09.14.2018  
 

Consumers Trade Up, U.S. Wine Sales Rise 3%

Cabernet illustrates trend as per-bottle prices increase, varietal remains dominant in DtC, off premise

 
by Peter Mitham
 
hertz
 
Cabernet Sauvignon wines racked up $1.6 billion in off-premise sales in the last 52 weeks and the average per bottle price for wines more than $25 increased by $1.62.

San Rafael, Calif.—Domestic wines gained ground in August, with Cabernet Sauvignon leading the way through both off-premise and direct-to-consumer channels.

U.S. wine sales totaled $3.6 billion in August, up 3% from a year earlier according to market research firm bw166, while off-premise sales through multiple-outlet and convenience stores IRI tracked approached $641 million in the four weeks ended Aug. 12, an increase of 1% versus a year ago. Consumers not only spent more in total, they also exhibited a willingness to spend more per bottle, as case volumes in the period dropped 1% to 8.1 million as sales value rose.

The top varietal in terms of all wines sold in the U.S. is Cabernet Sauvignon, which accounted for approximately $1.6 billion of the $9 billion in wine sold off-premise in the latest 52 weeks. It also highlighted the willingness of consumers to spend more for wines in the period.

A year ago, the average price for all segments of Cabernet Sauvignon sold in glass packaging at less than $25 a bottle fell. This year, all price segments $15 and up saw an increase in average bottle price. Wines at $25-plus gained $1.62 a bottle, those at $20-$24.99 gained 39 cents, and $15-$19.99 bottles gained two cents. The cheapest segment of Cabernet Sauvignon — less than $4 a bottle — even gained three cents a bottle.

Nevertheless, the middle tiers — those where the majority of sales occur — face significant pressure on prices. Approximately 56% of the varietal’s off-premise sales occur at less than $11 bottle. The single biggest portion of sales — $469 million in the latest 12 months — occur at $8-$10.99, a segment where average bottle price fell by a penny. The biggest drop, six cents, was in the $11-$14.99 range.

A similar phenomenon was seen in DtC shipments, where Cabernet Sauvignon continues to reign over its nearest competitors, Pinot Noir and red blends. Cabernet shipments represented 28% of the $2.9 billion worth of wine that Wines Vines Analytics/ShipCompliant by Sovos reported flowing DtC in the latest 12 months. The varietal’s shipment value, $814 million, was up 9% versus a year ago.

The wines being shipped reflected steady demand for expensive wines, with $100-plus bottles accounting for 54% of the value of Cabernet shipments. Cabernet’s strongest growth occurred in the $20-$39.99 price band, however, with shipments rising 24% to $61 million. Shipments of bottles less than $20 also gained ground, rising 16% to $32 million and recording the largest volume of any price segment at 231,909 cases.

The broad-based growth underscored not only consumers’ embrace of the channel but the willingness to spend on wines across the price spectrum in a channel now firmly anchored by affordable wines even as $100-plus bottles headline activity.

The channel continues to enjoy steady growth, with August data showing shipment value increasing 5% from a year ago to $136 million on a volume of 343,189 cases. Average price per bottle was $33.14, down 2% versus a year ago as more affordable wines flowed through the channel.

Rising consumer spending and greater shipments combined to help lift U.S. wine sales 4% to nearly $47 billion in the latest 12 months, according to bw166. Table wines led the increase, rising 3% versus a 2% increase in sparkling wines. All told, wine sales in the U.S. totaled $70 billion in the latest 12 months, an increase of 6% from a year ago. Domestic wines, including bulk imports, led the growth, adding $1.9 billion in sales over the period versus an additional $1.8 billion in sales of packaged imports. While growth in packaged imports continues to outpace that of domestic wines, this was the first month since October 2017 that the increase in domestic wine sales also meant stronger growth in real dollar terms.
While the wine kept flowing, hiring activity in the industry was flat in August.

Winejobs.com’s Winery Job Index was flat at 294. While demand for vineyard workers increased 80% as harvest approached, sales and marketing positions saw demand weaken 31% while finance hiring fell 30%. However, demand for general administration staff increased 54% while demand for direct-to-consumer positions, including tasting room and retail staff, increased 4%.

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