US Wine Market - Time for a Rethink

Rob McMillan of the Silicon Valley Bank has just published his latest annual report in which he describes the challenges facing the US wine market - and a possible solution.

Reading time 4m 42s

Rob McMillan/Robert McClenahan
Rob McMillan/Robert McClenahan


  • The US wine market has stopped growing
  • But consumers are trading up
  • Younger Americans are turning to other drinks
  • The health lobby is creating a 'neo-prohibitionist' atmosphere
  • A project is being set up to promote the positive aspects of wine


Is the wine industry doing well or badly? How can anyone tell – beyond looking at the profitability of individual companies where they are publicly available or the import and export figures for particular regions?

One invaluable and highly-respected indicator has been published every year for two decades by Rob McMillan, the self-described ‘banker to the US wine industry’ who, in 1990 founded the wine division of the Silicon Valley Bank and became its Executive Vice President.

In each State of the Wine Industry Report, McMillan uses responses received from a wide range of wine businesses and other sources to attempt to look at the way the US business has performed over the previous 12 months and its likely future prospects.

Holistic approach

As a banker, he looks at the subject more holistically than many wine-focused observers.

So, the 66 pages of the 2022 report includes the fact that 42% of the Baby Boomers – the cohort that began to reach their 65th birthday in 2011 – have no retirement savings. The fact that this is also the group that has historically drunk the most premium wine may give some people reason to pause. As these people age and encounter health problems in a country without universal healthcare - or have to fund the treatments required by their children, will they have as much money to spend on wine?


"Wime and ages"
Wine has to wait until US consumers are in their late 50s

McMillan also considers the differences in the way younger consumers look at life in general, and how wine fits into their worldview. For example, one third of Millennials – born between 1981 and 1996 - buy luxury goods, but only one in five drinks wine. He quotes a Harris poll in which Americans across the age range were asked which beverage they would take to a party. Unsurprisingly, the 21-34 year-olds were less likely to choose wine than beer, spirits, flavoured malt beverages or hard seltzers. The 35-44 year-olds were much likelier to take wine, but it still got fewer votes than beer. The only two groups that named wine ahead of beer were the 45-54 year-olds (30% compared to 26%) and the  over 65 year-olds for whom the choice was easy: 49% would take wine versus 18% who opted for beer. Shockingly for Europeans who imagine wine to be a drink people move into as they grow older, the 55-65 year-olds had no preference between these beverages. As McMillan notes “While the good news is that the boomer consumer is still buying, the bad news is that we still aren’t connecting with newer consumers’ values.”


"Taking drinks to a party"
Wine is less popular with 35-64 year-olds than some might have thought  

The changing US consumer

Another area, he considers is ethnicity. Today, 67% of US wine drinkers are white – like 72% of the Boomers. But racial composition is changing radically and 45% of Millennials are non-white, and Gen Z – born 1997-2012 – is equally divided between white and non-white. This is relevant because wine slightly underperforms among Hispanic, Black and Asian consumers. For McMillan, the wine industry urgently needs to pay greater attention to these groups and to younger citizens.

Historically, given their lower disposable income, people under 35 tended to buy cheaper wine. But, in the 1970s  and 1980s as Boomers reached the US legal drinking age of 21, lower-priced wines “started a long slow decline”, McMillan says. People began to trade up, especially between 1994-2017 as the range and appeal of premium wines expanded and “we witnessed a run of growing volumes of wine sold at increasingly higher prices, at the expense of lower-priced wines.”

Trading up

This trend has continued, and 2013-2021 saw a steady decline in sales of wines selling at all price points below $8.99. The next segment – $9-11.99 which marks the threshold into premium category has remained pretty stable over the last four years, while almost all costlier parts of the market have enjoyed growth. In other words, these are good times to be selling wine priced from $12 to $100.

On the other hand, McMillan argues, premiumization has also been a factor in making wine less appealing to today’s younger consumers. “The traditional on-ramp for wine consumers has been the lower-priced and higher-volume wines, but they continue to decline in popularity.”

"Wine price points"
The three cheapest segments are all losing market share

Patience may not pay off

In response to the belief that the wine industry simply needs to wait for the next generation to get the wine bug, McMillan points to the statistics. Wine really began to take off in 1994 when Boomers were 38, just four years older than Millennials are now at the end of a decade when growth rates dropped from 6% to zero.

Will young people suddenly “begin to flock to wine” in 2026 “because ‘they always do’ when they get older”? The banker believes they won’t because “that’s not the way consumer demand works. It’s not based on age, and markets don’t operate in a vacuum.”

Besides, the Boomers of 1994 were not living in what McMillan calls the neo-prohibitionist ambience that he believes to be prevalent in the US. “Alcohol consumption is being equated to opioid addiction” he says and “With continuing attacks on moderate consumption, we can count on new adverse legislation”. The wine industry, McMillan says, has to come together to “promote well-researched, positive science on moderate consumption.”

Coming up a solution

Not content with defining the problem and the solution, he has joined forces with fellow analyst Danny Brager of Brager Beverage Alcohol Consultants, Mary Jo Dale, CEO of Customer Vineyard and Dale Stratton, president of the Wine Market Council, to launch a “solution [that] has been tentatively named WineRAMP (the Wine Research and Marketing Project).” Its aim will be to “help… to build “’brand wine’ in the US marketplace and promote the positive attributes of wine to current and new legal consumers.”

The SVB State of the US Wine Industry Report can be downloaded here
An exclusive interview with Rob McMillan will be published by Meininger's on this site


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