What are Americans drinking? The U.S. wine market continues to grow, defying predictions of decline. But not all wines are enjoying better times, and this year’s pandemic and economic upheaval are only making things more challenging. The latest report from Impact Databank, a sibling publication of Wine Spectator, shows a complex market, with strong growth from sparkling wines and rosé offsetting slowing table wine sales, particularly for value-priced brands.
The U.S. wine market grew again last year, but by a mere 0.1% to 328.9 million cases. According to Impact’s report “The U.S. Wine Market: 2020 Edition,” wine consumption is projected to inch forward 0.2% in 2020 to 329.5 million cases. But the report forecasts consumption will decrease 0.3% by 2025.
A variety of long-term factors are at play. Wine has enjoyed strong growth in the U.S. market since the 1970s, save for a dip in the 1990s. In 1970, Americans drank 118 million cases of wine. Last year, it was 328 million cases. But per capita consumption has stayed relatively flat in recent years. And there’s a lot more competition these days. Spirits consumption is growing, rising 2.5% in 2019. And while beer consumption has declined, ready-to-drinks (RTDs), such as hard seltzer, have enjoyed big success. Consumption rose 32.5% in 2019 and is expected to grow another 82% by 2025.
Part of this shift is generational. Wine’s most loyal boosters—baby boomers—are retiring and starting to consume less alcohol. Gen Xers consume wine in significant amounts, but they’re a smaller group. Millennials and younger drinkers are exploring a wide array of beverages.
But the true wine market is not just a tale of generations. Several categories of wine are enjoying strong growth, which may hold lessons for all.
Sparkling wine continues to prove it’s not just for celebrations. For 12 years now, bubbles have been booming. Volume grew 1.7% in 2019 to 21.7 million cases. Domestic sparkling wine has enjoyed strong growth, but imported sparklers have been especially strong, both in the value and premium levels. Prosecco sales grew 14.8% in 2019 to 9.8 million cases, while Champagne sales grew 10.1% to 2.2 million cases.
Rosé has also enjoyed strong sales. Overall, rosé consumption grew 2.8% in 2019 to 18.4 million cases. Imported rosé, particularly from Provence, has led the growth in recent years, rising 17% to 3.4 million cases in 2019. But even domestic pink wines, after more than a decade of slump, have started to enjoy the boom. Domestic rosé consumption increased 0.1% to 15 million cases in 2019—not huge, but a big change after years of fizzling demand.
For red and white wines, price point is the dividing line. Most of the leading value-priced brands showed small declines in sales in 2019. But premium brands enjoyed growth—wines like Josh Cellars, Decoy and Meiomi, all of which sell for over $20, saw strong gains. The same was true for white wines: Sales of value-priced whites, under $10, declined, but premium white wines, such as New Zealand Sauvignon Blancs, marked strong gains.
Wine in Uncertain Times
How has the pandemic and recession impacted the wine market? It will be some time before the whole picture is clear. Restaurant sales evaporated overnight, but retail sales surged for much of the shutdown period.
During the first six months of the pandemic, Nielsen reports that retail wine sales grew 19.3% by volume and 24.7% by value. Prosecco sales at retail outlets rose 43% during the first three months of the pandemic, and 34.4% during the summer months. Retail Champagne sales grew slowly at first, rising 17.0%, but then accelerated to 65.1% during the summer months.
The trends of premium wine sales growth continued. Bottled table wine priced at least $20 a bottle was the fastest-growing segment—+30% from January through September—while wines priced below $8 grew just 2.5% by volume.
But the crises facing the country and even the world are far from over, with the pandemic expected to continue into next year. It’s unclear for how long, and how severe the economic pain will be. So far, Americans are still looking for a drink, and a high quality one at that.