries, in spite of the loss of tasting room sales, are not in the same financial straits as restaurants. “Wineries seldom go bankrupt,” he said, “even if they are over-leveraged. If they have financial problems, there’s always a willing buyer.”

One problem that was lurking in the US at this time last year, according to the report, was an over-supply of wine. But damage to crops from last year’s fires and smoke, as well as diminished tasting room sales, resulted in supply now being back in balance with demand.

However, one problem that has not gone away is the changing ages of wine drinkers. As Baby Boomers continue to retire, they are being replaced by younger drinkers with different agendas.

While the decrease in demand by Boomers for wine purchases at all price levels has not been as precipitous as once predicted, the decline is not being offset by younger drinkers, who often see better value in craft beers and in spirits.

“The digital world parallels the real world,” McMillan said, “and the new consumer is not one who wants to rely on advice from most current sommeliers. We need to consider the values of younger drinkers, and they value things in the wine world differently.”

Download the full report

https://www.svb.com/trends-insights/reports/wine-report

Seven Oregon Pinot Noirs Make Wine Spectator’s Top 100 List

Wine Spectator’s Annual Report names 100 of the best, most interesting wines in the world, with seven made in Oregon

Around this time every year since 1988, Wine Spectator gathers the best of the best wines its editors have tasted throughout the year, bestowing their favorite, most excellent wines made in or imported into the U.S. with a spot on the highly coveted “Top 100 list.” Oregon wines are often overrepresented on this prestigious list, garnering around five or six spots annually, or 5 or 6%, which is no small feat considering that Oregon accounts for far less than 1% of global wine production.

But in 2020, the number of Oregon wines set a new record in Wine Spectator’s Top 100 list with seven Oregon Pinot noirs earning their way on to this list. Put another way, this means 7% of the most exciting wines in the entire world are made in Oregon.

How hard is it to get onto Wine Spectator’s Top 100 list?
The magazine receives about 11,000 wines each year for evaluation, so the odds of getting on this list are more than 100 to 1.

According to Wine Spectator, “Our selection prioritizes quality (based on score), value (based on price) and availability (based on the number of cases either made or imported into the United States). These criteria are applied to the wines that rated outstanding (90 points or higher on Wine Spectator’s 100-point scale) each year to determine our Top 100…These wines are a diverse group—ranging from emerging labels and regions to traditional estates exploring new directions—and all generate the excitement we call the “X-factor.”

Winners this year include a top ten entry, Beaux Freres Pinot Noir Ribbon Ridge The Beaux Frères Vineyard 2018 with a score of 95, (the Beaux Frères Vineyard pictured above, photo by Carey Critchlow). Senior Editor Tim Fish described this wine as “A wine of presence and expression, impeccably structured yet elegantly layered, with evocative raspberry, rose petal and brown baking spice notes that pick up richness and tension toward fine-grained tannins.”

The other six winners and their respective spots on the list plus ratings are below. According to the magazine, a rating of 95-100 is deemed as a “Classic.” and a wine rated with a 90-94 is “Outstanding.”

#19: Résonance Pinot Noir Willamette Valley 2017, 93

#29: The Four Graces Pinot Noir Dundee Hills Reserve, 2017, 94

#33: Ken Wright Pinot Noir Willamette Valley, 2017, 91

#37: Bergström Pinot Noir Willamette Valley Cumberland Reserve, 2018, 94

#64: La Crema Pinot Noir Willamette Valley 2018, 92

#79: Stoller Pinot Noir Willamette Valley 2018, 90

“Placing a record seven Oregon wines among the world’s Top 100, and five in the top 40, is welcome recognition for Oregon and a reflection of the exceptional fruit and winemaking talent here,” notes Oregon Wine Board President Tom Danowski.

Stoller Family Estate appeared for the first time on this list in 2020, and the designation is not lost on founder and owner Bill Stoller. “Wine Spectator is one of the most influential publications in our industry, and it’s an incredible honor to earn a spot on its Top 100 list,” he said. “Our Vice President of Winemaking, Melissa Burr, has been honing her craft over the last 15 years. She created an everyday Pinot Noir that embodies the spirit and complexity of our region. To have our 2018 Willamette Valley Pinot Noir place alongside some of the best in the world is a testament to Melissa and her team’s dedication.”

