Wine Sales Reaching New Heights
Written by Tim on April 17, 2013
Over the past five years, wine sales have steadily increased from year to year in the United States. This steady growth has occurred while much of the nation’s economy has suffered significant difficulties during the recession that began in late 2008. While wine sales leveled between 2008 and 2009, a substantial increase in numbers has been realized in the years that followed suggesting that further growth will continue.
Wine Classifications and Sales Volumes
The largest sector of the U.S wine market is the table wine category followed by dessert wine and sparkling wine or champagne. The table wine designation includes classifications such as light wine, light white wine, red table wine, and sweet table wine all with alcohol content up to 14 percent. Wines with alcohol content between 14 and 24 percent are classified as dessert wines, and sparkling wine or champagne contains high levels of carbon dioxide which is responsible for the traditional fizziness common to this variety.
The Wine Institute reported that in 2010 table wine sales reach 678 million gallons with dessert wine sales of 69 million gallons and sparkling wine with 37 million gallons for a total of 784 million gallons. This includes sales from all production sources including California as well as international imports. These numbers represent a 10 percent increase in quantities purchased compared to pre-recession levels over the past five years with a total retail value of 32.5 billion dollars in 2011.
Wine Production Numbers by Region
According to the U.S. Department of Commerce, California accounts for nearly 90 percent of wine production in the United States so growing conditions in this region have a significant effect on U.S. production levels. In 2010, wine produced in California accounted for 61 percent of wine sales with 8 percent being produced in other U.S regions and the remainder originating from international imports. The other U.S. regions with noticeable contributions to U.S. production levels are the Northeast and Northwest. In Washington State, production is up 33 percent from 2006. Across the nation in New York, growth of grapes for wine production has increased by 17 percent. Steady growth has also been realized in Oregon and Michigan as well as in other states throughout the south and in Texas.
Wine Distribution within the U.S. Market
Of the total sales for wine in the United States, per capita figures for the total population of legal drinking age Americans is approximately 3.5 gallons per person. This number represents nearly a 10 percent increase over the last five years. Based on ACNielsen supermarket data, red wines are the more popular choice among consumers at 47 percent with whites accounting for 40 percent of wine consumed and the remaining 13 percent being blush wines. While this per capita data falls short of individual consumption levels of the residents of some foreign nations, notably France, the U.S. has grown to be the world’s largest wine market.
The data concerning the sale of wine in supermarkets represent only a portion of sales totals. There are a variety of avenues a consumer can take to obtain his or her favorite wine. Following the abolition of prohibition by the 21st Amendment to the U.S. Constitution, a three-tier system of alcohol distribution was established that is the basic structure by which producers are legally allowed to market their beverages. This system requires that producers must only sell to wholesale distributors who then are able to sell to retailers who are allowed to sell to consumers. This sales chain has generated some controversy in the United States by limiting the wine enthusiast’s access to selections that are not readily available in each individual’s state of residence through local retail outlets.
This distribution chain within the wine sales industry has been hotly contested for decades culminating in a Supreme Court decision in 2005 in the case of Granholm v. Heald. The decision of this case determined that it was unconstitutional for wineries to sell directly to customers in the states of New York and Michigan. More recent legislation has continued and various states take up differing positions concerning the original three-tier system. Now with the matter being decided at the state level, it is possible in some states for consumers to purchase wine from producers and this has had a large impact on wine sales within the United States.
For consumers who are not provided retail access to all the wines that are available in the U.S., this option to buy direct from producers has greatly liberated consumer choice as well as increasing wineries potential customer base. Customers interested in purchasing wine direct from the producer should check the current laws in their state of residence to determine if it is lawful for them to do so. As further legislation and distribution standards are discussed and modified, the direct sale of wine to consumers is anticipated to become a leading method of the purchase and delivery of wine for U.S. customers. Companies like The Traveling Vineyard take advantage of this by providing consumers access to wines though in-home wine tastings where wines are demonstrated and then direct-shipped to the consumers from the wineries.
Five Year Growth Trend in Wine Sales and Future Expectations
The increase in the sale of wine since the beginning of the 2008 recession and the more recent rapid growth in wine sales are considered by many economists to be a unique indicator of an improving economy. The trend in the wine market suggests that consumers are increasingly becoming more willing to engage in discretionary spending for non-essential products such as wine. As the economy becomes stronger, it is expected that wine sales will continue to climb with direct to consumer sales being a leading avenue for national sales.
Regardless of how consumers are getting the wines they desire, it is evident that there is a growing interest in this market. Market data over the last five years has shown consistent growth even during difficult economic times. California is by far the largest producer of wine in the U.S. and accounts for a large percentage of the wine consumed by American wine enthusiast. Overall wine sales are up, and individual consumption is also increasing. With the American wine market now the largest in the world, growth in this sector is expected to continue and this is a good indicator for both the wine industry and national economy as a whole.