Mike Veseth of the Wine Economist kicked off the State of the Wine Industry talk in Sacramento.
What does 2018 hold for California’s wine industry, and the broader global business? Industry leaders shared their views at the Unified Wine & Grape Symposium, painting a picture of changing fortunes and evolving themes that vineyards and wine producers must take into account.
Here’s a quick tour of some highlights of the talk. Stay tuned for more in depth coverage of the economic data presented by panelists in the days to come.
Fire shaped the year at home and abroad
“If we look at the personal standpoint, of the people in the wine industry, 2017 was pretty rough, with the wildfires in the U.S. Everyone of us either knows someone or suffered a hard time, or is someone who suffered a loss or had a hard time,” said Mike Veseth of the Wine Economist. “I have been so impressed at the way the wine industry and the communities of the wine industry have rallied to support each other.”
Beyond the human tragedies that brought the industry together in California, Veseth pointed out that extreme weather shaped wine markets as Italian, French, and Spanish harvests dropped by 23%, 19%, and 15% respectively, and Portugal had wildfires that burned 500,000 hectares, about 6% of the country.
Labor concerns loom large
“We’re moving to an environment where labor is much more expensive and there’s a lot less availability. We have to adjust,” Veseth said.
His points were echoed in a seminar on mechanization of the vineyard presented later in the day; a post covering that talk will be published on the Ceres blog shortly.
A changing retail landscape means changing wine business
There’s still plenty of good news about wine and retail. As seen above in a slide from Nielsen’s Danny Brager, wine supercharges a shopping cart, adding value above and beyond the wine purchased to the shopper’s total.
“Consumers are still trading up, drinking better, if they’re not drinking more,” Brager said.
At the same time, the retail industry is changing as the number of retail locations dropped in 2017 for the first time since the Great Recession.
Industry’s attempts to consolidate mean that the top 10 wine suppliers are more important than they were five years ago, Brager said. On top of that, the rise of ecommerce, both Amazon and other companies, takes business from brick and mortar retailers.
That’s important for the wine industry, Brager said, because 31% of wine purchases are unplanned.
“What happens to those unplanned purchasers?” Brager asked, telling the crowd that alcoholic beverages make up about 6% of brick and mortar shopping trips, and only 1% online, because online retailers don’t feature alcohol.
Rosé breakout continues
“Rose wouldn’t even fall on this chart (if it were at scale), its growth is so far ahead of everything else,” Brager said of a chart depicting varietals. “Really, everything seems to be coming up Rose. When you’ve walked into the store, I’m sure you’ve seen the pink walls, I think you’ve seen a pink display.”
Both men and women drink it, Brager said, and Instagram postings for the wine were up in the fourth quarter by about 60% from the same period a year before.The rest of the beverage world has taken note and is pushing copycat products, he said: “They’re coming up with their own version of rosé, rosé cider, rosé gin.”
Look for more blogs from the Unified Wine & Grape Symposium following the conference, including detailed breakdowns of talks by individual presenters at the State of the Industry panel, and other panels on topics such as:
- Legal marijuana’s effect on wine demand
- Mechanization in the vineyard to alleviate labor shortages
- Premiumization and implications of the strategy in case of economic downturn
- Changing varietal plantings in California regions