Signup: 2022 SVB State of the Industry Report

In the fall of each year, I pull apart the US Wine Industry into components and then analyze what's changed, review the trends, and make predictions in the Annual SVB State of the Industry Report. 

It's always a tedious effort that's been made more difficult over the past two years with the volume of channel shifting that's taken place. But I'm glad I put the time in each year as it's the only way to keep track of the movements of the business, and every year when I go through this process, I'm always surprised by something and this time was no different.

In 2020 with tasting rooms and restaurants closed or restricted, wine sales moved into the grocery and drug channel. With the reopening of restaurants and tasting rooms in 2021, sales moved back to the old channels - but that doesn't mean the business environment was the same as it was before the pandemic. 

In fact, if history is any guide, business never comes back the way we left it before a recession. Take the headline slide for instance.

The blue panels in the slide represent periods of recession going back to the Tech Bubble which burst in 2000. Wine sales growth in the last half of the decade of the 1900s routinely were in the teens to twenty percent range for premium wineries. But when the tech bubble burst, the sales growth rate collapsed to 5.2 percent - then it bounced back.

During the Great Recession, we saw the sales growth rate for premium wineries go from 22.3 percent just prior to the recession, to -3.8 percent when the recession hit, and then sales popped back to 19.8 percent growth the next year. 

Similarly, with this COVID period, we had sales fall from 5.6% to -0.6 percent. Then in 2021, sales growth exploded up to 21.0 percent. That's really an amazing number and well in excess of what I expected.

In each recession, we came back out of the dip not only with strong sales but underneath the surface, we always found an evolved business environment. For instance, coming out of the Tech Bubble, distributors started to become more selective about which wineries they would take on. In response, the industry began focusing more on direct sales, website design, and tasting room sales.

After the Granholm v Heald decision in 2005, states began to slowly open to direct sales, and then the Great Recession hit. When we emerged from it, the industry had put the time in to focus more on email marketing, social media, and Wine Clubs as a direct sales medium. 

In 2013, the above slide was produced in the SVB Direct to Consumer Survey where you can see Direct to Consumer sales were by far the biggest source of attention. But if you want to remember where we were then, read the popular blog post I penned from 2013, "What's the One Job Wineries Can't Fill?" 

From the Great Recession all the way through to 2020, the US went through the longest period of expansion without a recession. The wine business did well, but if you go back to the top slide again, you should notice the trend of sales. 

Yes - we've come out of probably some of the worst business conditions since Prohibition and posted a great rebound year - just like we did in the other recessions. But in each of those periods, the industry didn't hold on to the growth. You have to ask yourself, during the greatest expansion in history, what were the factors that caused wine sales growth to slow? And as in all the other recessions, where will the US Wine Industry trend going forward? 

Sign Up for the State of the Industry Report and Telecast

I hope you'll join me along with Amy Hoopes, Chief Strategy and Growth Officer of the Wine Group, Paul Mabray, CEO, Pix.wine, and Danny Brager, President of Brager Alcohol Beverage Consulting, for a look at the year past and an important discussion about where we go from here.

Some of the topics covered will include:

• Why spirits are taking market share from the wine industry, despite pockets of success

• How evolving sales channels created an opportunity for some wineries to experience their best year ever, while proving to be disappointing for others

• What impact specific long-term effects caused by shifts in consumer demand will have on the overall health of the wine industry in the next ten years

• What the industry can do together to elevate our opportunity for future success

REGISTER TODAY to join us for this highly anticipated 90-minute virtual gathering, get the replay link, and receive a gratis copy of Silicon Valley Bank's Annual State of the Industry Report.

Please note: 

In a change this year, only survey respondents will be able to download the slides produced with this videocast.

Zoom link will be provided upon registration.