U.S. wine shipments rise in 2021 as industry strives to attract younger consumers

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SACRAMENTO — U.S. wine shipments grew nearly 3% in 2021 from a year earlier, despite challenges that include competition from other alcoholic beverages.

U.S. and foreign wineries shipped about 448 million cases across the country last year, up from 435 million cases in 2020, according to a preliminary analysis of federal excise taxes by the liquor industry consulting firm bw166.

The data comes as wine leaders and analysts grappled with pressing issues facing the industry during a forum Wednesday at the Unified Wine and Grape Symposium, North America’s largest wine trade show. The event was expected to attract approximately 6,000 attendees over three days at the SAFE Credit Union Convention Center.

Topping the list of pressing issues was attracting younger consumers who don’t drink wine at the same rate as older generations.

Danny Brager, an industry consultant who previously worked for research firm Nielsen, noted that the hard seltzer water market in this country had $5 billion in sales in 2021, more than either chardonnay or Cabernet Sauvignon. The hard seltzer market is largely driven by millennial consumers.

“Huge numbers,” said Brager, who added that another $5 billion was spent on other non-traditional alcoholic beverages such as ready-to-drink cocktails.

“These are products that arouse the interest of consumers for the variety of flavors or some who are looking for effervescence. Some (consumers) are looking for convenient packaging like cans.

Brager and other allies are pushing for a greater marketing effort to reach younger consumers. They argue that the industry cannot rely on the growth it has experienced over the past 25 years as a result of the French Paradox, research which has shown that a Mediterranean diet accompanied by moderate consumption of red wine helped curb heart disease. They created a group called WineRAMP to help launch an industry-funded research and promotion program to boost wine sales.

“Shouldn’t the industry collectively consider a potential solution to market our category to the consumer? said Braguer.

The conference brought together speakers from across the industry, including winemakers, brokers and attorneys who all play a role in the American industry, which is largely dominated by California companies.

Steve Fredericks, president of Turrentine Brokerage in Novato, said there was an effort like what was proposed by Brager and his allies in the 1960s and 1970s under the auspices of the California Wine Advisory Board.

“It fell apart because of some politics involved,” Fredericks said. “But I think he had some success at the time.”

While challenges exist with younger consumers, other parts of the wine industry are more stable as 2022 begins. For example, the grape market is more balanced than in recent years, when harvests led to tonnages below historical averages.

“Overall, I would rate our current situation as very stable,” said Jeff Bitter, president of Allied Grape Growers, a growers’ cooperative with more than 125 members on the North Coast. “I would say it’s stable with a possibility of oversupply.”

Overall crushing of California wine grapes is expected to total more than 3.5 million tons for 2021 when results are released next month by the U.S. Department of Agriculture, Bitter said. It would be a slight increase from the 2020 harvest which was affected by the forest fires, he added.

There were more mergers and acquisitions last year among wine companies aimed at gaining greater market share, a trend that is expected to continue.

“I think that momentum will definitely continue through 2022,” said Mario Zepponi, director of Zepponi & Co., a mergers and acquisitions advisory firm in Santa Rosa.

Imported wine was the main driver of shipments last year, making up for some shortage of inventory in 2020, said Jon Moramarco, managing partner at bw166. Sparkling wine and imported vermouth also contributed to volume growth.

Some new wine segments have also seen growth, such as agave wine made from fermented agave sap, Brager said. Three of these agave wine brands were in the top 30 overall and saw significant growth in 2021.

“The price of these products is not in line with the luxury market,” Brager said. “They are targeting a certain demographic which is generally younger.”

You can reach editor Bill Swindell at 707-521-5223 or [email protected] On Twitter @BillSwindell.

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