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A Harsh Pill to Swallow: 2024 SVB Report Predicts Tough Times for Wine


Changing demographics, dropping demand and “bulging” inventories
call for industry leadership and vision.

By Jeff Siegel


There is very little good news in this year’s Silicon Valley Bank State of the Wine Industry report, released earlier today during the bank’s annual report webinar.

Rob McMillan
Rob McMillan

The 23rd annual survey of wine industry conditions, written by Silicon Valley Bank Wine Division founder Rob McMillan, is blunt. McMillan doesn’t expect the U.S. economy to slide into recession this year — and yes, some premium wineries should be able to take small price increases in 2024 — but save for possible good news about tasting room visits and direct-to-consumer sales, most of the rest of the findings are glum. And then some.

“It’s rather dour, as far as the industry goes,” McMillan told the audience for the 23rd annual report, which included viewers from almost two dozen countries. The webinar’s panelists included Jen Locke, CEO of Crimson Wine Group; Ed Thralls, SVP of Enolytics; and wine tech guru Paul Mabray.

“To fix the problem, we, as an industry, have to realize we have a problem,” said McMillan. “And I feel like the industry is finally moving to that point.”

Demand Slump Will Continue

Ed Thralls

McMillan predicts that the wine business’ slump in demand, which he has documented repeatedly over a series of past reports, will continue – and could last as long as a decade.

“We need to discover where we are,” he told the audience, “and recognize there’s too much inventory and that we’re in a period of correction.”

The panelists used terms like “right-sizing” in discussing what will come next, and especially in light of what was repeatedly described as “bulging” wholesale inventories.

The report notes that, since 2021, the spread between inventories and sales has increased significantly for all of beverage alcohol. In May 2023, there was $1.71 in inventory for every $1 in sales. That dropped to $1.55 by September, but remains well above the approximately $1.25  to $1 level of 2021. The panelists noted that though those numbers include all alcohol, they’re still indicative of lots of wine backing up in wholesaler warehouses. That means distributors are getting ever more reluctant to take product, and, says the report, “retailers can only rebalance inventories by buying less from wholesale while selling through their existing inventory.”

Jen Locke

As such, said Locke, producers need to meet with their wholesalers and ask hard questions about what’s going to happen next and what they can do to remain an important supplier.

Points in Summary

Overall, McMillan expects:

  • Total wine category sales will end 2023 down between 2% and 4%, and total sales should decline again in 2024. Sales measured by value will be flat in  2023, which will likely be the case for 2024 as well.
  • Planted acreage in California and Washington state is more than needed for current demand; Oregon is in balance. That means a market correction for grapes and for bulk wine in grapes that are intended for lower-priced wine is likely this year.
  • Premium wineries will end 2023 with a slight drop in sales by volume, though value growth will be up slightly thanks to a good fourth quarter. “Total premium wine sales by value will improve in 2024,” says the report.
  • Wine’s generation gap remains formidable. A Harris Poll that asked consumers (by age group) what alcoholic beverage they would bring to a party saw a difference in one-half between Baby Boomers and the next two generations when it came to wine. The drop was almost three-quarters for those ages 21 to 35.

Adapt and Evolve

There is even a downside to the good news about bottle prices. Though premium wineries “currently have balanced inventory positions and will successfully take small bottle price increases in 2024,” the specter of oversupply hangs over all.

Says the report: “But with demand fragile and too much supply at retail and wholesale, it wouldn’t take much for the industry to increase the use of flash sales sites and increase discounts and promotions in 2024.”

Which, McMillan told the audience, is the last thing almost anyone wants to see.

What can be done to combat that? McMillan was not optimistic that acquisitions — currently a key part of the industry’s maneuvering — are the answer; he said it’s difficult to increase sales, even after buying wineries, if what he called the overall pond is getting smaller.

Paul Mabray

Mabray pointed to the on-premise, where wine has really not recovered its place since the pandemic. He cited high wine prices as forcing consumers to choose something else, and added that spirits may seem more profitable, but that restaurants need to learn that wine may actually offer a higher return on investment given it’s more costly to make a cocktail than to pour a bottle of wine.

Throughout the presentation, the panelists emphasized that the industry needed to adapt and evolve to meet these challenges not as individual companies, but as an industry. As part of this, the industry leaders needed to lead.


Jeff Siegel

Jeff Siegel is an award-winning wine writer, as well as the co-founder and former president of Drink Local Wine, the first locavore wine movement. He has taught wine, beer, spirits, and beverage management at El Centro College and the Cordon Bleu in Dallas. He has written seven books, including “The Wine Curmudgeon’s Guide to Cheap Wine.”



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