SVB Report: the Need to Focus More on US Millennials

Rob McMillan's annual SVB Report is essential reading for anyone interested in the US market. In his latest edition, he reveals a pessimistic mood among US producers, falling sales, and a halving of the 30-45 year-olds' share of the market.

Reading time: 4m

Rob McMillan's report analyses the US wine industry every year. (Screenshot: Silicon Valley Bank 2025 State Of The US Wine Industry)
Rob McMillan's report analyses the US wine industry every year. (Screenshot: Silicon Valley Bank 2025 State Of The US Wine Industry)

The latest annual Silicon Valley Bank report by the highly-respected market insider Rob McMillan confirms that the US market is continuing to shrink – though by less than some other experts have suggested. The disaffection for wine among millennials aged 30-45 is a particular concern.

McMillan’s data are based on survey responses from over 600 US wineries of varying sizes. Of the eight largest, only Delicato and Deutsch Family Wine & Spirits which, together, represent just 13% of this cohort’s total sales, were able to increase their sales depletions in 2023 – by a marginal 0.7% and 5% respectively.

On average, the eight companies' sales fell by 3.9%, with Constellation Brands recording the largest drop (–15.3%).

Pessimistic mood

The slowing market situation is reflected by the mood of producers. Only 6% described 2024 as ‘the best year in their history’ (2023: 8%, 2022: 18%). Likewise, the same percentage considered 2024 to be ‘one of our better years’ (2023: 12%, 2022: 26%), and only 17% considered it to be ‘a good year’ (2023: 20%, 2022: 26%). 28% described 2024 as ‘disappointing (2023: 22%, 2022: 11%). Their own financial situation is also increasingly being viewed more negatively: in 2021, 17% of companies still described their financial situation as ‘rock solid’ and 33% as ‘strong’, but in 2024 these figures were only 5% and 21% respectively.

Overall, more US wine was drunk in 2020 than in the previous year. In recent years, consumption has steadily declined, by 3% in 2023 and an estimated 2.4% in 2024. The proportion of sales generated by younger target groups has fallen particularly sharply, with the 30-39-year-olds’ share, for example, halving from 18% at the peak in 2020 to just 9% in 2024.

Looking back

Reviewing his predictions for last year, McMillan admits that he was too optimistic in predicting that the number of 2024 of tasting room visitors and DTC sales would grow in 2024. Both fell.

On the other hand, his predictions that there would be no recession in the USA in 2024, that the overall wine sales trend would remain negative, that consumption would continue to fall and that overproduction would become obvious – especially in California and Washington, where vineyard acreage exceeds production needs were accurate - all proved to be correct. Oregon, the US exception to this rule, has acreage that does not exceed its needs. McMillan also sees his assumption confirmed that premium ($10-20 retail) wineries would be able to implement price increases more easily than mass producers.

On some points, McMillan’s self-assessment of his forecasts is ambivalent. For example, he had predicted that retailers would run more flash sales, discounts and special promotions – which was partly true (more flash sales), but the discounts at wholesale and retail were much more moderate than expected. He had also predicted that premium wineries to see growth in sales and turnover in 2024, but no upward trend was apparent. In other words, the trend to premiumization seems to have stalled.

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Looking forward

For 2025, Rob McMillan predicts further growth in the low-and-no, white wine and Prosecco categories. He also expects sales growth in the super-premium segment ($20-30). The market share of online sales will continue to decline because of high shipping costs. Tasting room visitor numbers are likely to continue falling. Global wine demand will also continue to drop, with the 21-29 age group in particular likely to increasingly do without wine. However, according to McMillan, the decline in overall demand can be reversed if solutions are developed for the 30-45 year-old target group. He expects that the official market figures for 2024 will show a decline in sales of between 1 and 3% and a decline in turnover of between 0 and 1%.

McMillan also expects grape prices and vineyard values to fall. He adds that the demand for bulk wine has not yet bottomed out. Price reductions due to oversupply are to be expected, despite the fact that California's lowest grape harvest since 2008, at 3.2 million tonnes, is likely to be ‘disguised’ by new private labels or product launches. According to McMillan, the reduction or adjustment of excess stocks in the trade is likely to continue into 2026. He considers further clearances to be likely.

In the longer term, he predicts that the premium segment will cease to grow between 2027 and 2029. After that, growth is likely to come only from inflation and/or population growth. The influence of demographic change on the wine market – the increasing retirement of the ‘boomer generation’ from the market – is likely to reach its negative peak between 2029 and 2031, according to McMillan. In general, the current market dynamics in many regions are likely to continue until after 2030. It will become increasingly difficult for producers to negotiate prices that are economically viable for them.

Focus on Gen Y (Millennials)

However, the report also offers a glimmer of optimism: "Wine" McMillan says "is what younger consumers want. They just don't know it. But the characteristics of wine fit perfectly into the picture – green, plant-based, natural, minimal additives, no added sugar, often organic and much more – all of which correspond to the values of younger consumers. There is an opportunity to change attitudes towards wine, particularly among 30- to 45-year-olds." Some, when thinking of popular brands in the US, may wonder at the reference to "no added sugar". 

Would-be exporters to the US will note that the Trump administration's threatened tariff policy could have a positive effect on the domestic industry.  For a wine industry that exports less and markets more wine domestically, tariffs might generally be welcomed – except for companies that involved in overseas trading. If tariffs on wine from the EU are introduced, McMillan also expects that some bulk wine buyers in the US will likely switch to domestic must and bulk wine. This, too, would be good news for Central Valley growers who are currently uprooting their vines because of the legal use of imported bulk wine in 'American wine'.  In 2023, the U.S. imported approximately 400 million liters of bulk wine.

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Reading time: 5m 15s

 

 

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