Wineries in the United States have noticed a worrying trend in recent years, as overall demand for wine has continued to go down. Silicon Valley Bank noted in its 2024 State of the US Wine Industry report that 2023 was the third consecutive year of negative volume growth for the wine category. Perhaps even more startling: For the first time in 45 years, the spirits market surpassed the wine market in total volume sales.
But that doesn’t mean that it’s simply a matter of convincing younger consumers to switch from spirits to wine. While much has been made of Gen Z’s apparent preference for relatively new ready-to-drink products like hard seltzers, wine demand is down mainly because alcohol consumption is down overall. The Wine Market Council found sales dropped in 2023 at comparable levels across most types of alcoholic beverages.
Health-conscious millennials and Gen Zers have taken note of the many negative reports that have emerged about the potential adverse effects of alcohol. No less of an authority than the World Health Organization has begun to warn that even moderate levels of consumption can be bad for you, and it seems that many people are heeding that warning.
The relative strength of the spirits market may be explained by a secondary cause for the widespread reduction in alcohol consumption: personal finances. With wages lagging behind increases in the cost of living, many people are tightening their purse strings, and alcohol is widely viewed as a productive budget cut. When they do decide to spend money on alcohol, they may be more likely to opt for cheaper products in the spirits category.
So, how can wineries succeed despite the industry continuing to transition to a lower-demand environment?
SVB and the Wine Market Council both suggest collaboration within the industry to market the wine category more effectively. That could mean explicitly linking wine to its 8,000 years of history and its role in cultures around the world. Wine is also closely associated with art and music — imagine your winery collaborating with others in your area to sponsor a local art and music festival. You may draw in culturally curious attendees who don’t usually drink wine and put them in a context where they’d be more inclined to partake.
More generally, wineries could band together to increase the variety of occasions where someone could consider wine. Wine used to rule adult parties and dinners, but now many adults opt for different beverages in those situations. By pooling the wine industry’s collective brainpower, it may be possible to start a retro trend to get people interested in bringing wine to those types of gatherings again or to discover alternate occasions where wine could be particularly appealing.
As WMC points out, much of the industry’s success in the 2000s in terms of sales and premiumization can be attributed to the collective efforts of smaller wineries. Your winery could become a leader of similar efforts in the 2020s.
It’s clear that wineries need to meet people where they are. WMC suggests offering low- or no-alcohol alternatives to appeal to the health-conscious consumer. The aesthetics of wine and wine drinking are still broadly attractive, so a wine that reduces or eliminates the wellness concerns that come with alcohol could tap into that attractiveness without the perceived downsides.
Of course, there are also people who see wine’s “vibe” as a bit stuffy or outdated. WMC lists “wine-based RTDs, zero or low-calorie wines with no sugar added, innovative packaging and sizes, wine cocktails” as potential products that could, much like wine coolers did in the past, appeal to people outside of the target demographic for more traditional or upscale products. If younger consumers seem to prefer casual drinks that won’t strain their budget, then you might just have to find a way to offer them — without cheapening your brand. Again, that’ll take some brainstorming, but if you can come up with a hit, it’ll be worth the effort, as your sales volume numbers will benefit.
Along with collaboration, SVB also poses greater individual efficiency as a way forward. If you’re going to invest a lot of time and energy in bold marketing campaigns and new product research and development, you’ll want to make sure your foundational business operations are running as smoothly and effectively as possible. Otherwise, you’ll never actually get around to attempting those moonshots, because you’ll be too busy keeping sales spreadsheets organized and updated and staying on top of compliance.
One of the best ways to improve operational efficiency is to implement back-office technology solutions that help you keep your data clean, organized, accessible and ready to analyze. You’ll also want solutions that can automate repetitive manual tasks, optimize your pricing, increase the effectiveness of promotions and improve your customer relations.
A wine-specific ERP solution like VinPoint Wine Management can help you streamline and modernize your business processes, leaving you with more time to focus on the complex task of overcoming the ongoing wine slump. Plus, with the deep insights provided by VinPoint’s business intelligence capabilities, you’ll have a better chance of finding the prime opportunities that are hiding behind those concerning downward trends.
In relatively fallow times, efficiency is the name of the game. When sales aren’t quite there, a leaner operation is more likely to survive and then thrive. To learn how VinPoint can help your winery grow, reach out to our expert team today.