US wine industry hopes to attract more millennials to make most of a bigger 2017 vintage
California is on course to beat the 2016 vintage with a bigger crop buoyed by bigger supplies of a wider choice of grape varieties, according to the Silicon Valley Bank. But there are significant changes taking place around which consumer groups are drinking wine.
It predicts the 2017 grape harvest will be 7% bigger than in 2016 and will come in at around 3.95 million tons versus the 2016’s 3.7 million tons.
It says in its latest report on the state of the US and Californian wine market that: “Overall supply is balanced with shortages of high quality Pinot Noir and Cabernet, but excesses are evident in certain non-core varietals and for grapes destined for lower-priced wine.”
It also predicts that a shortage of new land available for higher-end wine production coupled with bigger demand for wine overall will see vineyard prices increase in key areas of US production, notably Oregon and Washington.
The Silicon Valley Bank report is one of the key economic indicators of how well the US wine market is doing. It has reported that in 2017 there could be increased pressure on the US wine industry as more baby boomers reach retirement age and have less disposable income to spend on wine. Whilst at the same time millennial consumers are being attracted to other drinking categories like craft beer and spirits and not taking up wine in the same way previous generations have.
“While baby boomers will retain their dominance in wine consumption, their overall purchases will continue to decline,” confirmed author of the report Rob McMillan.
But it is hopeful the large millennial consumer base will help push wines up in the $8 to $11.99 red blend category. It is predicted that in time they will shift away from cheaper blends and in to more premium single varietals as their disposable incomes increase.
The key group will be Generation X who SVB predicts will become the largest fine wine consumers in the US over the next four years.
“The lowest price generic segment that appealed to the entry level consumers of the 1960’s has permanently lost its appeal,” said McMillan.