Granted, they don’t come out on a ledge here – that prediction doesn’t require any data to back it up. After a year of unhappiness drinking from our bubbles while watching cable news or UK dramas on Netflix and munching on sourdough crackers, we’re ready for an old-fashioned bender.
Not that we haven’t had wine for 10 months. While restaurant wine sales have suffered a blow that will resonate for years to come, sales overall have benefited from the pandemic’s disproportionate impact on low-income earners.
“Given that wine is a beverage that tends to attract high-income consumers, the bottom line has been a surprising force in the grocery circuit for more expensive wines, and at the same time, we’ve found renewed interest in sales of wines at low prices on the part of buyers. in search of value, ”the report says.
The outlook is not entirely optimistic. “As the hospitality industry, cruise lines, airports and airlines, concerts, sports and more rebuild, there will be strong consumer demand and a rebound in overall sales that will gain momentum. in 2021, but may not be sustainable until 2022, ”the report says. . Prices are expected to remain stable and consumers may continue to buy more expensive wine this year, as every day outside of our home becomes a special occasion. But in the long run, we will be more aware of the value. Again, not a big jump. Market shocks caused by the pandemic will not thwart long-term trends that have shown declining demand for wine as consumers become more health conscious and a nascent anti-alcohol movement gains momentum.
But the report presents some interesting information on how the pandemic has changed the way we buy wine, possibly permanently. Wineries and retailers who had already invested in e-commerce and direct-to-consumer delivery were able to adapt to the abrupt change in the market, and we consumers have become more comfortable buying wine online and have it delivered to us. “Online sales could easily be responsible for 20% of total sales by 2030,” the report says.
“The wineries that have evolved in 2020 have been creative in their sales channels and recognize the ongoing societal changes that will impact the industry to forever succeed in meeting anticipated demand post-vaccination and beyond.” said Rob McMillan, author of the report and the bank’s chief wine analyst.
Growth in online sales will remain uneven. On January 11, the United States Supreme Court refused to review a lower court decision upholding Michigan’s ban on out-of-state retailers from shipping wine to Michigan residents. Supporters of drop shipping had hoped the court would overturn the ban, similar to a 2005 ruling overturning Michigan’s ban on shipping wineries out of state to state residents. The court’s refusal to hear the case leaves a murky patchwork of laws that make it easier for us to buy wines online at wineries than at retailers. Who benefits? Wholesalers. Who loses? Consumers who would like to purchase wines not available locally from out-of-state retailers
Wildfires on the West Coast reduced the 2020 harvest. Coupled with increased sales from the pandemic, this helped ease market pressure from oversupply of wine and reduced demand. of consumers. This too could be temporary, according to the report, especially if the 2021 harvest is bountiful. This paradoxical logic would make winegrowers hope for a mediocre harvest, but certainly not as catastrophic as 2020.
For several years, the bank’s annual report has observed with dismay the aging of the baby-boomer generation, the main wine customers. In 2020, the pandemic prompted some baby boomers to think about retiring earlier, cutting back on wine purchases and drinking in their cellars, according to the report. With Gen X poised to become the leading wine-buying age cohort this year, the real hope is that Gen Y will turn away from hard seltzer and, well, grow up and buy more wine.
This year’s report sees hope in the buying habits of millennials. “The Millennium Cohort is the biggest growth opportunity for the wine industry in the United States, but they have just started to take an interest in the wine category,” writes McMillan. “This is the cohort that needs to be excited about wine for the industry to see anything close to the growth rates recorded over the 20 year period from 1994 to 2014.”
The problem, he continues, is that the wine industry is still selling to baby boomers. More on that next week.