Breakout Year Ahead for US Fine Wine Business ?

sate of the wine industry

Silicon Valley Bank, a leading US provider of commercial banking services to the innovation sector and the wine industry, has just released its Annual State of the Wine Industry Report. “We are seeing real strength in the U.S. economy going into 2015, which will increase demand for wine,” said Rob McMillan, founder of Silicon Valley Bank’s Wine Division and author of the report. “Declining oil prices are transferring wealth to oil-consuming countries, the employment picture is improving, the US dollar is strengthening and interest rates will move at a measured pace. As long as the industrialized world economies can hold their own, the middle-income consumer will see improved prospects. We’ll be toasting to that.”

Based on a survey of nearly 600 West Coast wineries, in-house expertise and ongoing research, SVB’s Annual State of the Wine Industry report covers trends and addresses current issues facing the US wine industry.

We are especially positive on the year ahead,” McMillan said. “We expect the fine wine business will experience accelerating growth, achieving 14–18 percent sales growth in 2015. At the same time, the cellars are full with several consecutive years of very good vintages.”

Key findings and predictions
1) Supply: We expect to see the third consecutive harvest of heavy yield and great quality across most appellations.
2) Sales Growth: After finishing the year at the top end of our predicted sales growth of 6% – 10% in 2014, we are predicting a breakout year of growth in the fine wine category in the 14%-18% range in 2015.
3) Pricing: While the large supply of wines in the cellars should normally indicate continued depressed pricing, we believe 2015 will be a year of both volume and price increases in the fine wine segment, driven by an improving economy and higher demand.
4) Demand: Wines priced below $7 a bottle performed poorly both on and off premise in 2014. This poor performance is likely to continue in 2015.
5) Planting: Grape planting is shifting regionally. Oregon and Washington are showing strong growth in planting on a percentage basis and we expect that this will continue for the foreseeable future given favorable quality and price dynamics relative to the fine wine growing regions in California.

Read the full report