Wine – A Growing Industry

As Steve Jacobson said in his Wine Facts post, wine is a growing industry. Wine Communications Group, Inc. published their annual metrics for the year 2012 which indicate a steady increase in all related facets of wine and wine production.

Off-premise sales, direct-to-consumer sales, flash sales, and the Winery Job Index all posted an all-time high in 2012. Domestic wine sales in major retail stores reached $5 billion, showing a 6% increase compared to 2011 results. Direct-to-consumer sales neared $1.5 billion, adding up to a 10% increase. Finally, the winery job activity hit an all-time high with a 16% growth.

On January 10th, MarketWatch reported that wine consumed by Americans have gone up by 21 percent in the last decade. While glamorized drinking in TV shows and movies like Sideways, Sex and the City, and Cougar Town might have helped the wine industry pick up the pace a little, the main reason is awareness. As wine lovers discover new regions and varieties of wine, including sweet reds and higher-end blends, I expect wine consumption to continue to increase over the next few years.

As a result, we should expect a slight increase in wine prices. In fact, Trader Joe’s Charles Shaw wine — infamously known as “Two-Buck Chuck” — will need a new nickname, as recent news announced a 50 cent increase after a strong and steady 11-year run. Alison Mochizuki, spokeswoman for Trader Joe’s, blames rising costs and bad yields at the company’s vineyards in 2011 and 2012: “In general, our retail prices change only when our costs change.”
In the state of California, where the wine was first introduced back in 2002 by the Bronco Wine Company, the new retail price will be $2.49. Ouch! Sure, it’s only 50 cents… but it amounts to a 25% increase. 60 million bottles sold every year, that’s an additional $30 millions in revenues! Well played, Chuck!

 

So, one could say 2012 was a very good year for the wine industry, but was it a good year for the wine, too? Only time will tell.

 

OTHER FUN STATISTICS

Wineries in the western U.S. continue to carry the most expensive bottle prices, with Napa County ranking first in that category. Average bottle price by region:

Napa County – $57
All California Counties – $37
Oregon – $27
Washington – $25
Other U.S. – $16

Separating Napa County by winery size shows a predictable result of higher prices for low volume to limited production winemakers. Average bottle price for wineries in Napa County by winery size:

Large (500,000 +) – $13
Medium (50,000 – 499,000) – $35
Small (5,000 – 49,999) – $46
Very Small (1,000 – 4,999) – $58
Limited Production (< 1,000) – $67

Wine sales kept growing in retail stores, ending the year with a 6% increase for domestic table wines. Cabernet and Chardonnay remained the go-to wine types for American consumers in 2012, ahead of Merlot which came in third place Hughes Air Heating & Cooling. Merlot is the only varietal that experienced a slight decrease in sales, while red blends showed a fast and steady growth. Table wine annual sales by varietal (in billions):

Chardonnay – $1.35
Cabernet Sauvignon – $1
Merlot – $0.55
Pinot Grigio/Gris – $0.5
Pinot Noir – $0.4
Red Blends/Meritage – $0.35
Fumé/Sauvignon Blanc – $0.3

 

 

You like statistics? Check out these related posts:
• Record Numbers For U.S. Wine Exports
• Wine Lovers Continue To Toast World Wide