US Wine Market Adapts to “New Normal” According to Nielsen Report

US off-trade consumers are settling into new normal following the incredible sales spikes seen at the height of the pandemic, the latest data from Nielsen has shown, but US wine appears to be losing out to imports from New Zealand, Italy and France in the most recent weeks.

According to data for the week ending 22 August, wine in the US off-trade grew 17.4%, marginally lower than the previous week, and well below the 25.2% of the whole Covid period to date. Spirits meanwhile led the charge at with growth of 26.2% (down from 27.2% last week, or 33.5% over the whole Covid-period to date) led by the whiskey (24.2%), which accounts for a third of the spirits category, tequila (+59.1%), ready-to-drink cocktails (+101%) and cognac (+53.2%).

Hard seltzers also saw triple-digit gains, up 113% this week, compared to the same period last year. Although this growth has slowed slightly, it still accounts for 10.2% of sales in the latest week.  Craft and super-premium beer also showed strong sales within the core beer category, which rose 9.8% overall.

Drilling into wine sales, sparkling wine grew well ahead of table wine, rising 35.5%, compared to table wine’s 13.3% growth.  However, the data showed sales of American table wine are losing out to wines imported from New Zealand (23.6%), Italy (23.3%) and France (18.7%) at a faster rate than pre-pandemic, with the market share of domestic table wine falling 3 percentage points, on the back of a 2.5 percentage point decline in Californian wine.

US Consumers are settling into a new normal, according to Nielsen’s vice president of beverage alcohol Danella Kosmal, with year on year trends up 18.5%

However, Kosmal stressed that although off-premise growth rates for alcohol continue to outpace growth rates of total consumer goods, the off-premise growth was not enough to make up for the total losses in on-premise channels. “There has been a significant shift in volume from on-premise channels, which has exaggerated growth rates for off-premise alcohol,” she said.

The latest data showed that the US Wine Market Adapts to “New Normal” According to Nielsen Report premise saw steady growth, showing the seventh consecutive week without decline, with the average rate of sale per average establishment up 3% compared to last week. This metric varied in different states across the US, with New York rising 4% in the last week, and Illinois seeing the strongest growth, at 11%, making it only a third (36%) below the ‘normal’ level of the same week last year.

However, the average rate of sale in outlets that are currently open is still down 22% compared to the same period last year.

L’uva Bella, Ohio’s Largest Winery Acquired by Millennial Investors  

L’uva Bella, the largest winery by volume in the state of Ohio, has been acquired by Marisa Sergi, 26, and Evan Schumann, 25, through their investment fund, S’quared Holdings.

The winery, based in Poland Township, primarily produces bulk wine for private label and retail channels. It also makes a range of grape and other fruit juice products.

The financial details of the transaction have not been disclosed, but the price paid by S’quared Holdings is believed to be “in the mid seven-figure range”.

The winery was founded 15 years ago by Sergi’s father, Frank. Marisa is a third-generation winemaker and already produces wine under the RedHead Wine label, which is distributed in Ohio, West Virginia and Pennsylvania, with plans to also launch in Kentucky, Virginia and Tennessee.

She said she hopes to add further product lines to the winery’s range, as well as branch into organic wine and extend distribution into five to 10 more states.

“We’ll also be implementing innovative partnerships and plan to hire six to 15 more people in the next three to five years,” she said. “We are willing to bet on ourselves, our team, and our community despite the challenging current environment. We believe we can build a bright and prosperous future for our company and our employees by continuing to produce great products and to go above and beyond to make our customers happy.”

Her business partner, Evan Schumann, studied entrepreneurship and finance at university and is member of the fifth generation of his family’s business, Ohio-based metal refinery Schumann & Co. He is the founder of Zitek Corporation and management consulting firm Matrix Growth Ventures, and has also worked for Magnus International and PrintCB.

Source:  Drinks Business and L’uva Bella