Not all that long ago, Aman Singh, who owns three Aman’s Beer & Wine stores in the southern part of the US state of Wisconsin, would fill up an endcap or aisle display as soon as it started to look a little empty.
But no more.
“I’m just going to let it run down,” says Singh, whose stores sell beer, wine, spirits, and THC products and run about 10,000 square feet. “If it’s 100 cases, I’m not going to buy more until it’s almost gone. I’m much more hesitant than I used to be — both in buying new items and letting merchandise sit on the shelf. I’m not going to buy more of it like I used to.”
The depletion numbers tell the story
Singh is part of what the latest SipSource numbers – depletion data from the United States’ wholesaler tier compiled by the Wine & Spirits Wholesalers of America trade group – see as continuing retailer and restaurant reluctance to boost wine inventories. SipSource reports that sales volume declined by 9.9% while revenue fell 10.5% in the first three months of this year, while volume was down 7.1% and revenue fell 6.7% for the 12 months ending March 31.
If it’s not exactly “de-stocking,” in which the US on- and off-premise spent the past several years clearing shelves by ordering only the minimum amount necessary (if that much), the new trend is accomplishing much the same thing. As Singh notes, there is very little demand for new wine products, so there is little reason to buy any.
“The current situation is less about the retailer purchasing less inventory on wine and is more about adjusting their overall selection in the wine category."
“The current situation is less about the retailer purchasing less inventory on wine and is more about adjusting their overall selection in the wine category,” says SipSource analyst Dale Stratton. “Retailers are always evaluating the range of products they carry and make additions and deletions on a regular basis. Currently, both retailers and on-premise operators are being more diligent in this process, leading to fewer new products entering and more slow-moving items being discontinued. While the end result is the same — less dollars held in inventory — the method of getting there is different than the ‘de-stocking’ we previously experienced in the category.”
SipSource tracks this by what it calls a Points of Distribution measure: the number of unique items purchased by retail and restaurants. It was down 5.9% in the 12-month rolling numbers from March to March, showing a significant decline in products added to store shelves.
As bad as those figures may seem, they could in some ways be an improvement over the 12 months ending August 2024, when wine volume fell 8%. There are two things to note: Stratton says the current sales declines should improve slightly in the next couple of months, while analysts say that this round of numbers could be pointing to a market bottom, which several told Meininger’s last December that they expected around the end of the second quarter this year. And if the bottom isn’t at the 6% decline forecast at the time, it could be something reasonably close to it.
There are caveats
This assumes the US economy doesn’t go into recession later this year, which many economists say is likely, or that the Trump Administration’s tariff-centric economic policy doesn’t further cut wine sales.
What accounts for this new approach to inventory maintenance? A variety of factors. They start with the cost of money; US lending rates are higher than they’ve been in more than a decade.
“If interest rates were lower, I might buy more – but not at the levels that interest rates are now,” says Singh. “It’s just not worth it. If someone comes to me with a deal, I’m going to sit on it for a month, because, again, it’s just not worth it to buy more now.”
The problems of premiumisation
Playing into this are a combination of higher prices for high-end wine, which retailers say haven’t dropped despite the decrease in demand, as well the continuing effects of premiumization and its focus on wines costing more than US$15. In all, there are fewer bargains to choose from to lure consumers back to their stores.
“We’re routinely being shown wines which are ‘ambitiously’ priced,” says Gerald Weisl of Weimax Wine & Spirits, a 64-year-old fine wine shop in the San Francisco Bay area. “It should not take a rocket scientist to figure out part of the slowdown in sales is a result of price escalation.”
He says there doesn’t seem to be any rhyme or reason to higher prices, save that the producers can raise them.
“Some vintners— many, in fact — look at pricing of certain brands, think ‘my wine is better’ and therefore they can ask a similar price or higher,” says Weisl. “Some wineries which have been favorites for some years take price increases, which make selling their wines a major challenge. Our clients who have been buying Chateau XX at $50 are not usually willing to part with $80 for the new vintage. As a result, we've stopped buying some of those in favour of others who have good quality and a price point that's more comfortable for the customer.”
Singh says this problem is compounded by the lack of what he describes as appealing discounting, which was common in years past. He says wholesalers may offer him just five cases free on a 100-case purchase, which he says hardly makes it worth his while, given the product pricing and consumer reluctance to try something new.
"I’m not necessarily cutting the number of SKUs I carry, but I am more choosy and more picky about what comes in."
“I’m not necessarily cutting the number of SKUs I carry, but I am more choosy and more picky about what comes in,” he says. “For instance, I won’t buy every varietal of something, but maybe only the two or three most popular varietals. And instead of having a full shelf, I’ll only stock three or six of each item.”
Having said this, Singh reports that RTDs, those ready to drink canned cocktails that have been a market leader for a couple of years, remain a bright spot, and it’s one of the few categories that shows signs of growth.
Finally, there does seem to be a difference between inventory management at some fine wine shops and those that serve a wider audience. Weisl says he could probably do a better job of pruning his excess stock, but that given supply chain problems, especially with some of his wholesalers, he says he likely has more inventory than he wants to have, so he doesn’t run short.
And Andrew Fisher, the president of Astor Wines in New York City, is skeptical that one-size-fits-all for inventory management. “In general,” he says, “I think these decision are driven by the store’s balance sheet, rather than preferences. Astor is certainly not ‘destocking.’ ”
One bright spot at least, in an overall spreadsheet of more depressing numbers.
