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Why Why 2023 will be tough for California’s wine industry – San Francisco Chronicle

January 21, 2023 by Wine

The 2023 forecast for the U.S. red wine market is here, and it doesn’t look sunny.Wine consumption in this country continues to grow at a slower and slower pace. Young people are still drinking a lot less red wine than older generations. The rising cachet of wellness culture has rendered white wine (and alcohol more typically) into a sort of villain.

And now, on top of all of it, a economic crisis might be looming.

These are a few of the takeaways from Silicon Valley Bank’s State of the U.S. Wine Industry Report. The research study, published Wednesday, is among the most carefully seen barometers of this $61 billion nationwide market.

None of the report’s major themes are surprising– they are extensions of trends that have been brewing for many years. But the existing financial environment, combined with the ongoing slowdown in white wine usage, provides brand-new difficulties.

“Nobody in the industry likes bad news,” said Rob McMillan, the creator of Silicon Valley Bank’s wine department and the author of the report. He hopes the data will be a wake-up call to the market, which is regularly “missing the mark,” he said.

Among McMillan’s soapbox concerns for many years has actually been the wine market’s failure to win over the youngsters– Millennials and, now, Zoomers, who stay less thinking about red wine than their parents were at their age.

“White wine was last cool with young customers thirty years earlier,” McMillan composes in the report. “The category back then spoke of … outward personal success, time-outs for family gatherings and the fictional downtime that would be taken with the money earned by working.”

Wine, to these younger drinkers, is a has-been, replaced by more recent tourist attractions like craft mixed drinks and, increasingly, nonalcoholic drinks.

Obviously, young people purchase some wine. And when they do, they spring for the leading shelf. “To the level they do purchase, they’re buying the most pricey bottles,” McMillan said. “However they’re purchasing a single bottle, and it’s infrequent.”

In truth, the most costly bottles are showing the most sales development across the board, not just amongst younger customers. (I wrote about that, and the truth that the majority of West Coast wineries are planning to raise their rates this year, in a separate story this week.)

One reason for optimism: If a financial recession does come, McMillan believes the wine market is well prepared for it.

When wineries have excess inventory and a recession hits, leading people to cut back on red wine purchases, wineries are required to slash their bottle prices. This has longterm impacts for the market, due to the fact that when the recession ends, customers are still anticipating those discounted prices.

However wineries do not have excess inventory right now. The last 3 grape harvests in California have been little– in truth, in 2020, lots of manufacturers made no red wine at all since of wildfire damage. “This time, if we have an economic downturn, we won’t have to be in that location where we need to discount rate,” McMillan said.

Those affordable rates sure would have been nice for red wine buyers like you and me– especially given that California wine prices are poised to accelerate in 2023– however that’s great news for this troubled industry.

Source: https://news.google.com/__i/rss/rd/articles/CBMiWGh0dHBzOi8vd3d3LnNmY2hyb25pY2xlLmNvbS9mb29kL3dpbmUvYXJ0aWNsZS9DYWxpZm9ybmlhLXdpbmUtaW5kdXN0cnktMjAyMy0xNzcyMzUxOS5waHDSAQA?oc=5

Filed Under: Wine Tagged With: RSS Feeds

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