Trends in Wine Consumption in the US Wine Market

Not only is the US the world’s biggest wine market by value, but few countries can offer the variety of wines, regions and styles available to American consumers.

Reading time: 6m 15s

A wining team
A wining team

During a three day US export seminar, industry expert Steve Melchiskey, President of USA Wine West, an importer with a distribution network in all 50 states, shared his insights with Hochschule Geisenheim University students. Interviewed by Isabel Kottmann and Jon Hanf from Geisenheim University.

What are the challenges in determining trends in the US wine market?

US consumers can be fickle. Trends emerge, then disappear. What is popular for one generation, is vino non grata to the next. Examples range from the love of German wines in the 1960s and ‘70s with the hugely successful Blue Nun and Zeller Schwarze Katz brands to today where these brands command relatively little or no shelf space. Merlot, once the darling of the California wine industry, is now a far-distant red wine choice of US consumers. And making it more difficult to divine, the geographic size and diversity of the US make it hard to decipher trends as they can be regionally, or even locally, driven. Go, for example, to the borough of Brooklyn, New York, the hotbed of the nascent natural wine movement. Natural wine is exploding there. Then drive a few miles to Trenton, New Jersey and you’ll have to look hard for natural wine. It’s a completely different market.

Even with the enormous diversity of the US, are there some emerging signs of what we can expect for trends in wine consumption?

First, and most troubling, is the flattening of wine sales overall in the US. Gone are the heady sales days of the 1990s and 2000s where wine sales grew regularly in double digits. With an ageing baby boomer population who embraced wine as a cultural mark of sophistication buying less, albeit more expensive wines, wine sales by volume are slowing. If it weren’t for hot categories like Prosecco and other sparkling wines the wine sales would be falling.

Wine sales by dollar volume are up, which could be interpreted in a positive light. But it may be the underpinnings of more serious problems: inflation, an ageing wine consumer with more income who buys more expensive wines, and younger consumers turning to other categories of alcohol such as craft beer and RTDs.

I expect this to continue in 2023 and into 2024 or until some of the larger international wineries begin to change their marketing focus and figure out how to attract younger consumers. I applaud E.J. Gallo for their investment in American football’s Super Bowl advertisements for their wine brand Barefoot. That’s an investment in the future consumer which I think will build not only Gallo’s brand, but help the industry as a whole gain visibility to a younger demographic.

Award ceremony
Award ceremony

Which role do specific demographics of American consumers play, in your opinion?

To start, preferences based on demographics are making a significant impact in the performance of different wine categories. These are generalisations, but they are a place to start understanding the future, from my point of view. Digging deeper into trends, we have to look at the key demographics: Baby Boomers (59-77), Gen X (43-58), Millennials (27-42), and Gen Z (21-26).

Baby Boomers still dominate the higher end of the wine market and shop many of the traditional regions and wine brands. Marketing to a generation that didn’t have access to international tourism on the level we do today involved bringing the romance and stories of exotic foreign cultures to that generation and tying it to the wine of the region. Lush pictures of Tuscan vineyards and images of Italian feasts replete with bottles of Chianti sold that generation on wine.

Currently in the 43-to-58-year-old age bracket, sandwiched between two larger demographics of the Boomers and Millennials, the generation Gen X has been somewhat overlooked in terms of wine marketing. Gen X crosses the line between the social media savvy Millennials and the Boomers and their love of family, culture and authentic food. And they recently became the demographic that consumes the most wine, taking the title from the ageing Boomer generation. While their numbers are small, they punch far above their weight class in terms of wine consumption. Think family, friends, the dinner table, and a focus on cooking mixed with Instagram accounts, and you can begin to understand their love of wine and culture.

Millennials, as the largest and wealthiest consumer category after the Boomers, are seeking out more value and unique varieties, creating lots of openings for categories like Moldova, Georgia, and native Greek varietals, among others. But as the initial heir apparent to the Baby Boomers’ love of wine, they are also now part of the new love of cocktails, boutique spirits and craft beer. To prove that point, spirits have just overtaken wine for the first time in consumer consumption statistics.

