Quality over quantity for wine brands and cellar tours

Americans trade and it doesn’t matter whether the bottle is filled with domestic or imported wine, analysts at Rabobank.

“In part, we are seeing an increase in average wine prices as a result of last year’s horrific harvest. [globally]Said Stephen Rannekleiv, Rabobank’s Global Beverages Sector Strategist, Wine lover. He was referring to the many vineyards in Europe that saw their yields drop by as much as 80% in 2017.

“But to a large extent there is a clear trend in the United States to shift to higher quality imports.”

The Netherlands-based bank found that US wine imports increased 9% in value but fell 4% in volume in the first six months of 2018 compared to the same one-year period more early.

Declining volumes “reflected a significant contraction in bulk wine imports [-19% in volume and -5% in value] because imports of bottled wine increased by 2% in volume and 10% in value during the same period, ”according to the report.

“The imported wine market is like the rest of the US wine market: consumers are looking for more premium brands,” said Rannekleiv.

Italy is number one

Italy, which produces three out of 10 bottles of wine imported to the United States, is jumping on the trend towards premiumisation. Italian sales representative/ US Executive Director Maurizio Forte, during a visit to New York earlier this month, said Italy was no longer interested in increasing its market share.

“We are already No. 1,” he said.

Now Forte wants to expand this success beyond Prosecco, Pinot Grigio and Chianti. Distributors and retailers can soon expect to see bottles of Franciacorta, Arneis and Brunello in the wine bags of their sales representatives.

Direct sales to consumers are declining

Meanwhile, US wineries are seeing a drop in direct-to-consumer sales. While the wildfires “have likely had an effect on traffic in tasting rooms for many wineries,” the Rabobank report notes, “the growing number of wineries is also intensifying competition for visitors.”

Cellar visits

Tourists go to fewer wineries, but spend more time in the ones they visit. There were 3,540 bonded wineries in California in 2011, according to the Wine Institute. By 2016, that number had reached 4,653, an increase of over 1,000 wineries in five years.

It’s not just the smaller players who feel pressured by the additional competition. Rabobank cited a recent Sonoma State University (SSU) survey of wineries, business leaders and wine growers. The study found that among the largest wineries, around 58% cited “brand proliferation as a drag on revenue and profitability.”

Private labels also pose challenges for traditional retail / wholesale channels. Beyond the usual producers, retailers are expanding their private label offer more and more. In the SSU survey, some 34% of respondents said that “private labels have a negative impact on their brands”.

Posted on November 12, 2018

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