Problem With The US Wine Market

I attended a DTC webinar where some well intended experienced wine business people discussed the best path forward for the American wine industry.  The problem is as I'm watching them parrot back what the group think is in the market now, and I am fairly certain they are wrong.   Tell me if you've heard this take before.  Consumption levels are down 4% overall.  The biggest drop is in the bulk wine segment under $12 which is down 30-40% depending on who is presenting the data set.  Meanwhile, the average bottle price is up 11% year-to-year, thus the thinking is that consumers are drinking less but spending more when they do drink wine.  I think this conclusion is total bullshit.  

Let's run the math for a second.  There are four consecutive years of declining sales volumes.  85 million people drank wine in the United States in 2023, versus 76 million last year.  Casual wine drinkers, those that drink wine once every 2-3 months went from 34% of the population down to 29% in 2025.  Those casual drinkers right there, that's killing the bulk market.  It's not like if you drink wine once a quarter you're thinking, "Man, let's go spend $150 on a Napa cabernet.".  Those are people that grab a bottle of Apothic or Barefoot and think they're being "fancy" because they are going to serve wine at dinner.  They don't drink wine more often because it's too expensive and too fucking complicated.  For example, there is a casual restaurant close to where I live that positions themselves as being very wine focused that sells mainstream national brands you'd see in any grocery store for $10 a glass like unoaked chardonnay and red blends with plenty of residual sugar.  Compare that to $4 for a Coors Light/Rolling Rock/Yuengling or $10 for a Ketel One espresso martini.  Seriously, which one would YOU order?  Those consumers are not being seriously courted into wine as a category so they are o-u-t.  There goes your lower price tier drinkers.

The loss of that drinker is so massive it is skewing the data to look like everyone that is drinking wine is now "trading up", hence all these wineries stumbling over themselves to "premiumization" their way right out of business.  The data makes it look like people that were spending $15-20 all got so excited about wine that they all said "We should buy the reserve bottle next time since we like the regular so much!".  That's not what is happening.  People that were buying $18 wines slid into the $20+ category because of tariffs and inflation making their bottle of Freakshow Cabernet that they used to buy for $17 now $21 or their Santa Margherita pinot grigio move from $16 to $21.  The data doesn't support a cultural shift to people suddenly drinking higher end wine.  If you look, all the other price points are down.  Well, except one... $200+.

I think we can say the main reason for the $200+ price tier being up is the spiraling prices of trophy wines and the increase in the income of the ultra wealthy population thanks to our new Gilded Age Grift Culture we find ourselves in.  Really rich people don't care if Grand Cru Burgundy prices are through the roof or if Silver Oak Napa is over $200 now.  It's inconvenient but sales data shows they'll pay it if the brand has heat.  If you have a brand with recognition and a value proposition, you're probably doing pretty well.  If you're not, you've got some problems amigo.  Especially if you were selling to the Canadian market which was completely destroyed thanks to that "business genius" we have at the top of our flow chart here in the USA.  So, what's the way forward?  Hell if I know...

Just kidding.  All of these family wineries out there that are getting killed need to stop worrying about the doom and gloom high volume wines demise.  Who cares?  That's not your business anyway.  Medium sized wineries and below need to change their mindset.  You are not competing with Gallo.  You're not really even competing with Wagner Family.  You are competing with yourselves.  People in these businesses think that everyone knows who they are and all about their wine region.  Consumers don't.  They don't know anything.  If you are a little boutique winery making 2000 cases, all you need to do is find 8000 people to buy three bottles of your wine a year.  There are 76 million people drinking wine in the United States.  Go find 8000 that you get excited about what you're doing.  And for God's sake, don't reflexively raise prices because you heard at some seminar that everyone is moving into "premium" bottles.  They aren't.  

It just comes down to winning a marketing contest.  It's the same game your local plumber, carpet installer, and dentist have been doing for years.  It's easy to beat these giant corporations.  Those brands move slowly, can't change direction easily and can be outworked.  I remember reading a book about how Budweiser grew from being a local brewery to a mammoth global brand.  August Busch explained to his employees, "We don't sell beer.  We make friends.".  Wineries need to identify the people that they think will be their "friends" and invite them to the party.  Make it about the consumer, not about the winery.  No one cares about your origin story unless it's really compelling.  "Mike and Franny knew from the moment they went on vacation to Napa they wanted to make a $180 cabernet named after a Greek God to impress all Mike's friends at the country club."  That doesn't resonate.  Find the unique value proposition and let the people know who will connect to it.  It's the same as being in a niche indie rock band.  You don't need to fill the same arena that U2 does.  You just need to sell the LPs that are in your basement to the people that like that kind of music.  Get them out of the basement so you can make a new one next year, same as wine.

The issue for me as I think about this as a P4 question is "Do I answer this with what the prevailing wine industry wisdom says?" or "Do I tell it like it is?".  I really do have a unique work experience that allows me to see this situation and easily transpose it onto other industries and ape solutions I've seen work.  I had been thinking about it today while walking the hounds, and I'm of the opinion now of "Fuck it.  I'm going to let it rip if anyone asks.".  I will, of course, be furious when I inevitably score poorly when I refuse to suggest wineries should increase their prices to meet markets which have less spending power and greater reluctance to spend in the category, but at least I'll know I was right.  Isn't that really all that matters?