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SVB Lays Out The Challenges Facing The Wine Category

January 20, 2022

Silicon Valley Bank (SVB) yesterday released its closely watched State of the Wine Industry report for 2022, flagging a number of structural challenges facing the business moving forward. Chief among those hurdles is the declining adoption of wine by younger consumers, who have been more enthusiastic about spirits, seltzers, and low- and no-alcohol offerings. While the baby boom generation continues to favor higher price points in wine, overall category demand will wane looking ahead due to this shortfall of younger drinkers, the report found.

Perhaps more ominously, SVB issued a warning about the future of the restaurant channel for wine. “The restaurant industry will continue to decline as a sales channel for wine due to overpricing on the menu and consumers who value other alcoholic beverages over wine,” it stated. “Restaurants will find that wine is not in demand at the prices charged and that maintaining deep stocks of wine is not worth the cost.”

On the more positive side, SVB predicts ongoing growth for wineries in the e-commerce space, with online sales expected to improve on their current share of 9% of an average winery’s sales. The supply chain issues that have complicated operations for players at all levels of the business are expected to moderate over the course of this year, the report added, while inflation is likely to pressure wine sellers across the market to raise prices in the coming year.—Daniel Marsteller

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