2017 OUTLOOK: PREMIUM WINE SALES AND PRICES TO RISE
Rob McMillan, founder of Silicon Valley Bank’s Wine Division, writes
one of the wine industry’s most authoritative annual reports that
assesses current conditions and provides a unique forecast based on a
survey of more than 500 wineries.
MAJOR FORECASTS FOR 2017:
- Wines sold between $12 and $25 will grow in demand as will
high-end luxury wines with an established brand. We expect to see small
price increases in these segments, with volume and price drops for
bottles priced under $9.
- Premium wine sales will increase between 10 and 14 percent above 2016 levels.
- Per capita consumption faces crosscurrents with retiring
wine-loyal baby boomers being replaced by less affluent millennials who
are ambivalent about their alcoholic beverage of choice. If economic
conditions continue to improve, however, per capita consumption should
be slightly higher in 2017.
- Today, millennials are beginning to affect the lower price range
of premium sales. Their presence is most visible in the $8 to $11.99
red blend category, but they gradually will shift from blends to
varietal wines or imports as their incomes grow.
- Even with winery M&A facing headwinds from higher interest
rates, winery acquisitions should remain quite active through 2017.
- Farm labor supply and costs are the dominant concerns in the wine business in 2017.