Among the most interesting findings of the survey the Wine Industry Financial Symposium made to 24 executives of the California wine industry, it was revealed that there is a growing trend towards the lowest-priced wines.
Some respondents said that consumers will not return to buy high-priced wines at the levels previously seen. Many respondents note that consumers have traded down and may have “reset” their wine preferences at lower price points. Nevertheless, some respondents note that they already are seeing improvements in sales of high-priced brands.
Moreover, Respondents also believe the strongest growth will be in the USD 10-14 and USD 14-20 segments, with USD 3-7 the slowest growing category.
Many (63%) think consumers are looking for values and deals, while 61% believe consumers like to try new things—varieties, tastes, regions and other brands.
About half of respondents find consumers looking for affordable luxury, while 42% see less brand loyalty. Only 40% think consumers are using social media to make purchasing decisions, with the highest impact among the cheapest wines.
Three-quarters are focusing more on consumer-direct sales, while almost as many are investing in infrastructure, reducing costs of operations and investing in more technology. Two-thirds are increasing grape contracts, while 55% are looking for alternate means of distribution and 34% are buying vineyards.
Most don’t find social media very important to their companies. Asked to rate the importance from one to five, they rate Facebook at 2.5, with Twitter and their company blog at 2.27.
The respondents continue to see strong Cabernet Sauvignon sales, followed by Pinot Noir and red blends; surprisingly, red Zinfandel comes next, followed by sweet reds. Merlot and Syrah trail the pack.
Likewise, Chardonnay is strongest among whites, followed by fast-rising Muscats, then Sauvignon Blanc and Pinot Grigio. White Zin is seen as the weakest among white wines.
The industry’s main concerns
Most survey respondents say that one of the problems US wine industry is facing today is grape shortages. Consequently, they are paying higher prices for grapes and observing margin compression. In order to improve margins, they are attempting to increase wine prices, reducing operating costs, improving operating efficiencies and emphasizing their relationships with growers.
Another factor also revealed is vineyard labor shortages. In response, they are increasing wages and benefits to attract employees, using labor contractors and increasing the use of mechanization.