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‘Wine is hurting’: the decline of sales in the US continues

11 October 2024 By James Evison

Despite stories of US wine sales bucking the trend of global decline, new data from the Wine & Spirits Wholesalers of America (WSWA) reveals a much gloomier picture. db investigates.

According to its latest report, the WSWA’s SipSource states that sales from wholesalers to more than 450,000 retailers across the US has declined by 6% in the 12 months through to August 2024.

The figures follow more positive news in May this year, when the drinks business reported on a survey from BMO Financial which appeared to show demand for wine was up. The data from more than 600 wineries claimed a growth period could even occur as the year unfolded.

But now the picture, at least from the wholesaler’s perspective, appears to be shifting.

Challenges

Wine stocking has dropped 8% while spirits fell by 3.9% according to the WSWA, revealing potential challenges for the sector for the rest of this year, as well as going forward into 2025.

Its analysts referred to the “earlier optimism” in their report on the sector — which it said were driven by destocking and seasonal shipping patterns — but said now that “broader consumption trends are cause for concern”.

The data revealed that the most vertiginous drop was in US$8 to US$10.99 table wine, which has seen a double-digit drop of 12.7% across both on- and off-trade channels.

Dale Stratton, SipSource analyst and industry veteran, said that “wine is hurting”, and that changing in consumer behaviour, economic and inflationary pressures as well as reduced shelf space were contributing.

Growth in other drinks

It also comes against a shift in consumer appetites for alternative beverages. The rise of THC-infused beverages was around US$2.04bn last year, and is expected to grow to more than $US3.09bn this year. By 2032, it could be as much as $US117.05bn, according to Fortune Business Insights.

This growth by the end of the decade would be almost double Silicon Valley Bank’s estimated size of the US wine sector for this year, which it expects to generate US$61.2 billion in revenue.

In addition, and despite a slowdown in the growth of hard seltzers in the US, the overall RTD market is expected to grow by 12% from 2022 to 2027, hitting $40bn by 2027 across 10 key markets.

Such pressures are creating something of a perfect storm for the wine sector.

Bright spots

There was some better news in other wine categories though. SipSource analyst Danny Brager highlighted how Prosecco was continuing to “perform well”, up by more than 2% year-on-year, which was already on top of already impressive post-pandemic figures, as previously reported in the drinks business.

At the fine wine end of the spectrum, there was also some small growth in the past six months, with US$50 and over bottles increasing by a modest 1%. Although in the domestic space, it was higher at 3%.

Brager said this was a “promising sign” going into the festive period, and “offering hope that consumers in higher price tiers are still willing and able to spend.”

Yet he was also keen to stress that declines in points of distribution “across most product classes” in the on- and off-trade signalled reduced wine and spirits assortments in stores, bars and restaurants.

Premiumisation

According to at the analysts, the figures showed that even top tier premiumisation, once seen as a big growth driver — and often cited by wine producers as a core part of their strategy — were under “pressure in a tightening market”.

Also, spirits were struggling. The figures revealed that the worst decline segment wasn’t in cheap wines, but was actually US$100+ spirits, which dropped by 12.5%, and mid-range tiers from US$50 to $99.99 had also fallen by 3.9% in the on-trade.

For the off-trade, which makes up 80% of the US consumer market, the US$100 tier fell by 8.5% and the US$50-99.99 fell by 4.3%.

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