Home Wine Business Editorial Finance An Uncertain Economic Vintage: Wineries Navigate Consumer Demand Challenges Amid Recession Concerns

An Uncertain Economic Vintage: Wineries Navigate Consumer Demand Challenges Amid Recession Concerns


Three industry experts discuss the effects of economic uncertainty
at a pivotal point for the wine industry 

By Laurie Wachter


As the American economy teeters on the edge of recession, the wine industry tries to predict how slowly the economy will move, how consumers will react and what the impact will be on their businesses. 

Dr. Robert Eyler, professor of economics at Sonoma State University, studies the impact on the wine industry of the United States’s volatile economy, which swings between periods of significant growth and recession. The macroeconomic variables that economists monitor before declaring a recession suggest that, while today’s markets show signs of decline, which indicates a slower-moving economy, the critical labor market element remains robust. 

Eyler’s assessment is cautiously optimistic: “If the unemployment rate doesn’t rise significantly and job losses don’t mount, the economy may sidestep a formal recession label, but we’ll likely have slower-moving growth into 2024.”

Weathering the Decline in Wine Sales 

In these uncertain times, the fact that wine sales volume has been down 5% to 6% over the last year and a half (and remains in that range) only adds to wine industry worries.

Danny Brager

Danny Brager, former leader of Nielsen’s Beverage Alcohol Practice and wine industry consultant, offers insight: “This sales downturn is not new. Despite an initial short-term bump, the market began to slow during COVID-19 after years of sustained growth. Wines under $11 continue to decline by 7% to 9%. Because [those SKUs] represent 70% of volume, it makes it tough for the overall category to grow.

“While not all price tiers are affected, the downward trajectory in the lower tiers, constituting 70% of sales, creates headwinds for the industry’s overall growth.”

Brager points out the dynamics around consumer spending. During 2021 and early 2022, affluent consumers had money to spend, and premium wines ($15+) growth rates soared. When inflation rose and people began returning to pre-COVID behaviors, higher-priced wines declined. 

He notes that those comparisons are against extraordinary growth rates, which are now out of the picture. “October through December will be pivotal, because we’ll finally see what people’s normal behavior will look like going forward, [which will] set the pace for the next two or three years.”

Deceleration in Consumer Demand 

Rob McMillan
Rob McMillan

Rob McMillan, EVP and wine division founder at Silicon Valley Bank (now a division of First Citizens Bank & Trust Company), underscores another facet of the challenge that wineries face. “Direct-to-consumer constitutes 68% to 69% of winery sales and rises to 90% for wineries under 2,500 cases, and visitor numbers on the West Coast declined this year. Simultaneously, the production of lower-priced wines sold in grocery stores has dropped. From a demand standpoint, we’re probably near the top of the growth cycle.” 

While wineries anticipated a resurgence in travel during 2023, McMillan remarks that Europe, rather than wine country, reaped the benefits of pent-up consumer travel desire. He notes, “TSA traveler counts at West Coast airports finally returned to pre-COVID levels in June, and these travelers are fine wine consumers.”

Will the decline wineries have seen from 2021 through mid-year 2023 presage an even worse 2024? McMillan thinks not, “I see the current decline as an echo of the COVID era. The holiday season looks promising and could usher in a modest rebound in 2024, particularly within the premium wine segment.”

Vineyard and winery leaders are left to balance increased costs with slowing demand under a cloud of uncertainty, to which concerns about the impact of artificial intelligence and climate change only add. With the economy still in flux, insights like these become essential. 

On November 30, Dr. Robert Eyler will be providing a more complete overview of where the wine industry stands financially, at the 11th Annual North Coast Wine Industry Expo (WIN Expo). In his presentation, The State of Industry Economic Pressures and Financial Markets, Eyler will provide a forecast of the U.S. economy, with headwinds and tailwinds for the wine industry, from vineyards to retail, and insights as to what you need to do to position your business in this downturn and be ready to strike at new opportunities as they arise. Learn more about this session and the WIN Expo event: wineindustryexpo.com


Laurie Wachter
Laurie Wachter

Laurie Wachter

Laurie developed her love of analytics and innovation while advising consumer packaged goods companies, including Kraft Foods, PepsiCo and the Altria Group, on consumer and POS data analytics and direct-to-consumer marketing. Today, she writes about these topics in the wine, food and beverage industries for a global client base.



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