Since the end of the 2007 recession, the U.S. wine industry has had a single mantra: “drink better.” That is, spend more money for a bottle of wine.
And, for the most part, that’s exactly what has happened, a process called premiumization. The average price of a bottle of wine sold at retail in the U.S. has more or less doubled to around $13; the off-premise sweet spot is now $15 to $20 a bottle; and sales of wine costing less than $10 a bottle have all but collapsed.
The unintended consequences of premiumization
But a funny thing happened on the way to nirvana. American wine consumption started dropping, even before the pandemic, and has picked up pace since then. We may be “drinking better,“ but we’re also drinking less. The wine industry, in its mad dash to embrace higher prices, overlooked that most basic of economic principles, that higher prices result in lower sales.
Call it the revenge of the law of unintended consequences: Not only have higher prices reduced demand, but they have also turned wine into something reserved for special occasions, further cutting consumption. After all, how many special occasions are there in a year? And since wine is now reserved for special occasions, the industry has — intentionally or otherwise— demonized the cheap wine that most people bought to drink with dinner as something somehow unworthy (even if the cheap wine is actually quite enjoyable).
When ‘value wine’ became a dirty word
Consider these points by way of illustration:
- Former American Wine Society board member Jay Bileti wanted to organize a tasting group in Denver recently, focusing on “value wines.” But, he said, at least half of the prospects passed, seeing the ambition of the group as too “low end.”
- When Dave McIntyre became the wine critic at the Washington Post in 2008, his goal was to help consumers understand that wine could be an everyday drink. But, when he retired from the Post at the end of 2024, “the industry was going in the opposite direction,” and wine had reinvented itself as something “too special” to drink every day.
- My students at the wine classes I taught at the Cordon Bleu and Dallas College around the 2010s were astonished I drank wine with dinner – even though they were culinary students. Said one: “It’s like date night every night!”
- At this year’s Silicon Valley Bank wine industry report webinar, Nielsen’s Kaleigh Theriault made the distinction between a wine shopper and a wine consumer. The former, she said, didn’t necessarily drink wine, but bought it as a gift for someone else. Does this mean wine has turned into the equivalent of buying Mom perfume for her birthday?
In other words, even before wine ran into its well-documented generation gap and the anti-alcohol backlash, both of which cut consumption, it had boxed itself into a corner by making wine too expensive for most consumers to drink unless they had a good reason — and dinner on Tuesday night was no longer a good reason.
A forgotten history of everyday wine drinking
Ironically, the U.S. wine business wasn’t always headed in this direction. Perhaps the two biggest moments in U.S. wine history after Prohibition both involved drinking wine regularly – the creation of the Fighting Varietals, the first well-made and inexpensive domestic wines, in the late 1980s, and the “60 Minutes” French Paradox episode in 1991. The former made it easy to buy inexpensive quality wine, so it was possible to drink wine three or four times a month instead of three or four times a year, while the latter offered medical evidence that drinking wine regularly — and in moderation — boosted heart health.
These did not turn the U.S. into a wine with dinner culture, but they got us closer than we’ve ever been. They powered the two-decades-plus wine boom that turned the U.S. into the world’s biggest wine drinking country by volume in 2013 (though not per capita, though that grew, too), while the number of wineries in the U.S. increased to some 12,000, a more than 10-fold jump from 1990.
Almost everyone – even cranky wine writers – thought we’d crossed the threshold. Meanwhile, one of wine’s most respected analysts, as clear-headed and as precise as they come, wrote in 2013 that American consumption would continue to expand over the next decade “as wine continues to gain traction among Americans of legal drinking age.”
Ignoring the warning signs
Which, of course, is the exact opposite of what happened. The signs were there, of course, though few people noticed. Younger consumers were not coming to wine the way their parents did; a 2020 study by the then Wine Intelligence consultancy showed, as its author told me, that wine had lost the two generations younger than 55 over the past 10 years. Meanwhile, the anti-alcohol lobby was getting stronger and more brazen in its messaging, including the infamous 2019 study that said alcohol death rates were similar to those from cigarettes.
And, as prices rose from the middle of the 2010s, demand started to slide. This was covered up by the growth in revenue, which regularly outpaced volume, but it was there nonetheless. Even in that fateful 2013 analysis, Nielsen reported that sales at U.S. retailers grew only two percent in volume, which was just a tad more than the increase in the number of people of legal drinking age. But, since revenue was up six percent, what need was there to worry?
A lot, which became obvious in the couple of years before the pandemic, as volume continued to flatten and revenue growth started slowing. Again, though, few seemed concerned. Tasting room fees in California, for example, kept going up, as much as five-fold between 2016 and 2023. A Napa Valley tasting could cost more than $100 – a very special occasion indeed.
An industry that shoots itself in the foot
It’s crucial to note here that tasting room visits and purchases, besides helping most U.S. wineries turn a profit, are also their only effective marketing tool, since they can’t afford anything else. The tasting room visitor who buys a bottle or three and returns home, pouring the wine for friends and waxing poetic about the visit, is like money in the bank. But perpetually rising fees cut tasting room visits, which meant fewer chances for marketing. It also demonstrated, once again, that the wine business not only doesn’t mind shooting itself in the foot, but can keep finding new ways to do it.
And, to add insult to injury, 2020’s WineRamp, the one attemptto boost demand through an industry-wide marketing effort met with the textbook definition of ignominious failure.
Because, to quote the noted Texas philosopher Robert Earl Keen, “The road goes on forever and the party never ends.“
Even today, many refuse to admit that the party has ended. The same Silicon Valley Bank study reported that almost half of the wineries it surveyed said they will try to take a small price increase in 2025, which flies in the face of wine’s economic straits. For one, the bank study forecasts a 12-month oversupply of wine that portends significant discounting; how can higher prices co-exist with that? For another, another analyst has predicted, at best, flat to negative sales figures over at least the next several years. Again, who can raise prices in that kind of environment?
Could wine be cool again?
The final irony? The “drinking better”/”drinking less” conundrum has been lost in the teeth gnashing and garment rending surrounding the generation gap and the anti-alcohol movement, both of which are perceived as existential threats to the U.S. wine business. Yet one could argue that if wine hadn’t been so eager – and so successful – to sever the connection to a wine with dinner culture, the generation gap wouldn’t exist. Wine, in fact, might even be cool again. Imagine: Young people with tattoos and body piercings, of every imaginable gender, race, and demographic, debating the merits of $8 wines like Picpoul, Grillo,and Viura.
And, if that was the case, wouldn’t wine be in a better position to refute the faux science that two glasses of wine on Tuesday night will, without doubt, lead to a massive coronary? If nothing else, an industry that knew better than to run off tens of millions of potential customers might have been more likely to notice the first anti-alc claims in the late 2010s and done more in response than raise prices again.
Or not, as the case may be. This is the wine business, after all.
