Wine Lovers Raise a Glass

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Many in our Going Global Community are wine lovers and so we always like to track the trends of the wine industry. After all having a great bottle with friends is one of the true pleasures in life. This time we have some insider’s access to a recent US industry report. And the news is pretty good for those of us who love a glass or two.

The Silicon Valley Bank’s 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.

“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.”

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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.

All in all 2015 looks like it will be a good year for the industry and pretty good one for consumers. We wine lovers may end up paying a little more but the quality and variety of wines should be worth it.

 

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