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.
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| 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.
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.
This survey is done in partnership with you the winery. Adding your data to this annual industry event will only take about 20 minutes.
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.
Today, we are about 50 responses short of what we need to produce the Annual Direct to Consumer Report, so please participate. To help us reach the finish line, we are leaving the survey open over the weekend and closing it on 3/24.
Here are the questions if you want to prepare [link], as well as the [link] to the survey.
Several sources have reported that tasting room visitation was down last year. Some have speculated that it's due to high tasting room fees. The headline slide is a chart from the interim survey data that puts a different spin on that conclusion.
Breaking the top chart into quartiles, the upper quartile seems expensive, especially considering people seldom taste alone. Life and wine tasting are a team sport—maybe someone can use that in a marketing pitch. Anyway, the lower two quartiles, representing half of the winery respondents so far, are about $23 or less.
Another fact you can pull from that same information set is the practice of using standard and reserve tasting fees. Surprisingly, 26.2% of responses thus far only use standard tasting fees. For those wineries that have both reserve and standard fees, the average reserve fee is 1.9 times larger than the reserve fee, with a maximum of 5 times the standard fee, down to 1.2 times the standard tasting fee.
Here is some more interesting information on tasting room reimbursement policies. From this chart below, you can see how you compare to other wineries on tasting fee reimbursement policies. If you participate in the survey and get the full anonymous data set, you can also sort this information out by region.
• We
comp tastings if you join the club or purchase 3 bottles.
• We
do flights, not tastings. No
reimbursement.
• Free
tastings for people who rent venue (we do weddings)
• 10%
off 12 bottles.
• We
will waive two tasting fees for a minimum $1,000 purchase.
• Club
Members get a limited number of free tastings; otherwise, we do not reimburse them.
• Tasting
fees waived for wine industry partners only
• Club
members only 4x per year
• We
don't charge our top buyers for their tasting fees
• We
only waive fees for people who have McMillan for a last name.
• we
don't offer tastings. We offer 5 oz glass for $3.75
• Our
state law doesn't allow "free" tastings, so we charge $1 per taste
• We
allow wine club members and up to three of their guests to taste for free. We
do not reimburse tasting fees otherwise.
• We waive tasting fees if the customer pays with cash.
This is my annual attempt to plead for your help, without which we can't produce the 13th Annual Direct-to-Consumer Report.
If there was ever a time when actionable information and insights were needed, this is it. But we are close to a crisis point because we are unable to get sufficient survey responses.
The SVB Annual Direct-to-Consumer Survey has been open for two weeks and is scheduled to close this Friday, March 22nd. As of this writing, we have 165 responses with just a few days remaining. That's far from the 500 we need to produce good results. (Click the top chart to see your region's performance thus far.)
The survey has just 29 questions. It should take 10 to 15 minutes to complete, even less if you are prepared. Many complete the survey in under five minutes. If you want to see the questions in advance,
you can download and print them here.
In May, all survey participants will receive high-level analysis, benchmarks, and complete sanitized respondent data, anonymized of all personal and business-identifying information. Nobody else gets this data, and it can't be purchased.
Silicon Valley Bank goes to great lengths and costs to provide this report to the industry gratis. Still, it's a partnership with you: Without survey responses, we can't produce this industry resource.
So please spread the word on your social channels and make this a personal goal. Your choice to participate or not is a vote for us to continue with this initiative or phase it out.
Are you ready to participate in the survey this year?
Nearly 3,000 attendees from dozens of the wine-producing countries of the world tuned in on January 18th to hear from Rob McMillan, EVP & Wine Division Founder, Crimson Wine Group CEO Jennifer Locke, industry innovator Paul Mabray, and Enolytics SVP of Professional Services Ed Thralls as they discussed the trends and findings identified in SVB’s 23rd annual State of the US Wine Report.
