Annual State of the Wine Industry Report Forecasts Growth in 2015:
- Increased Demand for Fine Wine Driven by an Improving Economy
- 14-18% Sales Growth
- Higher Bottle Prices
HELENA, Calif. –– January 21, 2015 —Silicon Valley Bank, a leading provider of commercial banking services to the innovation sector and the wine industry, releases its Annual State of the Wine Industry Report in a live broadcast from the SVB TV studio today.
“We are seeing real strength in the U.S. economy going into 2015, which will increase demand for wine,” said Rob McMillan, founder of Silicon Valley Bank’s Wine Division and author of the report. “Declining oil prices are transferring wealth to oil-consuming countries, the employment picture is improving, the US dollar is strengthening and interest rates will move at a measured pace. As long as the industrialized world economies can hold their own, the middle-income consumer will see improved prospects. We’ll be toasting to that.”
“We are especially positive on the year ahead,” McMillan said. “We expect the fine wine business will experience accelerating growth, achieving 14–18 percent sales growth in 2015. At the same time, the cellars are full with several consecutive years of very good vintages.”
Based on a survey of nearly 600 West Coast wineries, in-house expertise and ongoing research, SVB’s Annual State of the Wine Industry report covers trends and addresses current issues facing the US wine industry. The report offers unique data and observations that help wine business owners and managers think critically about their business strategies.
Key findings and predictions:
- Supply: We expect to see the third consecutive harvest of heavy yield and great quality across most appellations.
• Sales Growth: After finishing the year at the top end of our predicted sales growth of 6% – 10% in 2014, we are predicting a breakout year of growth in the fine wine category in the 14%-18% range in 2015.
- Pricing: While the large supply of wines in the cellars should normally indicate continued depressed pricing, we believe 2015 will be a year of both volume and price increases in the fine wine segment, driven by an improving economy and higher demand.
- Demand: Wines priced below $7 a bottle performed poorly both on and off premise in 2014. This poor performance is likely to continue in 2015.
- Planting: Grape planting is shifting regionally. Oregon and Washington are showing strong growth in planting on a percentage basis and we expect that this will continue for the foreseeable future given favorable quality and price dynamics relative to the fine wine growing regions in California.
McMillan is discussing the report and the state of the industry in a live broadcast with Paul Mabray of VinTank, Glenn Proctor of the Ciatti Company and Amy Hoopes of Wente Family Estates at an online event today at 9:30 a.m. Pacific time. A replay of the discussion will be available here later this week.
About Silicon Valley Bank’s Wine Division
Banking the world’s most innovative companies and exclusive wineries, SVB offers diverse financial services, knowledge, global networks, and world class service to increase our clients’ probability of success. Our Wine Division specializes in commercial banking for premium wineries and vineyards and the industries that support them. SVB has the largest team of commercial bankers dedicated to the wine industry of any bank nationwide. Founded in 1994, SVB’s Wine Division has offices in Napa and Sonoma counties and serves clients in the fine wine producing regions of California, Oregon and Washington. By virtue of its dedication to the wine industry, SVB is able to support its clients consistently through economic and growth cycles, and offer guidance on many aspects of their business, beyond traditional banking services. Silicon Valley Bank is a member of global financial services firm SVB Financial Group (Nasdaq: SIVB). More information on the company can be found at www.svb.com.
Silicon Valley Bank is the California bank subsidiary and the commercial banking operation of SVB Financial Group. Banking services are provided by Silicon Valley Bank, a member of the FDIC and the Federal Reserve. SVB Financial Group is also a member of the Federal Reserve.