Oregon Wine Symposium – Wine Industry Trends
22 Feb 2017
We are at the Oregon Wine Symposium this week and we had the opportunity to listen to Rob McMillan’s presentation about the State of the Wine Industry report by the Silicon Valley Bank Wine Division.
Based on their survey results, 2016 was the best vintage year in Oregon. Ever. This beat out previous best years in the last decade and even ranked as a better vintage than those in Napa Valley, Washington State and Sonoma.
Areas where respondents scored high confidence include Demand, Local Economy, and Sales Channels. Areas where respondents scored low confidence included Labor access & laws, foreign competition(especially from New Zealand and other regions growing) and substitutes (items like beer and whiskey).
Millennials continue to be important and as they grow older their buying habits are changing quickly. One thing that the millennials are not buying is high-end luxury wines. They are buying them but not at the same rate as the Boomer population. The Boomer population hit a median age of 35 in 1994 and within a few years their buying activity started to peak. The big question in the industry is how to replace the Boomer’s buying habits.
As the Millennial population continues to develop their palate initially from places like Beer or Proseco and Moscoto – their palate moves towards red blends and ultimately to the Oregon Pinot. Oregon is positioned well to take advantage of this trend and be the answer for younger consumers seeking new experiences in wine. The hottest price range right now for Millennials and Gen X consumers is $11-$15 per bottle.
The restaurant industry is experiencing a shift in consumer’s buying habits of wine. In the past 3 years the amount of wine purchased in restaurants has dropped from 32% of all checks including wine to 17% of all checks including wine. This is a massive change in behavior and can probably be attributed to consumers being more aware of what wine prices are in the super market or in the Direct To Consumer market. Recent trends in the quick serve sit down restaurant boom – restaurants like Chipotle and Panera – have also pushed wine purchases to a lower point of focus in the dining experience.
A few trends to watch:
- Millennials are trending up in their price points that they’re willing to purchase wine within – as their palate develops, they want more specialty flavors and experiences.
- Boomers are spending less on wine over the next few years, although they make up a large portion of wine club sales. How will this be replaced?
- Young consumers trust brands. When they’re ready to expand their wine choices, they go to brands that they trust. Does this mean that having a more diverse portfolio of wine production puts your winery in a better longer-term competitive advantage?
- Brand Oregon is great! People are ready to try Oregon and NW wines, they just need to be able to find them – distribution needs to catch up and improve.
- Sparking wine is growing and has been upward trending in consumption since 2010. Rose is growing in consumption – up 45% in the last year.
- Oregon Wine fans like the higher end wine ($30+ per bottle). Visitors to Oregon wineries are doing ‘intensive visits’ – meaning that they’ll visit several wineries during a weekend long trip. Lodging opportunities growing?
- What’s your path to market? As Direct to Consumer continues to move in it’s importance for wineries, how will you deal with distribution breadth?