WBM Video Interview: Danny Brager of The Nielsen Company Discusses Current Wine Sales Trends

In an interview with winebusiness.com, Danny Brager, Vice President, Client Services Director with the Beverage Alcohol Team at The Nielsen Company notes that table wine sales are up roughly one percent thus far this year, notable when one considers that Nielsen tracks some $10 billion in annual sales. Much of the growth in the category is coming from lower price points than it did previously, however.

“Over the past 13 weeks we’ve seen slight increases in table wine sales, about one percent, which doesn’t sound like a lot, but we’re covering a lot of different channels,” Brager said. He noted that while Nielsen measures sales in 125 different categories, over 60 percent of those categories are currently in decline.

“When we look at this by price point, we see two price point ranges that are responsible for a significant part of the growth,” Brager said. “One is the $3 to $6 price range, and we’re talking at equivalent 750 ml packages (including 1.5 liter bottles and 3-liter boxes)."

“The second price segment contributing growth is the $9-$12 segment. – wines in and around ten dollars.”

“At the other end of the spectrum, we continue to see weakness from wines priced at $20 and above,” Brager said. “That’s occurring despite the fact that we’re seeing an increase in the promotional levels behind that price segment to promote purchases of wines for $20 and above. When we looked further, the major consumer dynamic is that some buyers who used to buy in that price segment are abandoning that price segment and trading down.”

There are also indications of some recent weakness in the $15-$20 range. “It’s worth mentioning that if you go back to 2007 it was the complete opposite,” Brager said. “In 2007 it was all about trading up to higher priced segments, and that’s where the growth was coming from.”

“Despite what we hear in the news about an economic or a financial recovery, the consumer recovery is still very much lagging, and we see that and hear that from consumers, when we ask them what they’ll do with their spare cash, they either say they don’t have any, or they’re gong to do things like save money or pay down debt before they’ll go out and spend like they might have before.”

The holiday period between the Thanksgiving and Christmas holidays represents a critical time period for wine sales. That has long been the case but may be even more so this year. The seven weeks from before Thanksgiving to just after the Christmas holiday account for about 17 percent of wine sales, but for wines above $20, represents almost 25 percent of sales. It is a bit early at this point to assess 2009 holiday sales, though, as current data tracks sales through the mid-November.

Nielsen measures retail sales, primarily in retail stores and drug stores but also in several large liquor retailer chains with some representation from mass market retailers.

Upcoming segments of the interview with Danny Brager to run this week on winebusiness.com will cover imports, sales of dominant and emerging varietals, and shifts in the growth of wine sales by channel.