In a recent blog post, Rob MacMillan wrote this headline “Wine Demand is Turning Negative, Defying Good News” READ ROB’S POST. The gist is that despite the pivot to the online sales channels last year and the expectation that with the economy doing well and restaurants opening back up, wine sales growth, continues to decline for the same reasons he listed in 2017 when he first reported on the declining sales trend.
This graph from SipSource shows wine depletions declining from January to April 2021.
Here’s the thing: this is a national trend across all wineries. However, the wineries that have the greatest impact on these numbers are less than 1% of all the wineries in the US. According to Wine and Vines, 300 wineries produce over 90% of the wine sold in the US. Thus only those 300 wineries out of 11,053 wineries have any impact on these figures. BUT THIS DOES NOT HAVE TO BE YOUR TREND. You and your friends and neighbors may actually have a very different result, but the combined impact of the small wineries doesn’t move the needle to change “the industry-wide” trend.
To understand the scale of those 300 wineries: the winery with the smallest production on that list bottles 6,250 cases of wine each week. Gallo at the top of the list bottles 8,000 cases every minute, 24/7.
These are the graphs from some of my clients.
Even though they both had negative growth in 2020, they both had their most profitable years ever. Growth and Profit are separate issues. Frankly, many small wineries don’t want to grow their case production. (However, they should still grow their gross profit.) Granted, not everyone had these results, and a few suffered from a lack of inventory due to fires 2 seasons in a row.
The point is: don’t take these reports about the industry as a fait accompli. Small wineries are nimble. Their customers are real people and not a demographic. Small wineries have true authenticity that the large wineries try to copy. Yes, pay attention to the fact that the boomers are “aging out”. And pay attention to how you are making the tasting experience inviting to the next generation.
I offer this challenge to the small wineries: Beat the industry trend.
And sign up with Silicon Valley Bank so you will receive an invitation to participate in their surveys. The small wineries are under-represented. Let’s show them what small wineries can accomplish. SVB WINE DIVISION