8 Takeaways from the 2017 SVB Wine Report by Rob McMillan of Silicon Valley Bank
02.15.2017  |  by Dave Dobrow

Recently, I had the pleasure of participating in a webinar about the state of the 2017 Wine Industry hosted by Silicon Valley Bank (SVB). Every year, SVB puts out one of the wine industry’s most authoritative annual reports, with forecasts based on a survey of more than 500 wineries.

Here are some of the main takeaways from that webinar:

  1. Younger generations are slowly creeping into the market. Baby boomers make up the largest demographic share of wine consumers, at 41%; however, their consumption has been declining for several years now. Compare this to millennials and gen-Xers whose share of wine consumers has been steadily growing. This is significant, as millennials especially are more ambivalent about brands and also more open to craft beer and cocktail options.
  2. Premiumization and substitutionality are occurring. Wines at the $0-$2.99 and $6-$8.99 price points saw steep drops in both dollar amount and cases sold, while more expensive wines saw growth.
  3. Red Blends experienced a lot of growth. This is especially true in the $8-$14.99 price range, signaling that millennials entering the market are gravitating towards these blends.
  4. Restaurant wine sales have not stabilized and shown continued signs of trouble. Restaurant wine sales have declined over the past three years, mostly due to changing consumer behaviors. In 2016, Most categories are showing signs of dropping across virtually all premium price points. The exception is premium red and red blends, which demonstrated positive sales growth last year. This may be due in part to millennials having a different pattern of consumption in restaurants, though small winery access to restaurants plays a role as well.
  5. A huge leap in direct sales growth.  Recent legal decisions have made DTC shipping easier and more widespread. Direct sales have been “on a steep growth ramp since and now represent 59% of the average winery’s, total sales.”
  6. Sustainability is on everyone’s radar. It goes by many labels, but whatever it’s called, sustainable practices are sought after in brands, and wineries are responding.
  7. There is a huge need for technology. Wineries want software solutions that can help them manage the entire brand experience, from tasting room to DTC sales to “the last mile” of shipping.
  8. Launching new products and managing their distribution is still a challenge. Though most wineries agreed that 2016 was a good year, creating, pricing, marketing, and distributing new products remains a challenge that is on everyone’s mind.

There are many more interesting trends covered in the webinar and its accompanying report. Going forward in 2017, we are going to break down some of these trends and take a closer look at why they are occurring, and what to expect in the future.

There are four areas that we’ve written about recently and have received a lot of attention: The growing Millennial Market, the Rapid Rise of DTC Sales, Technology and the Brand Experience, and lastly Distribution. We predict that new solutions will continue emerging to address these areas, particularly when it comes to Curation, Compliance, Logistics, and Brand Experience.

If you can’t wait and would like to discuss these or related issues, feel free to contact us. Copper Peak Logistics has a decade of experience in the wine logistics and shipping industry, and we would love to discuss these trends and more with you.