US fine wine market larger than thought

The US fine wine market is significantly bigger than many believe according to Vinfolio chairman Jean-Michel Valette MW.

Speaking at the Fine and Rare Specialist course at Vienna’s Palais Coburg on 29 June, he said that annual US fine wine sales through retailers amounted to US$3.2 billion, before commenting, “The US is a larger fine wine market than people think”.

Jean-Michel then gave a detailed analysis of the make-up of the US fine wine market, and explained that the $3.2bn figure was defined as wine sold for over $50 a bottle at retail.

Stressing that these numbers referred to wine that has been sold for the first time, he added that in addition to the $3.2bn of fine wine retail sales there is an estimated $250m secondary market, which he described as “vibrant and growing”.

Breaking down the fine wine retail market by category, he said that US top end wines accounted for $1.2bn worth of sales, and that these bottles were mostly Napa Valley Cabernet Sauvignon.

He attributed a further $0.8 billion to sales of cru classé Bordeaux; $0.5bn to grand and premier cru Burgundy; $0.3bn to vintage Champagne, and finally, $0.4bn to “other” fine wines, such as those from Italy, or the Rhône Valley.

As for the value of wines sitting in cellars across the US, Jean-Michel proposed a conservative figure of $10bn.

He said that 4.3 million people had cellars according to the Wine Spectator, and he believed that there were around 100,000 private cellars containing 500 bottles or more.

“So, 500 bottles multiplied by 100,000 cellars, multiplied by a $125 bottle average gives you $10bn,” he said, adding, “and I think it is a bigger number than that.”

Vinfolio chairman Jean-Michel Valette MW

For example, he noted that the average bottle price among Vinfolio customers is over $200, while he also said that Cellar Tracker have 28 million bottles in their system.

“If you take the bottles just tracked by them, and give them a $200 average [value], then that’s almost $6bn.”

Jean-Michel also gave a break down of the most collected wines among Vinfolio and Cellar Tracker customers by volume (see lists below) before turning his attention to the length of time fine wines were remaining in US private cellars.

He explained that 82% of the bottles owned by both Cellar Tracker and Vinfolio customers were from the 2000s, but that 15% or fewer were from the 90s, and as little as 3% from the 80s.

“This shows that the wines are being consumed,” he said, “and although I guess that if this was the UK you might see a slightly older mix, but I also guess that when these wines go to Asia, they are being drunk.”

Summarising his presentation on the US fine wine sector, he reiterated the impressive scale of the market and emphasised the potential value of the secondary market in North America.

“There is a lot of wine in private cellars and at some point some of that will change hands. Why? Because it is worth a lot more [than people paid for it] and they may want to get their money out, or someone wakes up and realises they have too much to drink in their lifetime.

“Or they have a ‘life event’ – they get divorced, die, go bankrupt or their tastes change; for example, they suddenly discover Barolo or Burgundy and want to sell some of their Bordeaux.”

Vinfolio is membership-based service for wine collectors in the US

Continuing he commented, “There is a 10 to 20 year life for fine wine and things happen in that time, and people want to transact, and hence Vinfolio.”

Interestingly, on the subject of provenance, Jean-Michel pointed out that collectors don’t pay a premium for wine that has been stored in Vinfolio’s cellars.

He also reminded attendees of the course that it is illegal for one person to sell wine directly to another collector in the US.

As for influencing what is bought, he pointed out that Parker is still extremely important, and hence, “the wines people are keeping tend to have higher scores.”

As for decision-making without Parker, he pointed out the increasing role of “user groups”.

“These are people who actually pull the corks and you can see their notes for example on Vinfolio or Cellar Tracker.

To read more about the Fine & Rare Specialist course click here.

US wine market (retail value)

• Total                                  $30 billion
• Over $50/bottle                    $3.2bn
• $15-50/bottle                       $9.6bn
• less than $15/bottle             $19.2bn

US fine wine market (retail value, over $50/bottle)

• US wine                            $1.2bn
• Bordeaux                          $0.8bn
• Burgundy                          $0.5bn
• Champagne                       $0.3bn
• Other                                $0.4bn

Cellar Tracker collectors: US producers (ranked by number of bottles owned)

• Joseph Phelps Vineyards (mainly Insignia)
• Ridge Vineyards
• Kistler Vineyards
• Silver Oak
• Caymus Vineyards
• Pride Mountain Vineyards
• Williams Selyem Winery

Vinfolio collectors: US producers (ranked by number of bottles owned)

• Kistler Vineyards
• Peter Michael Winery
• Joseph Phelps Vineyards
• Harlan Estate
• Williams Selyem Winery
• Pahlmeyer
• Dominus Estate

Cellar Tracker collectors: Bordeaux estates (ranked by number of bottles owned)

• Lynch-Bages
• Pontet-Canet
• Léoville-Las Cases
• Cos d’Estournel
• Mouton-Rothschild
• Lafite-Rothschild

Vinfolio collectors: Bordeaux estates (ranked by number of bottles owned)

• Léoville-Las Cases
• Mouton-Rothschild
• Lynch-Bages
• Margaux
• Pichon Longueville Comtesse de Lalande
• Lafite-Rothschild

Cellar Tracker collectors: Burgundy producers (ranked by number of bottles owned)

• Maison Louis Jadot
• Bouchard Père et Fils
• Domaine de la Romanée-Conti
• Maison Joseph Drouhin
• Domaine William Fèvre
• Domaine Leflaive

Vinfolio collectors: Burgundy producers (ranked by number bottles owned)

• Bouchard Père et Fils
• Domaine William Fèvre
• Domaine de la Romanée-Conti
• Frédéric Magnien
• Domaine Marquis d’Angerville
• Domaine Dujac

Cellar Tracker collectors: Other producers (ranked by number of bottles owned)

• Château de Beaucastel
• Penfolds
• Antinori
• Moët & Chandon
• Maison M. Chapoutier
• d’Arenberg

Vinfolio collectors: Other producers (ranked by number of bottles owned)

• Château de Beaucastel
• Gaja
• Maison M. Chapoutier
• Clos des Papes
• Guigal
• Domaine du Pegau

Vinfolio and Cellar Tracker collectors: % of bottles owned by source

Cellar Tracker                                           Vinfolio

• US wines            38%                                   49%
• Bordeaux            18%                                   11%
• Burgundy            9%                                    14%
• Italy                       9%                                    5%
• Rhone                  6%                                    5%

All data compiled by Jean-Michel Valette MW for the Fine & Rare Specialist course at the Palais Coburg in Vienna.