SVB predicts US wine consumption to decline for the first time in 20 years

By Erin Smith

Published: 22 January, 2016

In the Silicon Valley Bank's annual State of the Wine Industry 2016 report released yesterday the financial services firm predicts that this year US wine consumption per capita will fall for the first time in 20 years.

While it may be a tough road ahead, premium wine brands in the US are predicted to fare better than wines at the value-end of the price spectrum.

Rob McMillan, founder of Silicon Valley Bank's Wine Division and author of the report said: "While demand for premium wine will increase this year, there are clouds on the horizon that should be considered. We believe total and per capita wine consumption in the U.S. will drop for the first time in more than 20 years due to emerging generational shifts in consumption patterns that we see accelerating in the near term."

SVB forecasts a 9-13% sales growth for the premium wine segment (USD$20 and up) and for wines above the $10 price point value is expected to increase between 4-8% over the coming year. The sales growth in volume in the premium wine segment is down from 2015 which saw volume grow 14-18%.

The appeal of generic and value-priced wines is well and truly over in the US. SVB is forecasting that both volume and value of wines priced at $8 and below will drop in 2016. The report stated: "The lowest price generic segment that appealed to the entry-level consumers of the 1960s has permanently lost its appeal. According to wine brokers with whom we've spoken, there are no producing countries showing interest in that segment today."

The most 'at risk' segment of the market will be wines found in $3-$6 range.

"Imported bottled wine will resume the prior trend of eroding US fine wine market share" giving foreign wines the advantage in 2016.

Younger generations' wine consumption are forecasted to surpass the baby boomers over the next decade. SVB predicts "the Gen X cohort will surpass the baby boomers around the year 2021 to become the largest fine wine consumer demographic in the US, and the millennial cohort will surpass the Gen X cohort around the year 2026."

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