The Wine Industry Shares Most Information 

Unlike most of the business world, there's a sense in the wine business that sharing is part of community, and your neighbor is part of your support mechanism. They are not a rival nor are they a competitor. Everyone freely offers support in the form of information and time. If you need a tractor because yours is mired in a soggy field, no problemo! Need a little welding and custom fabrication on a pump? I'll be right over with a welding rig. Stuck fermentation? I'll send over a portable heating unit.

That kind of sharing happens all the time. But ask your neighbor for your wine club list, or ask "Can you show me a copy of your financial performance so I can compare my winery to yours?" The answer is always just < ..... crickets ..... >. 

When it comes to that type of question you'll just get a mixture of liars dice, false bravado, partial truths. The following cartoon I put together is the best explanation of how that game is played with your neighbors in wine country... 

Sales Growth in Premium Wine has been Slowing

In the 2019 SVB State of the Industry Report released in January of this year, we said 

"2018 was a good year for wine. Total wine sales for the year set a record, restaurant sales of wine were higher and premium wine sales were up as well. Strong consumer confidence and a healthy US economy contributed to the improved performance, but changes to long-term trends are telling us that we
are at a transition point as an industry."  

We need to stop and note that 2018 showed a small uptick in performance, but that was only in the Premium Wine Segment as you will see below. The under $9 categories continue to disappoint and dragged volume sales negative, but there were some positives in the year and we have to be grateful for that, despite longer-term negative trends. 

A Look Back at Growth

We've gotten used to premium sales growth rates averaging 13% since 2000, and in the wine industry as a whole, 3-4% sales growth and 2% case growth was the norm. 

Going back, the upturn started in 1994 with premium wine sales growth in the 1990s typically above 20%, and even that was stunted by short supply. 1994 was the year the median boomer turned 35; typically the beginning of peak retail spending.

Starting in the early 2000s traditional three-tier wholesale distribution started to fail for the small producer, leading to a scramble to push direct sales. That move progressed very well until the past four years when three-tier sales went through another down phase, and tasting room growth couldn't replace losses in three-tier. 

Wine sales are still growing today but as you can see in the nearby slide titled US Wine Consumption Volume, volume growth with the rectangle highlighting the present period, is flattening. As alarming, total volume through retail grocery and drug; the orange line in the nearby slide, has turned negative for the first time since 1994. 

Read the rest of the article here.