Americans Drink More Wine—Mostly Bigger Brands

Looking for value in a recession, Americans trade down to less-expensive wines

In spite of the current recession, Americans are on pace to drink more wine in 2009 than ever before, with consumption expected to eke out a 0.6 percent increase this year, the 16th consecutive annual gain. The weak economy has slowed wine-industry growth considerably, as shrinking disposable incomes dampen overall alcohol consumption, particularly in restaurants, bars and other on-premise outlets, according to the upcoming U.S. Wine Market: Impact Databank Review and Forecast, 2009 Edition. But as the global economy improves, wine-industry growth is also expected to gradually build momentum.

There are a few exceptions but, in general, bigger wine brands have gained traction as many Americans have been looking for values by trading down to less-expensive wines. Last year, the 28 brands that sold at least 2 million cases each in the United States grew by a combined 1.1 percent in sales volume, the fastest growth of any segment. Collectively, these 2 million case wines were priced 35 percent below the industry average, according to the upcoming Impact report. The trend continued into this year as the 50 largest-selling brands are projected to combine for a 1.2 percent gain, double the total market’s expected growth rate.

Imported wines have been particularly hard-hit by the recession, and the continued weakness of the U.S. dollar does not bode well for imports in the near-term. Last year, domestically-produced wines outpaced their imported counterparts for the first time in 13 years, according to Impact Databank, owned by M. Shanken Communications, the parent company of Wine Spectator. Imports also have relatively greater exposure to restaurants and bars, which are more susceptible to consumer cutbacks in an economic downturn. Domestic wines are now projected to outperform imports in the near-term, and are expected to account for three-quarters of industry volume within a few years.