SVB’s annual Big Wine Report shows how the wine industry can adapt – Robb Report

David Silverman/Getty Images

This story is Oenophilea weekly insider newsletter into the world of fine wine. Sign up here.

One of the annual rituals of the U.S. wine industry is the arrival of the U.S. Wine Industry Report from Silicon Valley Bank every January. This report was written by Rob McMillan after an exhaustive survey of U.S. wine producers, analysis of U.S. wine production and consumer behavior, and provides predictions for the coming year and recommendations for the industry. McMillan, executive vice president and founder of SVB’s wine division, began the 2024 report with the phrase “survival of the fittest” and a related quote from Charles Darwin. survive. It is the one that is most adaptable to change. ”

Many in the industry took this as a harbinger of bad news, but McMillan tempered this idea in the next page by focusing on the word adaptability. “Most people think survival of the fittest means the biggest and strongest survive, but that’s not all there is to it,” he told us. “Darwin suggested that the species that survived were the ones that were best able to adapt to change. The species that survived were often those that were more successful by cooperating, rather than competing within groups for success. ”

The report outlines the many challenges facing the wine industry, including the fact that younger consumers are reducing their alcohol intake, including wine, as reported in a recent Gallup poll. ing. There are a variety of reasons, including a preference for cannabis over alcohol and the belief, promoted in part by the growing neo-temperance movement and the World Health Organization, that alcohol is harmful to health. The report also discusses overproduction of grapes and wine, particularly in lower-end markets, and an overall decline in sales of bottles in the $15 and under category. Additionally, in-person winery visits are down as McMillan believes people are making more ambitious travel plans than sitting at a winery last summer. That change in his behavior resulted in a decrease in on-premises revenue. However, he believes these numbers will recover in 2024.

Macmillan defines the neo-temperance movement as “a segment of the population whose primary goal is to reduce or eliminate alcohol consumption,” who are well-funded, committed, and work to influence “national levels.” He pointed out that he was doing so. “Governance” for enforcement. This is one area where the wine industry can and should start working together. It’s about working together to remind the public that wine is more than just a drink. It’s a cultural institution. Enjoying wine is not only about everyone who makes it, from the vineyard workers and winery employees to the store owners who talk to you and guide you to the perfect bottle, but also the people around you. It’s also a way to connect. These fermented grape juice bottles have real people and some really cool heritage painted around them. However, the world of wine cannot rely on tradition alone. McMillan is right that adapting is the key.

As winery tourism declines, producers, especially those that rely on direct-to-consumer channels rather than retail or restaurant distribution, need to figure out ways to keep customers coming. Skipstone is a winery located in Sonoma’s Alexander Valley that focuses on Cabernet Sauvignon and Bordeaux. Offering a blend of styles and single varietals, this property features an 8,000 square foot luxury mansion on site, available for rent to those with a desire to immerse themselves in wine country surrounded by vineyards. I can. Brian Ball, Skipstone’s general manager, said the challenge of not producing the 2020 vintage due to the bushfires has led to the company working with other producers across the country to hold tasting events and “Best of the Year”. He said he has started taking new approaches to connecting with wine lovers, such as participating in “Of”. Bulk wine packages with other Napa and Sonoma wineries.

Lorenzo Trefethen, third-generation winemaker at Napa’s Trefethen Family Vineyards, believes he and other millennials need to find new ways to engage audiences. That’s because they and younger Gen Z consumers are unlikely to have read a print wine magazine or heard of an influential critic. Your parents (or even grandparents!) may have followed suit. Last year, he and his family launched Take Off with His Trefethen. This is his $30 per person special tasting at the winery, designed specifically for first-timers and newcomers, where guests visit the vineyard. “The time has come to position ourselves for future wine lovers who value experience, sustainability and authenticity,” he says.

While much of the report focuses on the decline of the entry level of the wine market, McMillan sees a silver lining in the types of wines that appeal to the entry level of the wine market. rob report Dear readers. He believes top wineries could temporarily reduce wine production if necessary while waiting out market instability. “The good news for fine wine buyers is that we are not seeing the year-on-year price increases that we have seen in the past,” he says. “The reality is that some producers decide to raise prices, while others hold prices steady, creating relative value for discerning wine buyers.”

That being said, he says rob report, “True luxury is timeless. Vintage cars, watches, handbags, wine bottles, etc. could be worth more in five years than they are today. Therefore, true luxury goods manufacturers We must remain true to our leaders.” So if you see a headline that says the end of your precious wine is near, people from all walks of life in this multifaceted industry: Rest assured that we’re doing everything we can to keep bringing the best bottles to you.

Want more exclusive wine articles delivered to your inbox every Wednesday? Subscribe to our wine newsletter Oenophile today!