Fact or Fiction? Wine is a Recession-Proof Product
Written by Denise Kotopoulos on January 16, 2013
We joke at the Traveling Vineyard that wine is a product that sells itself – even in difficult economic times. All kidding aside, recent research conducted by Nielsen (you know, the television ratings people) reveals that growth in direct to consumer wine sales is dynamic and likely to continue. Nielsen’s research also confirms that the Traveling Vineyard is doing all the right things when it comes to positioning the company and our home based business entrepreneurs for future expansion.
Here’s a run-down of the Nielsen’s findings in their State of the Wine Industry From a Consumer Perspective:
Wine is one of the top 10 consumer packaged goods experiencing growth, #3 in terms of both dollar growth and unit growth.
In terms of dollar growth, wine is ahead of vitamins, candy, cosmetics. It is surpassed only by yogurt and snacks/spreads. In terms of unit growth, wine comes in right behind frozen novelties and fragrances in terms of volume increases. Wine is a growth industry.
Wine growth is ahead of beer and spirits (2007-2010).
Relative to other alcoholic beverages, wine growth exceeds beer and spirits growth in both dollar value and in volume.
Consumers are gravitating toward private label brands that represent value.
Since the economic downturn, consumer behavior has shifted. Private labels used to be a fall back. They are now looked upon by consumers as being equal or better than name brands. The Traveling Vineyard specializes in proprietary wines with exclusive labels that can only be found at our in-home tasting events. Consumers are less focused on luxury and more focused on value.
Due to economic conditions, consumers have cut their out-of-home entertainment. As conditions improve, they are more likely to continue cutting out-of-home entertainment than they are to cut at-home entertainment.
Wines consumed at home, what are called “off-premise” sales in the wine industry (not sold in a restaurant setting), are more likely to be where consumers put their dollars as the economy improves. The Traveling Vineyard specializes in these direct sales at their free home wine tasting.
Direct to consumer shipments as a percentage of overall sales are relatively small, but growing well.
Direct to consumer sales represent only 1% of the total wine market, but have shown double digit growth.
Consumers report finding good quality wines at lower prices and many don’t plan to change.
The $9-$20 price segment is growing best. The Traveling Vineyard “sweet spot” is in this target range at roughly $15.99-$16.99/bottle.
Red blends are doing well. Moscato and Malbec are still on fire.
These popular wines are represented in the Traveling Vineyard’s product mix and have been some of its best-sellers.
Smooth Merlot ties this blend with Syrah, Cabernet Sauvignon and Petite Sirah for added oomph. A friend to meat hot off the grill.
Fun and fizzy. Sweet and sassy. This effervescent dessert wine is the one wine that guests ask for over and over again.
Argentine Malbec shines as the new “it” wine of the New World and is now one of the fastest growing varietals in the US.
Domestic wines have shown better growth than imports.
In the $15-$19.99 segment alone, there has been an 8.6% improvement in volume (through January 2011.) This, again, is The Traveling Vineyard “sweet spot” for pricing. The Traveling Vineyard offers wines from around the world, but roughly half of their labels are domestic.
Consumers are not afraid to look beyond the brands they customarily purchase.
Across the board, consumers report, “I am finding good quality wines at lower prices.” Even amongst “core drinkers”, they report, “Even when the economy turns around, I will continue to buy wine that is less expensive than the wine I used to buy.” Because the Traveling Vineyard does not pay for expensive advertising as do the major brands, we can offer our wines at modest prices that reflect more value for your dollar.
Wine consumers are adventurous. They like to buy brands that are smaller or less well known. They are willing to explore new/different products.
Unlike spirits and beer drinkers, wine lovers are not as tied to well-known brands. The bottom line: there is room for lots of choices.
Wine is social and social media is hot.
What could be more social than a wine tasting event in your own home? Have you checked us out on Twitter and Facebook? Seen us on Pinterest?
Wine is less impacted by the economic downturn largely due to its core demographics. Younger generations (Millennials 21-33 years of age) are driving new wine growth more than any other age groups. Seniors are still important.
This plays into the universal appeal of the Traveling Vineyard’s in-home wine tasting event business which targets all ages and all levels of wine lover.