San Rafael, Calif.
-- Domestic table wine sales through March 21 grew at a healthy 5.3% annual rate over the previous 52-week period, as reflected in the latest retail data from SymphonyIRI Group. The off-premise market for domestic wines totaled $4.5 billion. In contrast, imports edged up just 0.3% for the 52 weeks ending March 21, and dipped to a negative 0.8% in the most recent four weeks measured. Total imports were worth $1.3 billion.
Winery sales directors who remember the early 2000s, when imports steadily ate away at U.S. market share, might be pleased to see that domestic table wines now account for 78% of the off-premise market in dollars (after dipping below 75% in 2005). Balancing this trend, however, are the weakened export figures for domestic wine recently reported by Wine Institute and others.
U.S. wine categories that are particularly hot this spring in terms of dollar growth are 3L bag-in-box wines, 500ml aseptic packs, and the most expensive price- point of $20-plus for traditional 750ml bottles. This last development may give hope to high-end boutique wineries whose on-premise sales were particularly hard hit by the recession.
A snapshot of four-week sales figures ending March 21 showed 2010 sales 5.1% ahead of 2009 numbers for the same period -- when the U.S. was still reeling from the financial crisis of late 2008 -- and February 2010 sales peaked higher than any month in 2009 except for the holiday periods of November and December.
What wineries say
Still, an increase of 5% at retail is not enough to restore the previous declines in sales for many vintners. Rather than stand by and wait for more increases through the three tiers, Alexandra Cohn
, who co-owns JC Cellars
in Oakland, Calif., is working hard on direct sales. An experiment in February using an outside telemarketing company to contact wine club members by phone was "hugely promising," so she hired a new direct-sales staff person to call current and former direct customers virtually full-time. "Sales have more than doubled for the year so far, compared to 2009," she said.
The SymphonyIRI Group numbers for dollar sales trends were positive overall for California, Washington and Oregon in the thousands of food, drug and convenience stores across the U.S., where SymphonyIRI Group tabulates scan data. California table wine sales matched the average of 5.3% over 52 weeks; Washington managed 3.6% growth, and Oregon had the most positive sales trend, up 6.1%. For the most recent four-week period, however, the numbers had cooled slightly.
"I think things have stopped getting worse," said David Graves
, co-founder of Saintsbury Winery
in California's Carneros district. "But wineries still have a lot of inventory to work off." He observed that many wineries are offering deep discounts to on-premise accounts for by-the-glass wines where the lowered price-point is not so visible. And they're offering deals to accounts in out-of-the-way places like Hawaii, where producers hope the rest of the marketplace won't notice.
"You've spent years on airplanes and in all these markets to build your brand, and you don't want to just give that away," Graves advised. "The question is, what's the new normal? I don't think we've reached normal yet, because we're still working through the dis-equilibrium."
Washington and Oregon
Washington's fastest growth of 19.7% over 52 weeks came from boxed wines at $2-plus per 750ml equivalent, but much higher priced wines did well also. The state's $11-$14.99 wines grew strongly, at 10.8% during the same period. The hottest four-week trend was in the $15-$19.99 range, where sales increased 33.5% over the same four weeks in 2009. Second in sales growth for the four weeks was SymphonyIRI Group's most expensive table wine category, $20-plus, which grew 10.5% for Washington wines.
Oregon showed a similar trend, with its lowest priced and highest priced wines both putting up good growth numbers. The state's least expensive bracket of any significant size, $5-$7.99, surged 26.3% over 52 weeks, while Oregon wines from $15-$19.99 and also $20-plus grew at healthy rates of nearly 8% each.
By package size
A closer look at sales by package size indicates that 3L bag-in-box wines had the best growth rate of all significant-sized package categories. Domestic wines in 3-liter boxes grew 17.9% over 52 weeks, signaling again the public's acceptance of the non-traditional format, and most likely their continuing search for value.
In smaller formats, wine sales in 500ml aseptic packs grew even faster, at 49.3% more dollars than the previous year, though still accounting for a tiny 0.3% of table wine sales. Table wine in 1-liter bottles also grew dramatically, at 29.2%.
Remember the 375ml half-bottle? It was one of only two format categories to decrease in sales over 52 weeks, dropping by 2.8%, and plummeting at a rate of -8.9% over the most recent four weeks. The other loser was the 3L glass jug.
The big 5-liter box now holds a 14.9% volume share of the market, while the 3-liter box claims 2.6%. The roost is still ruled by 750s, however, owning 45.7% of the volume share, and an overwhelming 66.4% share of dollars.
SymphonyIRI Group, founded in 1979 and based in Chicago, describes itself as the world’s leading provider of enterprise market information and services. The company focuses on the consumer packaged goods, retail and healthcare industries. Ninety-five percent of the Fortune Global 500 in consumer packaged goods and retail use SymphonyIRI Group, including several of the Top 30 wine brand owners. See symphonyiri.com