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U.S. wine consumption up
Sunday, January 20, 2008
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The wine industry may have reached the tipping point in 2007.

That’s good news for the U.S. wine industry, according to John Gillespie, president of Wine Market Council, who on Friday shared the results of the organization’s 2007 survey of consumer trends in the U. S. wine market. Gillespie told a capacity crowd of 250 wine executives at Copia that the tipping point, as described in a book by the same name by Malcolm Gladwell, “is the point at which a social epidemic cannot be stopped.”
The wine industry has reached that point, and the momentum continues to grow, Gillespie said, and cited several factors to support his comment.

Impact Databank estimated that 304 million cases of wine were sold in 2007, the highest number in history.
For the first time, the number of core wine drinkers, people who consume wine more than once a week, outnumbered the marginal drinkers, those who drink wine at least once any time between once a week and once every two or three months. Fifty-five percent of those surveyed identified themselves as core drinkers.

Overall, the total number of wine drinkers has increased considerably in recent years, too. Gillespie said that in 2000, only 43 percent of the population drank wine, while 57 percent did not, but in 2007, those numbers had reversed, with 57 percent now drinking wine. That’s a about 64 million people.
He said consumption of table wine rose 4.5 percent last year, marking 14 consecutive years of growth. To show how unprecedented that is, he said the last time a growth trend that long occurred was from 1969 to 1982.

He cited another first — per capita consumption of wine topped 3 gallons. Americans drank 3.2 gallons per person in 2007, compared to 2.81 gallons in 2005, and 2.46 in 2000. Per capita consumption has been on a steady rise since 1990, when it was 1.96 gallons.

Forty-seven percent of millennials, the generation described as between 14 and 28, are drinking more wine, and 53 percent said they are spending $20 or more on wine more frequently or occasionally, but Gillespie acknowledged that use of the words “frequently” and “occasionally” is very subjective. “What is frequent to me might be occasional to you,” he said.

In addition to the millennials, 37 percent of gen-Xers and 10 percent of the baby boomer generation said they are consuming more wine.

Gillespie said the driving forces behind the increased consumption are more occasions to drink wine and more wine consumption at each occasion.

Among those who are drinking less wine, about one-third of core and marginal drinkers said they would drink more if it cost less at restaurants, while just a little more than one-quarter said they would consume more if wine were generally more affordable.

Wine on the Web

The report indicated that 52 percent of core drinkers bought wine from Italy in the past three months, 44 percent bought wine from France and 41 percent from Australia. All other countries that export to the U.S. trailed far behind.

On the other hand, Gillespie said 90 percent of core drinkers bought wine from California, while 79 percent of marginal drinkers did likewise. He said that in a study of comparisons of flavor, uniqueness, quality and value, Californians rated wines from their state much higher than did people from elsewhere, creating what he called the “Sierra Gap.”

“If I were a producer, I’d look at the other 49 states as export markets,” he quipped.

He said that the Internet will continue to play a larger role in selling wine. Eighteen percent of core drinkers and 9 percent of marginals bought wine over the Internet, and of those, 64 percent bought directly from a winery, while 35 percent bought through online retailers.

Although the numbers of those making Internet purchases may still seem small, he pointed to the growth trend — in 2003 just 6 percent of core drinkers purchased over the Internet.

Twenty-three percent of millennials bought wine via the Internet, compared to 16 percent of gen-Xers and 21 percent of boomers.

In addition, about half the millennials went to the Internet to obtain information about wine, indicating to the audience that producers should think about making more use of the Internet to communicate with this audience.

Responding to a question about the effectiveness of Internet information, Gillespie said about 65 percent of the respondents logged onto wineries’ Web sites for information, about 40 percent went to Wine Spectator’s site, and about 26 percent used wine blogs for information.

The industry should look to the millennials for additional future growth, Gillespie said, and that of the 70 million in that group, 27 million are not yet of drinking age.

Danny Brager of Nielsen’s Beverage Alcohol Client Service team, said that wine consumption grew at a faster rate than beer or spirits, and his firm’s research showed that consumers are drinking better quality beverages and seeking more variety. He said they also desire convenience and that the consumer mosaic is changing — it’s “less white and more ethnic,” more affluent and older, but quickly added that the millennials do still matter.

The fastest-growing varietals are cabernet sauvignon, pinot grigio, pinot noir and riesling, and he said that since 2000, more than 3,300 new wine brands have emerged, accounting for about 70 percent of all brands represented on store shelves today. Five years ago the top 10 brands were responsible for 33 percent of total dollars spent on wine; today the same brands account for just under 23 percent.
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