Premium trend drives California wine sales to $35.2bn

Sales of Californian wines in the US reached a retail value of US$35.2 billion in 2017, climbing for the sixth consecutive year to its highest ever record, wines priced above $10 driving growth.

Sales of Californian wines in US reached a retail value of US$35.2 billion in 2017

This represented value growth of 3% compared with the previous year, with the state shipping 241 million nine-litre cases across the US – an uplift of 1% by volume. Total shipments of both domestic and international exports totalled 278m.

“California wine sales in the U.S. market have grown 15% in the past decade from 209 million cases shipped in 2008 to 241 million cases in 2017,” said Jon Moramarco, founder and managing partner of BW166, and editor of the Gomberg-Fredrikson Report, which compiles annual analysis on behalf of the California Wine Institute. “Last year the growth mainly came from premium wines priced over $10.”

According to Moramarco, demographic trends play a significant role in wine sales, with wine sales growing in line with the legal drinking age population, which increased roughly 10% over the last decade, despite per capita consumption remaining flat.

The rise of the winery tasting room and direct-to-consumer sales have also driven sales, accounting for nearly $2.7 billion in retail value and 5.8 million cases in 2017.

“Wine is growing but in a more challenging environment, with rapid and broad retail and consumer changes,” added Danny Brager, senior vice president of Nielsen’s Beverage Alcohol Practice Area.

“Wine selling locations in the U.S. are up 20% from a decade ago to 565,000 off- and on-premise locations, with a wide range of formats such as natural/gourmet grocery stores, no frills/value-based formats, theaters, premium bars and fast/casual on-premise outlets.

“There is also a diverse range of consumers, from Millennials who have less disposable income than a generation ago to Baby Boomers who are retiring and likely slowing their wine consumption as an increasing number of Americans are entering their golden years.

“Marketers need to find the right balance in attracting these diverse sets of consumers. “E-commerce is increasingly having an impact on expanding consumer access to wine, and wineries are working on several digital platforms where wine is being sold.”

Overall, wine shipments to the US from all production sources – California, other states and foreign producers – grew 1% to 403.4 million cases in 2017, with an estimated retail value of $62.2 billion, up 2% from the previous year.