Wine Sales Grow as Consumers Trading Up

Sauvignon Blanc exemplifies trend of consumers willing to spend more for wine

by Peter Mitham
Higher-priced boxed Sauvignon Blanc and bottles priced more than $25 have led sales of the varietal that accounted for $623 million in total sales in the past 52 months.

San Rafael, Calif.—Data from market research firm bw166 reported that $3.2 billion worth of U.S. wine sold in May, driven by a 2% increase in table wines. Sparkling wine and bulk imports increased 3% and 13%, respectively, but represent a minor portion of the market. The activity kept U.S. wine sales in the latest 12 months steady at $41 billion, unchanged from a year ago.

But drilling down into sales of Sauvignon Blanc, which has a reputation as a refreshing tipple during the warmer days of late spring and summer, the ongoing shift to premium wines is evident. Consumers are trading up, even for varietals such as Sauvignon Blanc, which saw the most growth over the past year in the top price tiers.

Sauvignon Blanc logged sales of $623 million at multiple-outlet and convenience stores in the 52 weeks ended May 20, according to market research firm IRI. This was 7% higher than a year ago. Growth was more than twice as great for bottles priced $20 and up, however, increasing 16% to exceed $23 million.

Similarly, the most expensive box brands of Sauvignon Blanc — those priced $4.50-plus per 750 ml. — enjoyed a 41% lift in sales to more than $19 million. The shift is even more dramatic considering that boxed Sauvignon Blanc priced less than $4.50 saw sales drop 29%, while bottles retailing for $7.99 and less saw sales drop 4%.

“The trend we’re noticing is that consumers are becoming more informed in their wine purchasing,” says Tamara Stanfill, public relations manager with Treasury Wine Estates and its Provenance Vineyards property in Rutherford, Calif.

Moving from $20 to $25 per bottle
Provenance Sauvignon Blanc retails for $25 and up and has seen particularly strong growth in the latest 13 weeks, Stanfill said, with consumers willing to pay for wines of greater quality.
“It appears that people who normally spend $20 are willing to go up to $25-plus,” she said.

Belinda Weber, marketing director with Duckhorn Wine Co. in St. Helena, Calif., makes similar observations, noting that a warm spring helped boost Sauvignon Blanc sales, fuelling the ongoing trend. Both its $20 Decoy Sauvignon Blanc and its $30 Duckhorn Vineyards Sauvignon Blanc saw double-digit growth in the latest 52 weeks at 21% and 19%, respectively, with greater growth in the latest 13 weeks.

The shift in Sauvignon Blanc reflects a broader trend in off-premise data for the four weeks ended May 20. Sales through multiple-outlet and convenience stores in the period totaled $656 million, market research firm IRI reported. This was up 2% versus a year earlier even as case volumes were flat at 8.3 million, pointing to a higher average spend per bottle.

Stronger pricing was also seen in the direct-to-consumer channel, which once again saw growth outpace the rest of the industry at 7%. A total of $229 million worth of wine shipped DtC in May, while case volumes increased 9% to 544,724. While the price of the average bottle shipped fell 2% versus May 2017 to $34.96, wines from Napa— which dominates the channel, representing 47% of its total value –increased 3% in the latest 12 months to an average of $63.71 a bottle.

Wines Vines Analytics/ShipCompliant by Sovos data indicated that the primary destination for Napa’s wines over the past year was California itself, at 30%, down two percentage points from last year as deliveries to other states increased. The greater reach didn’t necessarily deliver greater value, however; the average value of wines shipped to consumers in destination states other than the top seven increased by just 1%.

DtC shipments to Texas on the rise
Stronger gains were seen in larger, established markets such as Texas, the most significant destination for Napa wines after California, receiving $143 million worth of shipments in the latest 12 months. These wines averaged $70.18 a bottle, up 7% from last year. Florida, the third largest destination for Napa wines, received wines averaging $74.94 a bottle, up 5% from last year.

Despite the growth at home, data for May indicates that packaged imports remain a force to watch.

The category remains the fastest-growing in bw166 data, with sales rising 8% to nearly $22 billion in the latest 12 months. Jon Moramarco, managing partner of bw166, noted that consumers continue to gravitate to French table wines, primarily rosé, as well as sparkling wines from France and Italy. The result was an additional $1.7 billion in sales for packaged imports, making the category the single-biggest contributor to the $1.9 billion increase in sales of domestic and imported wines in the U.S. in the past 12 months. The sum of all wine sales for the period was $63 billion, up 3% from a year ago.

Wineries also keep hiring, with Winejobs.com’s Winery Jobs Index rising 4% in May versus a year ago to 471. The increase was driven by greater demand for DtC positions, including tasting room and retail staff, as well as administrative and vineyard positions. Demand for the three subcategories increased 25%, 16% and 6%, respectively.

While the supply of vineyard labor continues to face constraints, preparations for Memorial Day and the arrival of summer visitors drove demand for DtC positions.

The strength of activity more than offset a 30% drop in demand for sales and marketing positions and an 11% drop in finance requirements. Winemaking positions saw demand fall 4% versus a year earlier.

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