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Sparkling Wines Now the Fastest-Growing Segment of the U.S. Wine Industry

A modest growth was led by a 6.6% rise in the consumption of sparkling wines, according to the Beverage Information Group's 2017 Wine Handbook.

25/08/2017

The U.S. wine market, already the largest in the world, grew by another 2.4% in 2016. That modest growth was led by a 6.6% rise in the consumption of sparkling wines, according to the Beverage Information Group's 2017 Wine Handbook. In addition, the premium end of the market (wines in the $10 to $20 range) continued to show strong growth.

As the report notes, consumers continued to seek premium and high-end brands to enjoy at home and in on-premise venues. Sales of wines priced under $10 weakened again this year with wines in the $10 to $20 range thriving. That suggests that retailers will continue to find shelf space for premium and high-end wines in 2017 and 2018.

The numbers also suggest that consumers are learning about and interacting with wine brands in new ways. As the report points out, many major brands had trouble staying top of mind with consumers, as was also the case last year. Smaller brands are becoming more attractive as word of mouth and social media platforms create unique awareness that is not found in traditional advertising mediums.

There are several key factors behind the continued growth of U.S. wine consumption, especially within the premium segment. For example, a strong U.S. economy, employment and wage gains, and larger discretionary incomes all contributed to the category's growth. As might be expected, there is a direct correlation between premiumization and income: in any economy where incomes are strong or growing, there will be a shift to the premium end of the market.

Total domestic wines accounted for 76.8% of the wine category, up slightly from the previous year. The number of U.S wineries also continued to grow, topping almost 8,300, up 4%. California, the largest wine producing state, continued to capitalize on the increasing popularity of its premium and super-premium wine segments in 2016.  Wines produced in Oregon and Washington also continued to show promise as consumers are demonstrating their willingness to explore wine beyond the California segment.

Table wine grew to 309.4 million 9-liter cases, a 2.2% increase over 2015, as reported by the 2017 Wine Handbook. The champagne and sparkling wine category grew for its 15th consecutive year to 22.1 million 9-liter cases, up an impressive 7.8%. Domestic sparkling wine reached 11.9 million 9-liter cases resulting in a 5.2% increase in volume, continuing an eleven-year growth streak.

For emerging wine brands trying to break into the U.S. marketplace, the 2017 Wine Handbook includes important consumption data and projected sales by category and by market, as well as leading brands and historical information. Categories include table, fortified and dessert wines, sparkling and champagne, vermouth and wine coolers.

The trend toward premiumization in the U.S. wine market has to be a positive one for winemakers - not only are sales increasing, but so are margins. The only question, it appears, is how to remain top of mind with consumers in what is still a highly fragmented U.S. wine industry.

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