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MarketWatch: Silicon Valley Bank Forecasts 7 to 11% Growth in U.S. Fine Wine Sales

April 20, 2012


From MarketWatch:

Silicon Valley Bank, a leading provider of commercial banking services to the wine industry, released its Annual State of the Wine Industry Report for 2012-2013. The report captures trends and addresses critical issues facing the U.S. wine industry, offering unique data and observations that help wine business owners and managers think critically about their strategies.

• Long-term steady growth in the fine wine business is expected; 7-11% sales growth in 2012.
• Wine inventories evolving into a state of shortage that will last for some time domestically.
• Increasing prices for grapes and bulk juice as growers finally start to see recovery.
• Increasing plantings to feed the looming grape shortage.
• Imports taking larger market share in the U.S.
• Bottle price increases, but not a return to prices prior to the recession.
• Increasing difficulty for third-party marketers that have sold with a culture of discounting.
• Functional evolution of digital solutions, creating a 'Fifth Column' sales channel.
• Millennials as a fine wine consumers are over-valued in their importance today.

Based on its in-house expertise, ongoing research and a survey of nearly 500 wineries, Silicon Valley Bank continues to believe the fine wine segment is at the beginning of a long-term, steady growth phase, despite current and potential headwinds.

"We believe we are quickly trending to a position that has not yet been experienced in the business: supply will be structurally short for an extended period in all production winery sizes, demand will continue to grow at a little slower pace post-recovery, imports will take a larger share of total domestic sales and make larger inroads into the lower priced wine categories," said Rob McMillan, founder of Silicon Valley Bank's Wine Division and author of the report. "The biggest obstacles to growth and profitability for wine businesses over the next several years will be finding supply at the right price and quality for a given program. The function of selling wine will now be on par with managing costs, and will become the dominant competitive issue over the next several years."

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For the full article, visit www.marketwatch.com.


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