2017 Silicon Valley Bank State of the Wine Industry REPORT


On January 18, 2017, I had the opportunity to watch the live video cast of this presentation featuring SVB Wine Division Founder and EVP Rob McMillan. Industry leaders joining him in 2017 were Amy Hoopes, President, Wente Vineyards, Dan Leese, President, V2 Wine Group and Paul Mabray, VP, Social Media & Reputation, Avero, LLC.

What really stood out for me? 

  1. Wines sold between $12 and $25 will grow in demand, and limited price increases will be available.
  2. The significant decline in wine sold at restaurants is concerning. It is important for wineries to understand WHY and to diversity if possible. The younger generation of wine buyers want authentic experiences and exploration. When we look at the increase in wine buyers nationally verses regionally, we can drill down to buying habits at restaurants. Craft cocktails, especially “classic” craft cocktails have seen a huge resurgence over the past three years. Younger wine buyers are also BIG classic cocktail drinkers. Do wineries need to develop a fortified line of wines that can offer a new twist to classic cocktails? I am not suggesting the entire production changes but perhaps a new line of products get added. When we study the larger wine producers, we find a good diversification of products. For the small guys, have some fun with wine cocktails at the tasting room. Test it out and see how visitors respond. Not one size fits all for every wine brand or wine region.
  3. With over 8700 bonded wineries in the United States, wine brands need to have a genuine brand voice that connects well with consumers respective to a region or brand. Start with what you know and then ask questions to determine how to communicate brand value to key target audiences.

Rob McMillan, writes one of the wine industry’s most authoritative annual reports that assesses current conditions and provides a unique forecast based on a survey of more than 500 wineries.

DOWNLOAD 2017 SVB WINE REPORT HERE.

MAJOR FORECASTS FOR 2017:

  • Wines sold between $12 and $25 will grow in demand as will high-end luxury wines with an established brand. We expect to see small price increases in these segments, with volume and price drops for bottles priced under $9.
  • Premium wine sales will increase between 10 and 14 percent above 2016 levels.
  • Per capita consumption faces crosscurrents with retiring wine-loyal baby boomers being replaced by less affluent millennials who are ambivalent about their alcoholic beverage of choice. If economic conditions continue to improve, however, per capita consumption should be slightly higher in 2017.
  • Today, millennials are beginning to affect the lower price range of premium sales. Their presence is most visible in the $8 to $11.99 red blend category, but they gradually will shift from blends to varietal wines or imports as their incomes grow.
  • Even with winery M&A facing headwinds from higher interest rates, winery acquisitions should remain quite active through 2017.
  • Farm labor supply and costs are the dominant concerns in the wine business in 2017.

About Sandra Hess

Sandra Hess, founder of DTC Wine Workshops and the DTC Consultant Network is a public speaker on the subject of direct to consumer wine sales and customer retention in the US.