Gen Z, and to a somewhat lesser extent the Millennials, are known to be driven by marketing and branding relating to sustainability, diversity, identity acceptance, and ethical workplace practices. They have unlimited abilities to travel and visit foreign countries and experience foreign cultures. Not only does Gen Z travel globally, they think globally. Challenges like climate change, the rights of women and minorities, and the LGBTQIA+ community are all important to this generation, as well as the Millennials. Accordingly, they care about the impact wine brands make on the environment and society. They want to know the commitment wineries and brands have to these issues, and it influences their purchasing decisions. Gen Z values not only the culture and food, but also the identity behind the brand. Marketing challenges are very different for these groups as compared to the Baby Boomer generation. Does the winery have a woman or minority winemaker? Do they farm sustainably? Are their workplace codes inclusive and non-discriminatory? All these are key to capturing this demographic.

Are there starting points for cross-generational marketing?

As Anheuser-Busch beer recently found out, trying to position a brand for the values of Gen Z/Millennials can run squarely into conflict with a brand’s older Baby Boomer consumers. The paying of a transgender social media marketer to promote their well-known Bud Light brand of beer has resulted in a backlash of epic proportions. Sales of their best-selling beer have plummeted 25% and there may be a longer-lasting effect on their brand than could have been predicted. Some demographics in the US clearly don’t share Gen Z’s social justice concerns.

But at the core, concerns with climate change, diversity, and other social issues have spread throughout all demographics of US consumers. Wineries and brands need to figure out how to market wine not just on the beauty and culture of the product, but on the broader social and environmental efforts that interest today’s consumers.

After several decades of being on the outside, organic and sustainable [agricultural] and business practices are now almost minimum requirements for wineries to adopt and also promote. While in Europe this trend is well-established with a third of French and Spanish consumers purchasing organic wine, in the US this trend is just beginning to take hold. Organic/sustainable is currently an $8.6 billion market in the US for wine, but projected to be a $21 billion market by 2030. If you aren’t on the organic/sustainable train, you will eventually be left standing at the station.

Will natural wines and low sugar/low carb wines gain a larger overall market share?

One of the trends that may be having a negative impact on the wine market overall is the emergence of natural wines and low sugar/carb wines. While there are clearly consumers to whom such wines have strong appeal, it has also started to confuse consumers. If there is one wine that is low sugar/carb does that mean that the others are bad for you? If that wine is natural, then are the other wines on the shelf artificial? These are not small questions for the industry, because competition of this kind could end up cannibalising the wine category, putting wine itself in a bad light for a small success for a few marketers.

What about no- and low-alcohol wines?

Low- and no-alcohol wines are increasing in popularity. Trends such as dry or damp months, where individuals stop or reduce their alcohol consumption are common throughout the US. Low- and no-alcohol alternatives are not only popular for consumers at home, but restaurants and bars are also hopping in and creating cocktails with no- or low-alcohol. Completely alcohol-free bars are also a trend that is likely to grow over the next two years.

Which marketing tools do you recommend for the US?

Perhaps the most significant trend for 2023 and 2024 is, and will continue to be, digital engagement with consumers. Brands that ignore social media and other ways to engage US consumers do so at their peril, but as the Bud Light controversy shows, it has to be done right and thoughtfully. The post-pandemic environment in the US has ushered in digital engagement with a flourish. A consistent strategy to engage the most likely consumers for your wine is key to not only sales but to attracting distributors and retailers to carry your wines. Instagram, Facebook, Tik Tok, QR codes on labels, menus, and signage have become more and more popular and this engagement is key to success in the US market.

Wine buyers on all levels are researching wine reviews online, even if they are shopping at the store. Online reviews, both from experts who blog and consumers who engage with online sales, are driving purchasing and brand decisions.

Are there any other trends the wine industry should be aware of?

The final trend, of course, is the one we don’t see now, nor can we predict. That trend is always the most significant and it requires every business in the wine industry to stay engaged with their consumers and buyers. It’s easy to fall back on digital information, but nothing succeeds in our industry like talking to people from all demographics about what they want and listening to their answers. In the end, we see trends by listening to, and observing, our customers.

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When a panel of wine industry experts convened to discuss the latest SVB Annual Direct-to-Consumer Wine Survey Report, they also offered some suggestions on how to make more money. Felicity Carter listened in.

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