One of the most notable trends in wine sales over the last few years is the growth of Riesling. As consumers become more comfortable in the wine industry and expand their flavors and varietal choices, many are turning to Riesling. The varietal had the strongest growth rates for all white wines in the last year, though off a small base.

Chris Lynch, chief marketing officer at BWE (formerly Beam Wine Estates, which was recently purchased by Constellation Brands), has high hopes for the future of the varietal. "I think both in terms of the style of wine and global production, can the world of premium wine produce another aromatic white that can really gain what we might call critical popularity? I think Riesling has a better chance of doing that because it excels in Germany, Australia, New Zealand and California, among other regions, and the flavor profile is easier for people really to gravitate to and enjoy. It's a very expressive, aromatic, fruit-driven flavor profile," he said.

Given the success of the varietal, Wine Business Monthly recently added Riesling to the monthly data table. Because the varietal has not been regularly featured in the reports, WBM is offering this short retrospective of the varietal over the last two years.

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RIESLING: A Two-Year Restrospective

Between January 2006 and January 2008, Riesling sales have grown 98 percent in The Nielsen Company-tracked retail outlets. Over the same time period, case volume has grown 87 percent.

Further, in the 52 weeks ending in January 2008, the varietal has risen 23 percent by dollar sales, the highest growth rate of any top-10 varietal. By case volume, Riesling again grew 23 percent in the last year, second only to Pinot Noir's 25 percent growth rate. According to Nielsen, consumers spent over $33 million more on Riesling in 2007 than they had in 2006.

"There has been a resurgence of Riesling as more and more people try to pile on the Riesling category," said Brian Lechner, client director at The Nielsen Company. "There were also some premium prices versus five years ago. It's a very food-friendly category. I think in the food trends that we continue to see, particularly the growth of Asian foods, that all bodes well for Riesling. I think that as that varietal growth plays out, retailers seem to take advantage of it and add more shelf space, which drives growth a little bit more."

It must be noted that the phenomenal growth rates are coming off a small base. As of the 52 weeks ending Jan. 12, 2008, Riesling accounted for 2.2 percent of the sales market and had a 1.5 percent share of total case volume. The figures put Riesling about on par with Zinfandel, though if Riesling continues to sustain current growth rates, it won't be long before Riesling sales surpass Zinfandel.

"In my life in the wine industry, I think I am on my third Riesling phenomenon," said Dale Stratton, vice president of strategic insights for Constellation Wines US. "It has some pretty good versatility and it can be dry to off-dry. It's great to see that this Riesling thing is going on. It just kind of comes along every so often, but it will plateau and fade away, and then it will spike again."

Lynch believes that the only barrier to further sustained growth of Riesling would be because of a lack of quality grape sources. "Varietal trust is key for a lot of people," he said. "For wines like Riesling and other aromatics, I really think it is going to be supply constrained, unless there is enough global production to achieve critical mass and go forward. But because of quality of land issues, there will be always that nature's constraint."

If producers can overcome the relative lack of supply, Lynch believes Riesling will continue to build its consumer base. "The flavor delivery of Riesling has a better chance of appealing to a wider audience," said Lynch. "I think that the inherent characters of Riesling and the ability to produce exceptional Riesling allows for better long-term growth."

Overall Wine Sales Growth Slowing, Up 4 Percent in January

Economic uncertainty in the waning months of 2007 has slowed sales growth considerably as overall wine sales gained just 4 percent over the prior year in the 13 weeks ending Jan. 12, 2008 over the same period the year before. Case volume sales were even more grim, rising just 1 percent in The Nielsen Company-tracked supermarket channel in January figures.

While any growth over the year before is positive, these growth rates are down from the 7 percent sales/4 percent case volume growth rates that were seen through much of 2007. Still, this is about even with the growth rates seen in the data ending in December of 2007, so it appears--at least for now--that there is no further slowdown in wine sales.

The strength of sales throughout 2007 is reflected in the year-on-year data, where sales have risen 6 percent in the 52 weeks ending Jan. 12, 2008. Case volume remained steady at 3 percent growth in January. Still, the growth rates on dollar sales still continue to outpace case sales, currently by double, indicating that higher-priced wines are driving growth even as overall wine growth is slowing down. The trend toward higher prices has sustained itself for about three years, though it is obviously slowing from the heights reached in 2006.

Big Three Still Dominate

As always, the "big three" varietals still dominate the retail arena. Chardonnay sales rose 2 percent in the 13 weeks ending Jan. 12, 2008; by case volume, Chardonnay was up 2 percent in the sales period ending in mid-January. This, again, shows a marked slowdown in the wine retail arena in the last few weeks of 2007 and beginning of 2008. Chardonnay is, as always, the top-selling varietal in the Nielsen Company-tracked marketplace with about a 21 percent market share in sales and 19 percent share in volume.

Red wine sales are continuing to climb, led by Cabernet Sauvignon, which has increased sales volume by 7 percent in the 13 weeks ending in January. Case volume rose by 5 percent over the same time period. Though Cabernet Sauvignon represents about 15 percent of all wine sales, it accounts for 11 percent of case volume.

Merlot sales are again dropping significantly, reversing a long period of growth over most of the last 52 weeks. Merlot sales dropped 3 percent in the 13 weeks ending Jan. 12, 2008 over the same period the year before. In terms of case volume, Merlot dropped 3 percent in the January data versus the same period in 2007. This is the third straight month Merlot sales have faltered.

This is a somewhat sudden fall for Merlot, even considering the slow growth of the overall market at the end of 2007. The suddenness of the drop is reflected in the 52-week data ending in January 2008, where Merlot is still registering 2 percent growth in sales and 3 percent growth in volume over the 52 weeks ending in January 2007.

However, for all the talk of its demise, Merlot has not suffered a drop in market share. The varietal maintains about 12 percent of the market in dollar sales and 11 percent in case volume.

White Zinfandel

White Zinfandel also continues to fall and lose ground over sales in 2006. In the 13 weeks ending in mid-January, White Zinfandel dropped 4 percent below sales in the same period the year before. Similarly, case sales data indicates that White Zinfandel volume dropped by 4 percent in the 13 weeks ending Jan. 12, 2008. Unlike Merlot, White Zinfandel is also suffering in year-on-year data. In the 52 weeks ending in January 2008, both White Zinfandel sales and case volume dropped by 3 percent.

Still, White Zinfandel is an incredibly popular wine, claiming 8 percent of the market in case volume, making it the fourth-largest varietal in the marketplace by a wide margin (the next-highest market share is Pinot Gris/Grigio at 6 percent). In dollar sales, the 5 percent market share qualifies it for sixth-largest varietal in the marketplace, though Pinot Noir, which claims a 6 percent market share by dollar sales, recently surpassed White Zinfandel.

Domestic Sales

Domestic wine sales gained 4 percent in the 13 weeks ending Jan. 12, 2008 over the same period in 2007, while imports rose 5 percent over the same time period. Year-on-year, domestic wine sales grew 6 percent versus imported sales growth of 7 percent in the 52 weeks ending Jan. 12, 2008.

In terms of case volume, domestic wines grew by 1 percent in the 13 weeks ending in January 2008 versus the year before; imported wines also grew by just 1 percent in the same time period. Year-on-year, domestic volume grew by 3 percent, but imported volume rose 4 percent. wbm

Mary-Colleen Tinney has been a writer and editor with Wine Business Monthly for over seven years. Focusing mainly on sales and marketing, Tinney has also been the retail sales analyst since late 2004.