The US wine industry is projected to have seen falling sales by value and volume in 2024 amid a “significant reset”, a new report has said.
According to new research from Silicon Valley Bank, the US wine market is anticipated to have seen volumes fall by 1-3% last year.
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The value of sales in the US are expected to have been flat, with a potential variation of ±1%, Silicon Valley Bank, which issues regular reports on the country’s wine market, said.
The report suggests that discounting through 2025 could result in value sales “aligning more closely with volume sales”, potentially ending this year down 1% “plus or minus 1%”.
Silicon Valley Bank wine division founder and author of the report Rob McMillan said: “The wine industry is undergoing a significant change, marking the first demand-based correction in three decades.
“We have been predicting a generational shift for many years and the 2025 report data solidifies the wine industry is now living that reality.”
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By GlobalDataSilicon Valley Bank projects sales in the “premium” wine sector in the US fell 3.4% in 2024.
However, it said the decline was not uniform across the board.
The top quartile of premium wineries registered an average revenue growth of 22%, while the bottom quartile saw a revenue decline of 16%.
Nevertheless, the bank said gross profit margins in the premium segment deteriorated throughout 2024 due to higher cost inputs from the 2022 and 2023 vintage wines.
According to the report, white wine and prosecco saw volumes rise, with white wine seeing “better sales growth rates” than red.
“Varietal shifts from red to white could be a forward indicator that a rotation to younger consumers is underway,” Silicon Valley Bank said.
The ageing Baby Boomer population, declining by 2.6 million annually, is expected to peak in 2037 at 4.4 million.
The impact of that demographic shift on sales is anticipated to peak between 2029 and 2031, the report said.
“To mitigate the decline of older consumers, it is essential to rethink and enhance our approach with the 30-45 age group and improve our share between beer, wine, and spirits in that cohort,” Silicon Valley Bank added.
When it comes to oversupply, California and Washington have planted acreage that exceeds current demand, while Oregon is closer to achieving a balance between supply and demand, the bank said.
Discounting is expected to remain a solution for addressing oversupply. The bank anticipates various forms of discounting will persist across grapes, bulk wine and bottled products.
However, price adjustments are likely to be less overt, Silicon Valley Bank suggested, with surplus inventory funnelled into private labels, flash sales platforms and newly-developed labels introduced by négociants.
According to a Silicon Valley Bank survey, 42% of respondents plan to implement a small price increase in 2025.
Meanwhile, only 16% of grape buyers told the bank they plan to purchase more fruit in 2025. The researchers said they do not expect that figure to increase.
