The annual report to members of the Wine Market Council found positive indicators in almost every measure, though there are recent signs of weakening demand, particularly among higher-end wines.
Council president John Gillespie, who spoke at dual meetings in New York City and at Copia in Napa, proclaimed that in 2007, the wine industry reached a "tipping point," a time at which the trend toward wine as a widespread social phenomenon was unstoppable.
He made this observation based on a number of observed metrics: He estimated that wine consumption in the United States exceeded 300 million cases for the first time -- and annual adult per capita consumption was more than three gallons, noting, "We've had 17 years of rising per capita consumption, though it took 20 years to match the previous peak in 1982."
In addition, the U.S. topped Italy in 2007 as the world's second-largest wine market and is heading toward beating France as the world's largest market.
The studies also found that men now equal women in wine consumption for the first time (at least in recent years) and that there are now more core (weekly or more frequent) drinkers than marginal wine drinkers (those that drink wine but less than weekly).
Wine consumers are getting younger, too, with the age of core drinkers slightly less than marginal drinkers for the first time. This reflects the tastes of the "Millennial" generation, which includes wine consumers from 21 to 31, though roughly half of the 70 million Millennials are between the ages of 14 and 20. As the adult Millennials adopt wine more than beer or spirits, they represent a huge potential future market.
Another major change is that among those who drink alcoholic beverages. While 57 percent didn't drink any wine in 2000, 57 percent now do. (32 percent of the adult population doesn't drink alcoholic beverages.) One reason for the rising consumption is that more people now consider wine suitable for more occasions than they had in the past, such as including wine in casual meals rather than reserving it just for special occasions.
The data presented at the conference came from a number of sources, including Adams Beverage Group and Nielsen Research, which recently joined the Wine Market Council and is sharing data.
Danny Brager of Nielsen's Beverage Alcohol Client Service team presented data based on scanners at grocery stores, drug stores, some liquor chairs and Target -- though not from restaurants and bars. It also collects data from 125,000 households.
In total, dollar sales were up 8.5 percent he last year, compared to 6.8 percent in 2006, while volume increased the same 3.5 percent, showing a continuing trend for consumers to move up the price scale.
Nevertheless, the troubled economy has had its impact: households are much less inclined to boost spending than increase it (44 percent to 6 percent).
In addition, sales growth for the last four weeks and 12 weeks has been dropping compared to that for the year, indicating growth is slowing amid economic fears.
Among the channels Nielsen tracks, sales total $8 billion. Nielsen found that dollar sales are up for every category except the lowest, where wines selling for under $3 were down 0.5 percent in sales (1 percent in volume), while the highest growth was for wines selling at $12 to $14.99.
Unfortunately for US producers, import sales were up at a slightly higher rate than those on domestic wines, 7.1 percent versus 6.7 percent.
Not surprisingly, the trend toward reds continues, with red wine holding 50.3 percent of the market Nielsen tracks compared to 42.1 percent white. Reds are up 8.8 percent versus 6.2 percent for whites.
Blush sales, which represent 7.5 percent of the market, were down 1.3 percent, though premium rosés are showing "incredible" growth, according to Brager.
He also finds great interest in "organic" wines (those from organic grapes and other wines touting their environmental purity) with dollar sales up 29 percent on an admittedly small base.
Chardonnay remains the top variety by a huge margin at 22 percent of the market and Cabernet now at 14.1 percent. Merlot has shrunk to 11.6 percent of the market; with the "Sideways effect continues to impact its popularity along with that of Pinot Noir, which is up 24 percent to claim 5 percent of the market. Pinot Grigio has grown to 7.5 percent of the market, too.
Among the hot wines with smaller market shares are Riesling, which is up 24 percent; Muscat, which gained 31 percent; Malbec is up 56 percent, and rosés selling at $8 or more have risen 52 percent. "Consumers are thirsty for variety," says Brager.
The markets remains competitive, of course. Brager says more than 3,300 new brands have flooded grocery shore shelves since 2000 and now represent more than 70 percent of the total. That's of 4,000 brands total.
This has be accompanied by shrinking of old brand leaders and reduced concentration: the top 10 brands in 2000 held one third of the market. Three of those brands have been displaced, and the top ten now represent only 23 percent of sales. Nielsen also found huge growth in premium 3-liter boxes (47 percent) and TetraPaks (52 percent), though from small bases.
Jennifer Pagano of the Council also presented results from research she conducted among sommeliers and wine buyers at restaurants ranging from the Olive Garden with its 600 locations to high-end destination restaurants.
Among her findings were the power of samples (the Olive Garden finds that 40 percent of customers who didn't intend to order wine do so if given samples), to the popularity of flexible ways of offering wine, from quartinos ( 250 ml) and mezzolitros (500 ml) to wines sold by the inch from bottles left open on tables, to house wines, 1.5 oz pours of luxury wines, flights and even 8 oz. pours at steak houses. "Trials are very important on every level from wholesale to consumers."
She also found sommeliers and barkeeps love screw caps and consumers don't have a problem with them: it's only the industry and writers who seem concerned.
Wine bars are hot, especially among women, who like the atmosphere, and "green" marketing also appeals to consumers. She also said sommeliers complain that they still can't sell Merlot.
Detailed reports on these studies are available to Wine Market Council Members. The Wine Market Council is a non-profit association of grape growers, wine producers, importers, wholesalers, and other affiliated businesses and organizations. The council's mission is to establish the widespread acceptance of wine as a rewarding part of American culture and to encourage the responsible enjoyment of wine by current and future generations of adults in the United States.
Get information on the group and its efforts at www.winemarketcouncil.com.