Watch the Replay: SVB State of the Wine Industry - 2024 Virtual Event (youtube.com)
Read the Report Here: State of the US Wine Industry Report 2024 | Silicon Valley Bank (svb.com)
The key findings indicate that the alcohol beverage market across the board is in a period of change, driven by evolving consumer dynamics, including the aging of older wine-focused boomers, who are being replaced by a new set of primary consumers who drink across categories, drink less wine, and consume less alcohol.
“With the current messaging about alcohol as it relates to health and wellness, premium wine is well suited to meet the prevailing guidance around benefits and moderation,” said Jennifer. “We don’t have to reinvent what we are making; we have to retell our story and tell it collectively.”
Premium wineries experienced mixed success during the past year. The value of premium wine is still growing, but we anticipate volume sales will finish lower this year. The industry will need to find collaborative solutions to link wine attributes with the segmented values of newer consumers to increase demand while at the same time finding efficiencies in sales, marketing, and production to retain margins.
Direct-to-consumer volume sales were lower in 2023. Tasting room visitation dropped for the second straight year leading to lower premium sales through nine months in 2023. However, strong 2023 holiday sales should lead to positive growth in value at year-end.
Consumer demand for the total wine category continues to decline.
As reported over the last several years, in addition to wine, U.S. consumers have been drinking across categories such as ready-to-drink (RTD) options, spirits, beer, and cannabis or have been abstaining altogether.
Conditions are ripe for overproduction, which may lead to inventory excess in more price segments, discounting, and eventually price reductions. Pressure starting from the grower will create inventory bulges and drive higher-than-needed inventory turns in 2024.
Register here for the videocast, replay, and copy of this year's report.
In 1992, I wrote the original SVB Wine Division Business Plan in which I said,
"U.S. table wine entered a seven-year period of declining volume in the late 80s. Industry observers attributed the decrease to changing consumer attitudes concerning alcohol consumption, health concerns, drunk driving issues, and overall changing tastes as consumers drank less but better wine."
Despite that gloomy soundbite, I got bank approval to start this first-of-its-kind focused wine division. Why create this business for the bank with all the gloominess? I believed and predicted the premium wine industry was about to take off, driven by the boomer generation.
I did pretty well with that prediction.
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| Rabbit Island Sunset, Hawaii |
I enjoy looking at vacation photos, especially now that
COVID is no longer a problem. I’m presently taking a much-needed vacation where
I’m spending time admiring the stunning Waimanalo sunsets on the island of
Oahu. While I don't post many pictures on social media when I travel to Hawaii, or on cruise vacations I do enjoy learning about the history of an area and
sharing it.
Many people believe that the wine industry is cyclical, and
while true particularly in grape growing, there are also distinct periods in the industry that
are characterized by unique events that don’t repeat themselves and shape the
industry. Those eras typically last from seven to 10-years.
THE LAST GENERATIONAL CHANGE
Now that things are back to normal in the wine division, we're happy to get a break from all the ugly news updates. It is starting to feel like we're settling into a new routine, but nothing lasts forever.
Without greater participation this last week, there will be no SVB Direct to Consumer Report produced this year.
Three weeks later though, we were purchased by First Citizens Bank, and we are today operating as Silicon Valley Bank, a division of First Citizens Bank.
During that dark period when we were being run by the FDIC, we literally had hundreds of people encouraging us to find a way to continue producing the gratis information we've done for more than 20 years. Because of that encouragement, with the ownership question behind, we decided to produce the Direct to Consumer survey and report, a month later than usual. It was the industry encouragement that was the deciding factor.
For most, hopefully it's obvious why I've done that. But for those who haven't followed the rollercoaster, SVB was taken over by the FDIC on March 10th. That was the end of the old SVB.
But after a couple failed auctions, most of the legacy bank's assets were sold to First Citizens Bank, who decided to run the acquired bank as a division, and retain the name of Silicon Valley Bank. So we died and have been reborn!
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| Photo by Maksym Kaharlytskyi on Unsplash |
"From everything we are seeing at this early stage, we're starting to believe we've somehow landed in the best outcome imaginable for our clients, employees and our community."
