Silicon Valley Bank Releases 24th Annual State of the US Wine Industry Report

Core Insights - The wine industry is experiencing a significant demand-based correction, marking the first such change in three decades, driven by a generational shift towards younger consumers [3] - Despite an overall decline in global wine demand, the premium wine segment shows resilience, with the top quartile of wineries achieving an average sales growth of 22% [2][8] - The market environment is expected to lead to the most accessible bottle pricing in the last 30 years, benefiting consumers seeking value [2] Market Trends - Total wine category sales are projected to end 2024 with negative volume growth between -3% and -1%, while the weighted average of wineries experienced a 3.4% revenue decline [8] - No- and low-alcohol wines, as well as white wine and prosecco, are witnessing positive growth, indicating a shift in consumer preferences [4] - The youngest consumers are increasingly abstaining from wine or opting for alternatives, a trend expected to continue into 2025 and beyond [4][5] Consumer Behavior - Older consumers (60+) who traditionally purchase more wine are being replaced by younger consumers who have lower purchasing indices and prefer other drink categories [5] - To restore balance between demand and supply, it is critical to increase consumption among consumers aged 30-45 [5] Industry Challenges - Wine supply is currently backed up throughout production and sales channels, creating challenges for industry players [2] - Tasting room visitation is predicted to be slightly lower in 2025 compared to 2024, indicating potential difficulties in attracting consumers [8] - 42% of winery survey respondents plan to implement small price increases in 2025, which may be challenging in an oversupplied market [8]