Wine Sales Up in '07, Though On-Premise Growth Slowed

Wine bottles Although the economy has slowed growth of on-premise wine consumption a bit, overall U.S. wine sales by volume still rose 3.2% last year, according to Eric Schmidt, manager of information services for Norwalk, CT-based Beverage Information Group.

The beverages research/publishing company, which just released the 2008 edition of its "Wine Handbook," reports that volume sales increased to 292.1 million 9-liter cases last year, and dollar sales reached a new peak, $27.9 billion. Case sales have now gained for 14 consecutive years.

If the growth rates continue, the U.S. will surpass Italy and France to become both the largest wine market and biggest wine importer in the world by the end of the decade, Schmidt points out.

He stresses that wine consumption in restaurants, bars and other out-of-home venues was still "in the black*" last year, but grew less than pre-recession, and less robustly than in-home/off-premise.



Further, while it might seem counter-logical in this economy, the price segment driving most growth is $15 and above per bottle. This ties in to a degree with the greater '07 growth of in-home consumption, according to Schmidt.

"People able to buy premium and super-premium wines are clearly not as affected by the economy, and are part of the reason that wines and alcoholic beverages in general are by and large resistant to economic downturns," he says. "At the same time, even those who are economically better off are doing less on-premise wine drinking. With wine, it's very easy to replicate the experience of enjoying a good bottle in a restaurant at home, and you're obviously going to pay considerably more for the same bottle in a restaurant. Spirits are a bit more resistant to downturns in on-premise, because it's a bit harder to replicate the experience at home-buying the ingredients, mixing them and so forth takes more effort."

Still, bottles priced at $12 to $15, and to a lesser extent, $9 to $12, also saw growth, Schmidt adds. Private-label wines, now offered by brands that might not spring to oenophiles' minds, like Target and 7-Eleven, are seeing just moderate growth, he reports.

However, increasingly eco-conscious retailers, including Wal-Mart, Target and supermarket chains - as well as "green"-minded vintners -- are driving important wine packaging and consumer demand trends. Target's Wine Cube and super-premium Black Box Wines from Constellation Wines are but two of a burgeoning number of examples of wine running the price gamut that are being packaged in boxes and bags, notes Schmidt. (Screw-off tops also continue to gain acceptance even for more upscale wines, although that's a factor of their airtight and resealable capabilities.)

Overall, demographic trends are working in favor of wine in the U.S. While the approximately 70 million Millennials (age 23 to 30) are not as sophisticated about wines as older generations, they're willing to experiment with lower-priced offerings, the Handbook points out. Meanwhile, the 77 million Baby Boomers between the ages of 43 and 61 have more disposable income and are spending more on higher-priced wines. Further, the Hispanic demographic is emerging as an important wine-consuming group, and Echo Boomers are starting to reach drinking age.

*Editor's note: The article was amended post publication.
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