Industry Insight - WINERIES -(Q2 2023)
2023 - Quarterly 2
Ominous Outlook for Wine - Oh boy!
Wineries need to be very concerned about the future, according to Rob McMillan, founder of Silicon Valley Bank’s (SVB) wine division. The author of this year’s State of the Wine Industry Report says the industry is at a critical turning point due to volatile market conditions coupled with deteriorating demand among younger consumers.
Higher costs and unpredictable shipping conditions = shrinking margins.
Premium is still strong, premium wine segments are forecasted to grow 4-6%
The report notes that because wine consumption is only growing among those over the age of 60, the industry’s future depends on its ability to attract younger drinkers away from spirits, beer, and alternative beverages. Moreover, he predicts that higher costs and unpredictable shipping conditions will shrink winery margins. A bright spot in the otherwise gloomy outlook is demand for premium wine. The SVB report estimates sales growth of 4% to 6% for the premium wine segment while for the industry as a whole, will see volume stabilize at negative growth levels.
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