Winemakers Hammered By Declining US Consumption & Exports
What’s with California wine regions tearing out wine grape vines? Fields of California wine grape torn asunder along with smaller wineries putting themselves up for sale. What is going on with wine?
What does this mean to you the consumer: lower pricing, less choice, canned wine, less perks from your wine club, competition, an escalation of the food, concert & entertainment competition waging at wine tasting rooms throughout California? What about these big wineries (Gallo, Bronco, Constellation Corps) buying out smaller wineries?
We think the answer is : Yes! You’ll see it all.
All these things can and will happen in various forms. The pendulum of consumer tastes (like our politics) wags side to side over time. Trends come and go. Beverage preferences are affected by the swinging metronome of taste.
Spirits (whiskey is hot right now), marijuana (also hot) and CBD are competing for the consumer winemakers covet. We’re seeing a winemaker’s train wreck unfolding in consumer preferences. Will it be worse in coming years?
The Wine Institute tracks wine production and documents 599.5M gallons produced in California in 2022 (their last confirmed numbers.) That number declined from a 2013 peak of 762.3, or 162.8M fewer gallons, a 21% decline.
And consumption of wine in gallons (imports & home grown) is declining. In 2020 Americans consumed 1B gallons of vino. In 2022 we consumed 964M gallons of wine: 36M less gallons of wine, a 3.6% decline.
And, what about exports of our wine? US winemakers exported 120M gallons of wine in peak year 2015. That’s down to 77M in 2022. A loss of 43M gallons in seven years, a 36% decline.
The economics of wine making & selling aren’t looking good these days. US consumption down 3.6%, exports down 45%: that means less money in the checking account and a brutal P&L statements.
Demographics impact these consumption numbers. Baby Boomers (1945-1964) a big group of wine consumers, own a role in this. According to Demographer Ken Gronbach (Age Curve & Upside Author) they are shrinking from 80M folks (estimates say 10M have passed the bar) and are now at 70M souls. Fewer consumers, fewer bottles of wine sold.
| ‘Contemplate that number, 170 million people 40 years and under. That’s of 50% of America’s population.‘ |
Gen X sports 65M souls and have not been able to move the needle replacing Baby Boomers’ consumption (of all consumer goods, not just wine.)
Gen Y (1985-2004) sits at 88M souls and they’re just hitting the 40-year-old mark. They’re not heavily vested in wine because hard ciders, seltzers, spirits, beer, marijuana & CBD compete for their attention. Gronbach pegs Gen Z (2005-2024) at maybe, “70M-80M people.”
Now comes an interesting part of this demographic puzzle. According to Gronbach the US is entering a period of time where, “It looks like we’ll have 170 million people 40 years and under in the United States for the first time in history.“
Let’s stop here. Contemplate that number, 170 million people 40 years and under. That’s of 50% of America’s population. Boomers & Gen Z numbered in the 145M . Gen Z & Gen Y numbered 153M. Think of the consequences of 170M people under 40-years-old. Imagine the economic growth and power, think of the shifts in goods consumed and changes in politics. Interesting times.
Back to the subject, as most wine drinkers know, you come to wine later in your life. Youth tend to enjoy beer and move to wine in their later years. But now we need to factor in marijuana, CBD, hard cider & seltzer. The playing field is changing.
Gronbach continues, “Here’s a drawback for wine. Right now the number of non-whites being born in the United States outnumbers whites. We had a record year in 2007 when we had 4,316,000 babies born in the United States and 25% of them were Latino.”
Only 13% of Latinos consume wine. According to a 2016 study by Nielson Spectra, US wine drinkers are 70 percent White, 13 percent Hispanic, 11 percent African-American and 5 percent Asian.
Gronbach suggests, “I think what you’re dealing with here is, one, the decline in wine drinking, I don’t think your Latino population are big drinkers of wine. And two, we have a huge crop of young people that are going to age into the wine product, so don’t worry about it.” It’s just going to take some time for these young populations to become friendly with wine.
| ‘But for those of us who savor a good glass of California wine, the benefits will fall to us. Cheers to gazing at sunsets and stars with family & friends while grasping a good glass of grape.’ |
Every wine AVA in the country, every winemaker will say they’re not effected by these declines. After all, some wineries still have ‘wait lists’, right? There are always exceptions. But, are these real product restrictions or marketing ruses? Everybody wants what they cannot obtain. Scarcity creates demand and it’s easy to restrict production as your price point rises.
All wine creators will be effected sooner than later. Premium wineries on down to the bulk wineries are effected when the numbers decline like this. They’ll all need to respond in their own particular way, using marketing and price point to sustain volume and profitability. We know one winemaker who is thrilled he’s only lost 3% of his wine club. He cites other winemakers who’ve lost double digit numbers.
But for those of us who savor a good glass of California wine, the benefits will fall to us. Cheers to gazing at sunsets and stars with friends & family while grasping a good glass of grape.
Some notes on our wine ranking system.
Bill & Erin Hodge write about California Wine, the estates & winemakers producing them and educational information about Vino. Living in California Wine Country provides a front row seat to the places you want to visit the most here in the Golden State.
– -✰ means -What’s next on your list of wines
-✰ means -Not liking it too much
✰ means -We’ll drink this wine, especially if it’s hosted!
✰+ means -You’ve got our attention and we might buy this wine.
✰+ + means -We’re hooked and we’re going to buy this wine.
When you see -✰/✰+ with a slash, it means we disagree.
