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Wine is as vital a staple to the American bar and restaurant scene as any other category. With total sales equaling around $14 billion, the category continues to be consumed, but with every passing year, it seems fewer and fewer consumers are doing so.
A whole myriad of reasons for the decline can be cited from rising costs to shifting consumer attitudes and everything in between, but to really get to the heart of the issue and ultimately provide some solutions, we need to dig into the cold, hard numbers.
A Category in Decline
Wine currently accounts for 13% of all dollars sold across beverage alcohol in the U.S. on premise, but this number is in decline with total sales down -4% versus a year ago. The spirits trend is actually slightly more negative than wine at the moment, but we need to bear in mind that spirits has a 46% share of all dollar sales.
From a table wine point of view, performance is consistent across the big two with red wine volumes down -6% and white wine down -3%. In pink, the numbers look a bit more worrying with still and sparkling varietals down -8% and -12%, respectively.
A Priced-Out Consumer
Premiumization has been a key driver of consumer purchases in recent years, but the current economic downturn is impacting many Americans. As a result, categories like Champagne have seen significant declines, down 16%. Other sparkling wines, such as Prosecco and Cava, have fared slightly better with a 6% drop. This can be attributed to both consumers trading down and the rising popularity of cocktails, particularly spritzes, which have become one of the top 10 cocktails in U.S. on-premise venues.
Tariffs Loom Large
Currently, 65% of all on-premise wine sales come from U.S.-made products, leaving 35% for imports. This could become a concern as we approach 2025, especially if proposed tariffs are imposed on all imported wines. Such a move would likely force Italian, French, and other specialty restaurants to make tough decisions regarding pricing and inventory
In terms of country of origin, there are some pockets of growth across the category. Italy, New Zealand, and Spain are all stealing share, and Chilean wines are actually posting strong growth (+12% versus a year ago), although from a very small base.
What Can be Done?
Despite some of the doom and gloom, all is not lost. As mentioned earlier, wine currently outperforms spirits in terms of the 52-week trend, and there are still many suppliers and brands who are breaking the trend and posting positive numbers. There is no one-size-fixes-all approach, but some of the below could lead to swinging sales back in wine’s favor.
- Win with younger consumers: Wine drinkers naturally skew older, and with younger consumers tending to drink other categories, what can wine do to win early adopters in the category? Flavor, innovation, digital marketing, and appropriate LTOs should all be considered.
- Create exclusivity through on-premise exclusives: We know from our latest On-Premise User Study that 63% of consumers have made a purchase in-store of a brand that they first tried in the on premise. With premium brands still being built in the channel, this could lead to a nice halo effect for the whole brand family.
- Innovate with packaging: Creativity around packaging can lead to sales in areas you might not expect. Brands have had great success with canned and tetra packaging this year, and younger consumers who cite sustainability as a key driver appreciate such serves.
- Have the correct channel strategy: Wine has a natural place within traditional channels such as fine dining, but to really move the needle, an appropriate strategy in growing channels such as hotels, fast casual, and "eater-tainment" is needed.
- Pricing Ladders: Pricing is often a touch conundrum for the on premise to resolve when considering wine. It is difficult for consumers to purchase a bottle in a restaurant when they could pay significantly less in a supermarket or liquor store. Consumers are willing to pay for quality though, so offering brands/varietals across all price points ensures that everyone is catered to.
In Summary
While the wine category faces undeniable challenges, there are still significant opportunities for growth and revitalization. By focusing on younger consumers, leveraging exclusive on-premise offerings, embracing innovative packaging, and tailoring strategies to emerging channels, the industry can reverse the current decline.
Additionally, a thoughtful approach to pricing can ensure that wine remains accessible to a broad range of consumers. With these strategies in place, there is potential not only to stabilize the market, but also to reinvigorate wine’s place in the modern American dining and drinking culture.
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