U.S. Wine Sales Up Despite Import Competition

Total sales increase by 2% to $2.9 billion, DtC up 8% over 2017 in typically slow season

by Peter Mitham
Rosé wine sales outpaced all other major varietals or wine types by a large margin but pink wine represents a small fraction of total off-premise sales, which are still led by Chardonnay at more than $1.9 billion.

San Rafael, Calif.—Steady growth in U.S. wine sales continued through July, traditionally a slower season for purchases and direct-to-consumer shipments.

U.S. domestic wine sales increased 2% to $3 billion in July versus last year, market research firm bw166 reported, while Chicago, Ill.-based firm IRI reported that sales through the off-premise channels it tracks increased 1% in the four weeks ended July 15 versus a year earlier.

The gains were driven largely by table wines, with sales of domestic wines increasing 2% in the month to $2.9 billion, while domestic sparkling wines saw sales increase 3% to $139 million. Similarly, the latest 12 months saw domestic wine sales increase 3% to $46 billion.

Sales of packaged imports outstripped those of domestic table wines, however, with imports posting a 7% gain in the latest 12 months to exceed $23 billion. The gain also helped drive total wine sales in the U.S. 5% higher in the period, to a total of $69 billion. Rosé from France and sparkling wine from Italy remained critical elements in the increase, which also manifested itself in off-premise sales.

IRI reported that off-premise sales through multiple-outlet and convenience stores rose 1% in the four weeks ended July 15 to total $646 million, while the latest 52 weeks saw sales increase 2% to near $9 billion.

Rosé led the nine major varietals in terms of growth, however, with 52-week sales rising 34% to top $442 million. While a small fraction of the off-premise total, it was significant given that the gain translated to nearly $112 million in additional sales. Chardonnay, the top off-premise varietal, saw sales even with last year at more than $1.9 billion, while Cabernet Sauvignon, with growth of 5%, was the only varietal to record a comparable gain in dollar terms — adding just $80 million in sales.

Sales of the second fastest-growing varietal, Sauvignon Blanc, increased 7% to rank sixth among the top varietals, displacing Merlot, which saw sales decline 6%. Merlot was the only major varietal to lose ground.

The potential for Sauvignon Blanc to keep growing is part of the reason Ed King, president of King Estate Winery in Oregon, planted an acre of the variety in June as the winery refocuses following its sale earlier this year of Acrobat to Foley Family Wines. “The King family recognizes the success of the varietal in the market and also the distinct quality of Oregon Sauvignon Blanc,” said Ryan Johnson, marketing director for King Estate.

While the new planting won’t yield fruit until at least 2020, a small amount of Sauvignon Blanc will be made this year for release to wholesalers in 2019. “We see potential for Oregon Sauvignon Blanc in the direct channel as well as the broad market and we are committed to growing its success,” Johnson said.

The experience of rosé and Sauvignon Blanc in the off-premise channel was paralleled by direct-to-consumer (DtC) shipments of Zinfandel and sparkling wine.

DtC shipments rose 8% in July, traditionally a slower month that saw 296,810 cases worth $109 million shipped this year. Shipments in the latest 12 months approached $2.9 billion, however, up 13% from a year earlier. While all varietals showed strong growth – no variety posted less than 9% growth – Zinfandel was the clear star with a 27% increase in the period versus the previous year. Sparkling ranked second with 21% growth. While the two varieties saw shipments worth just a quarter of Cabernet Sauvignon, the top varietal by value with $809 million shipped in the latest 12 months, case volumes of Zinfandel and sparkling worked out to 60% of Cabernet’s case volume of 984,046. With an average bottle price of $28.05 (versus $68.52 for Cabernet Sauvignon), Zinfandel also points to the democratization of the channel as vintners use it to ship a greater selection of varietals at a broader range of prices.

The work of getting that wine into the hands of consumers kept hiring activity steady through July, with Winejobs.com’s Winery Job Index rising 10% in the month to 388. Demand for vineyard workers in advance of harvest delivered the strongest growth, rising 113% versus a year ago. Sales and marketing roles followed by finance positions saw the next-greatest demand, rising 36% and 21%, respectively.

Demand for DtC positions, including tasting room and retail staff, increased 9% and remained the subcategory with the highest index level.

Winemaking positions saw demand fall 1% in July, with the subindex for the category resting at 474, virtually even with the same month in most of the previous four years.

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