Wine consumption in the US is expected to drop this year after more than two consecutive decades of growth.
With baby boomers aging — and more and more millennials choosing to pass on the Sauvignon Blanc and Pinot Grigio — the Silicon Valley Bank predicts the industry will see a decline across the board for the first time since 1993.
“While demand for premium wine will increase this year, there are clouds on the horizon that should be considered,” said Rob McMillan, founder of Silicon Valley Bank’s Wine Division and author of their annual State of the Wine Industry report, which was released Thursday during a live videocast.
“We believe total and per capita wine consumption in the US will drop for the first time in more than 20 years due to emerging generational shifts in consumption patterns that we see accelerating in the near term,” McMillan said. “We believe this is the case, since there is a permanent shift from generic wine, and aging baby boomers are being replaced by frugal millennial consumers. Millennials, at this point in their development, have proven more agnostic in their choice between beer, spirits or wine compared to retiring boomers.”
By 2021, Gen Xers will replace baby boomers as the largest fine wine consumer demographic in the US, according to officials.
Millennials will leap-frog them just five years later.
“We’re training Millennials to drink foreign wine,” explained McMillan. “But how do we brand American wines? We have to be able to say something more than price. American-produced wines have to mean something. We have to get our hands around this for the long-term growth of the domestic industry.”
With the value of the US dollar strengthening and Americans having direct access to suppliers across the globe, thanks to theIinternet, officials expect fine wine imports to be more popular this year, while bulk foreign wine imports are expected to lose market share.
McMillan told The Post he expects California’s largest wine region — The Central Valley — to be hit the hardest by the drop in consumption in 2016, which will ultimately force ten of thousands of additional grape acres to be removed from the 300-mile stretch of land.
“If you’re in the Central Valley of California, this is alarming,” he said. “People in that area will have to make massive changes in order to define themselves in the long run and become more relevant.”
Oregon and Washington, on the other hand, are expected to see high interest for vineyard acquisition for premium and luxury wine production. And winemakers in the Empire State need not worry, neither.
“Regional wineries in New York are a lot more isolated from the world and national wine trends,” McMillan said. “They are selling direct. For them, it gets down to how well the economy is doing. If Wall Street sneezes, the wineries get a cold.”