That’s the opinion of Rob McMillan, senior vp and founder of Silicon Valley Bank;s wine division. In fact, he says, the deceleration has been going on since 2015.
“That’s not saying wine sales are declining, but rather the positive growth rate we’ve seen in premium wine for a very long time is clearly decelerating,” he explains.
If this trend continues, by mid-2018 to 2019, “Wine as a category will have very little growth,” he says. There are plenty of ominous signs, he says:
- The growth rate of craft beer has been, and continues to decline.
- Restaurant sales of wine are collapsing.
- In discretionary consumer and mass luxury, many companies are fighting secular changes from the Amazon Effect, but consumer preference changes are also part of the dialogue. Tiffany, Michael Kors, Ralph Lauren, Nordstrom and Coach are all dealing with disruptions particularly in the US. Luxury retailers are trying to come to grips with an evolving consumer.
- Grape and wine brokers tell me the grape market is quietly slowing down even for Napa Cabernet and it doesn’t appear to be harvest related. Price expectations of sellers aren’t in line with winery buyers. Wineries note that sales growth isn’t as strong as they’d forecast and they aren’t looking to increase their purchases at this point in the business cycle.
- A respected beverage economist tells me high-end spirits reached a saturation point in late 2015, carrying into 2016. That’s very consistent with the Nielsen data above.
- US Auto sales have been lower every month in 2017, after seven straight years of increases. That says something about the US consumer today.
- More than one winery owner has told me sales of wines over $75 have been more difficult this year. That’s not a unanimous POV. Other clients who sell in that tier of wine aren’t seeing a change at all. Brand strength seems to be the biggest factor, but it’s still one more qualatitive data point.