Highest-Priced Wines Grow Fastest
Retail sales of $20-plus bottles up 22% compared to year ago
San Rafael, Calif. -- The hottest retail sales trend of 2010 for small- to medium-sized wineries may be the rapid and sustained growth of the highest priced domestic table wines, those at $20 or more per bottle. This category showed a 21.9% increase in dollar sales over the 52-week period ending Aug. 8, as compared to the previous 52 weeks, as measured by check-stand scan data from major food and drug stores across the United States.
With $137.8 million in sales and an average retail price of $26.38, high-end wines seemed like the best business to be in. The price per case in this category averaged $317, by far the highest in all categories measured by the SymphonyIRI Group (SIRI). Yet this success had a cost: The average bottle price came down by $1 during that period, a drop that correlates with the increased sales. The relative change in sales volume, 26.6%, confirmed that lower prices were related to more bottles moving.
"What this is screaming at me is that premium wine is totally healthy right now off-premise," said Doug Goodwin, VP of client insights for beer, wine and spirits at SIRI.
Top 20 high-priced brands
At Wines & Vines' request, Symphony IRI charted the top 20 brands -- both domestic and imported -- in the $20-plus range to identify the individual leaders. This list looks very different from the top 20 brands over all price ranges, which is dominated by multiple wines from E. & J. Gallo, The Wine Group, Trinchero Family, Constellation Wines U.S. and others. Thirteen of the top 20 brands at $20-plus come from independently owned California wineries.
Only two imported brands made the list, and one of them, Santa Margherita from Italy, ranked No. 1. Imported by Terlato Wines International, the iconic Pinot Grigio brand sold nearly $22 million and more than doubled the sales of the No. 2 brand, Chardonnay specialist Sonoma-Cutrer of California. Sonoma-Cutrer made a good example of how lower prices seemed to boost sales. The Brown-Forman-owned brand's price dropped by $1.07 per 750ml to $22.79, and sales soared by 31.4% to $8.7 million.
Rombauer Vineyards of Napa Valley was a close No. 3. Also a Chardonnay-oriented winery, Rombauer didn't have to push as hard. Its sales increased by 31.8%, while the average price dropped only a nickel.
The red and green arrows on our table demonstrate the correlation between lowered price and increased sales growth. It is consistent, but not universal. The price of both Cakebread Cellars and Trefethen Family Vineyards wines went up, while their sales managed to go up, too.
Overall varietal leaders
As usual in mid-summer, overall wine sales reported in August for the most recent four-week period dipped below those from the previous four-week period, but the total sales of domestic table wines still surpassed the same period last year by 5.6%. Domestic-produced table wine sales in major food and drug stores tallied just under $315 million, and accounted for 77.9% of the total off-premise wine market (against imports) as measured by the SIRI.
Looking at the longer measure of 52-week cumulative sales, domestic table wines were up a healthy 5.9% in dollars over the previous 52-weeks. The total was nearly $4.3 billion on a volume of more than 64 million 9-liter cases. More bottles were sold, and at a higher average price than in the previous period. The average 750ml bottle was $5.50, up 10 cents, and volume was up 4%.
Two of the four fastest-growing varietals over 52 weeks will be no surprise to winery and distributor sales people: Pinot Noir at all price levels grew at 10.5% in dollars and continued the rise that started when the Pinot-praising movie "Sideways" won an Oscar in 2004; and Riesling grew 7.1% in dollars, confirming another long-awaited but now apparently lasting trend.
Both Pinot Noir and Riesling are generally lighter style wines. But the other two fastest growing varietals are full-bodied, and their recent growth is less well appreciated. Meritage and other red varietal blends placed No. 1 in revenue growth, with 11% more dollars than the previous 52 weeks. Red Zinfandel completed the top four fastest growing types, posting a 7.4% increase.
Figures quoted in this article come from the Chicago-based SymphonyIRI Group, which uses scan data to provide market information and services to industries including consumer packaged goods, retail and health care. Wines & Vines provides further analysis and reporting on the results.