Wine industry reset is here, fueled by a
generational shift to younger consumers redefining consumption
patterns
NAPA,
Calif., Jan. 23, 2025 /PRNewswire/ -- Silicon
Valley Bank (SVB), a division of First Citizens Bank, today
released its 2025 State of the US Wine Industry Report. Widely
regarded as the leading source of market trends in the premium wine
sector, SVB's annual report provides an analysis of current market
conditions and forecasts for the year ahead.
The report uncovered several positive market indicators, despite
an overall decline in global wine demand in the last year. The
premium wine segment once again demonstrated resilience with small,
single-digit sales declines overall, and the top quartile of
wineries producing average sales growth of 22%. With total wine
consumption decreasing by volume, wine supply is backed up
throughout the production and sales channels. While challenging for
industry players, the market environment is poised to create some
of the most accessible bottle pricing of the last 30 years, a
golden era for wine consumers in search of value.
"The wine industry is undergoing a significant change, marking
the first demand-based correction in three decades," said
Rob McMillan, Silicon Valley
Bank Wine Division founder and author of the report. "We have been
predicting a generational shift for many years, and the 2025 report
data solidifies the wine industry is now living that reality.
Different parts of the industry will heal at different times, but
we can expect a continued downturn for some time before we reach
flat growth.
No- and low-alcohol wine, white wine and prosecco experienced
positive growth, with white wine outpacing red wine sales for the
first time in many years. According to the report, varietal shifts
from red to white could be a forward indicator that a rotation to
younger consumers is underway. More broadly, the youngest consumers
are increasingly abstaining from wine altogether or choosing
alternatives, all trends expected to persist into 2025 and
beyond.
"Consumers are not changing their minds about wine. Older, 60+
year-old consumers who historically index higher for wine purchases
are sunsetting, replaced by younger consumers who index lower for
wine and prefer other drink categories," said McMillan. "To restore
the balance between demand and supply, growing consumption share
with consumers in the 30-45 segment is critical. The industry can
shorten the recovery by evolving marketing and promotion strategies
to meet that consumer at their value points."
The 2025 SVB report examines the latest consumption, pricing and
sales data as well as the most promising wine industry marketing
strategies. It provides an in-depth analysis of the key trends and
data impacting the US wine industry:
- Total wine category sales will end 2024 with negative volume
growth, between minus 3% and minus 1%.
- The weighted average of wineries produced a 3.4% revenue
decline, with the top quartile seeing an average of 22% revenue
growth, and the bottom quartile seeing a 16% revenue decline.
- Wholesale-heavy wineries fared worse than
direct-to-consumer-focused brands.
- Tasting room visitation is predicted to be slightly lower in
2025 compared to 2024.
- California- and Washington-planted acreage exceed demand while
Oregon is closer to being in
balance with demand.
- 42% of winery survey respondents said they will take a small
price increase in 2025, which may prove difficult in an
over-supplied market with prevalent discounting.
Silicon Valley Bank will host a live webinar to discuss the
annual report and state of the wine industry on January 23rd at 9:00 a.m. PST. The panel will include
Rob McMillan at Silicon
Valley Bank, Kaleigh
Theriault, Beverage Alcohol Thought Leader at NielsenIQ,
Alison Smith Story,
Co-Founder of Smith Story Wine Cellars, and Peter Yeung, Wine Industry Consultant.
Register for the live webinar here. A replay of the discussion will
be available after the event.
Read the full 2025 State of the Wine Industry report here:
www.svb.com/trends-insights/reports/wine-report.
Silicon Valley Bank's Wine Division
Founded in 1994,
SVB's Wine Division specializes in commercial banking for premium
wineries and vineyards and the industries that support them. With
the largest team of commercial bankers dedicated to the wine
industry of any bank nationwide, SVB's Wine Division has offices in
Napa, Sonoma and Oregon serving clients in the fine-wine
producing regions of California,
Oregon and Washington.
About Silicon Valley Bank
Silicon Valley Bank (SVB), a
division of First Citizens Bank, is the bank of some of the world's
most innovative companies and investors. SVB provides commercial
banking to companies in the technology, life science and
healthcare, private equity and venture capital industries. SVB
operates in centers of innovation throughout the United States, serving the unique needs of
its dynamic clients with deep sector expertise, insights and
connections. Learn more at svb.com.
About First Citizens Bank
First Citizens Bank helps
personal, business, commercial and wealth clients build financial
strength that lasts. Headquartered in Raleigh, N.C., First Citizens has built a
unique legacy of strength, stability and long-term thinking that
has spanned generations. First Citizens offers an array of general
banking services including a network of more than 500 branches and
offices in 30 states; commercial banking expertise delivering
best-in-class lending, leasing and other financial services coast
to coast; innovation banking serving businesses at every stage; and
a nationwide direct bank. Parent company First Citizens BancShares,
Inc. (NASDAQ: FCNCA) is a top 20 U.S. financial institution with
more than $200 billion in assets and
a member of the Fortune 500™. Discover more at
firstcitizens.com.
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SOURCE Silicon Valley Bank
