Wine: It's what the young consumer wants. They just don't know it.

 

The beginning of change is understanding.

Each January in California, we are all enlightened by the Unified Wine and Grape Symposium, the DTC Wine Symposium, the Sovos ShipCompliant DTC Wine Shipping Report, and the Silicon Valley Bank State of the US Wine Industry Report. I'd like to say I attend them all, but some overlap. I do make it a point to attend the SVB State of the Wine Industry Videocast though. To allow flexibility, SVB records the video presentation of the SVB Report for replay. 

This year, while the headlines have been less than ideal, I come away from January 2025 encouraged. Why? Because I knew the business would not evolve in a healthy path until the majority understood this is a secular change.

In prior years of this report, we predicted this day would come if we didn't evolve. At the end of the Introduction to the 2019 SVB State of the Industry Report, we said: 

"The fundamental underpinnings that created the industry growth are changing, which means the tactics that were relied upon to ride this wave of success to this point will slowly prove flawed without business adaptation. To continue its growth in the years ahead, the US wine industry needs new direction and a changed focus." 

In-action has been the only action we've taken to attack industry issues to this point in time. And the truth is, you can't fix a problem you can't identify and accept. So, back to the question of why I'm encouraged by the recent news: It's because it feels as though we have finally reached a critical point where the facts have been accepted as reality. 

Yes, there are still those who don't want to hear about the underwhelming performance of the industry for varying reasons, but we are ready to adapt now. That is a start. Let's seize the momentum!

Where do we go next?

I know for a fact that when the circumstances surrounding business success change, using the same strategy will fail. 

We are in this very strange place where consumers who we need to influence tomorrow, have values that align or should align with wine. As a friend of mine once said, "For Gawd's sake. We are plant-based." We also can be locally sourced, have no added surgar, be low in carbohydrates, gluten-free, authentic... Just take a look at Slide 20 in the State of the Industry Report and think about the possibilities.

In the next 5 years, we will see the creative side of the business come forward and solve some of these issues. We will be far more successful working together versus going it alone. Yet, every wine company has to reconsider its strategies and look for growth opportunities.

It's time to break the mold and reevaluate everything we think - DTC, grape contracts, the tasting room model, micro collaborations with neighbors, the effectiveness of our social media campaigns, wholesale distribution, our efficiencies, how we use data, our messaging, where we market, how we define 'an experience' ... The list is long and includes gaining personal insight and being willing to take a position on the inflated claims of the anti-alcohol industry. And yes, I know permit holders can't make health claims. But we can do more in that area. Staying silent hasn't been a good strategy.

The possibilities are bright ahead of us because wine is what the young consumer wants. They just don't know it. So let's tell them.

SVB State of the Wine Industry - what comes next?

 Click on the above picture to use the QR Code, or try this link: State of the Industry 2025

How Long Will This Last?

Now it feels like it's 2025. The new year's cobwebs are clearing, and the events are starting, including the release of the Annual SVB State of the Industry Report, the DTC Wine Symposium, and next week, the Unified Wine Symposium will be in full force.

The main goal of presenting the SVB State of the Industry Report is to provide a forward view and be as transparent as possible. I understand that many in this industry don't like to hear 'doom and gloom.' Who does? But that is exactly the comment I received several times over in the 2019 report when I said:

With a good 2018 in the books, it would be easy for winery owners to just keep doing what they do now, hoping the multitude of challenges creating the current retail sluggishness will be solved. This would include consumers finding more discretionary income, labor and migration issues becoming disentangled, and the emergence of digital platforms and strategies to unravel the many problems and opportunities in the DTC sales channel.

Hope is always good, but hope is never a good strategy. Despite the positive year in 2018 and 25 years of great growth for the US wine business, I believe sales growth forecasts for the next five years should be tempered. The fundamental underpinnings that created the industry growth are changing, which means the tactics that were relied upon to ride this wave of success to this point will slowly prove flawed without business adaptation. To continue its growth in the years ahead, the US wine industry needs new direction and a changed focus.

The 2019 report was also the first in which I spent a chapter discussing the neo-prohibitionist threat. In any case, the industry finally understands what I was warning about on both counts. So, will this report be hard to hear?

I don't need to spend much time rehashing what the industry knows. Of course, the data are a foundation that must be offered, but in this report, I don't spend much time discussing neo-prohibitionism or dwelling on the obvious: We are in a correction. In this report, like the other SVB reports, I look forward to what comes next and will answer the question, "How long will this last?"

Knowing how long this phase will last is a core consideration for industry plans for the next five years. This is a report I believe you will appreciate, and it may be helpful in your specific circumstances.

Please sign up above to watch the presentation with a great panel; get the replay link and the link to your own copy of the report!

2025 is here. Let's get after it!

US Government Recommending Lowered Alcohol Guidelines and Enhanced Cancer Warnings

 

The Political Tug-of-War

The title of this post reflects the actions the Surgeon General is promoting. It's part of a long-term, well-thought-out, and well-funded campaign against consuming alcohol - any amount of alcohol. The campaign runs circles around anyone wanting to point out the other positive health science behind moderate consumption. But this report shouldn't be a surprise to anyone. 

Final SVB Annual Survey Participation Update

 

Survey Results as of 10/17 at noon

The SVB Annual State of the Wine Industry Survey closes this coming Sunday evening, October 17th. 

The great news is there has been a strong response rate this year, and we will close with a statistically significant response size above 500 total responses. The AVAs in seven regions will receive their own comps to compare performance against the other regions. 

A special thanks to Paso Robles for their record participation this year. Napa will again cross the 100-participant mark, so once again, thank you, Napa!  

I'd still love additional responses from wineries in Oregon, Washington, Lodi/Clarksburg, New York, Santa Cruz/Monterey, and Texas. With another seven to ten responses, each of the last four named regions will have sufficient responses to have their own regional comps too.

Please promote this post on your favorite social media to get the word out for the last push!

Adding your data to this annual industry event will only take about 20 minutes. 

Here are the survey questions that you can use to prepare: Link. 

Here is the survey itself: Link.

The Annual SVB State of the Industry Survey is Closing

The wine industry is in uncharted territory, but analysts' opinions of its current state vary. If the analyst views were music, they would range from Bob Marley's, 'Every Little Thing's gonna be Alright,' to Led Zeppelin's, 'When the Levee Breaks, I'll Have no Place to Stay.' Who are you going to believe?

Is this a correction, or a small road bump?

Before discussing the topic, let me get some quick business out of the way: The SVB Annual State of the Industry Survey is open for two more weeks, and your participation is vital. We really need your help. We currently have 140 responses but need at least 500 responses. Why participate? 

The SVB Wine Industry Report has provided transparent, fact-based direction for the US Wine Industry for decades. The survey adds subjective color to objective data. That color produces better understanding, which is the first step in planning change. 

This survey is done in partnership with you the winery. Adding your data to this annual industry event will only take about 20 minutes. 

• Here are the survey questions that you can use to prepare: Link. 
• Here is the survey itself: Link.

Is the Direct-to-Consumer Channel Holding Up?

The answer to the title question is yes, DTC is holding up, but as most in the industry will attest, it's a nuanced response that requires a discussion. 

Sign up for the 2024 annual SVB Direct-to-Consumer Videocast presented next Tuesday, June 25th, to hear an expert panel discuss the findings from the 2024 Direct-Direct-to-Consumer Survey.

What can you expect? After researching the wine industry for more than 20 years and producing this report for well over a decade, you can expect the same thing you always get: an honest and balanced view of the current direct-to-consumer market. 

Would you like a teaser? Take a look at the chart below.