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2020 US Wine CurrentsOregon Wine Symposium
Rob McMillan, EVPSilicon Valley Bank
Presented 2/11/2020
Success & Consumer Changes
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2
Oregon Is The Envy of Every Region!
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Change in Oregon Industry Sentiment:Ebullience!
3
-12.5
48
1040
-23-17
2
-3
-32
13
-50
0
50
100
150
200
Net S
enti
men
t Ind
ex
2015 2016 *2017 2018 2019
Source: 2020 SVB State of the Wine Industry Survey
Overall Industry
Sentiment
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Origin $ $ CYA$ % Chg
YA 9L EQ 9L EQ CYA9L EQ % Chg YA
DOMESTIC 10,638,323,208 69,990,043 0.7 119,123,670 -2,748,337 -2.3IMPORTED 3,826,915,144 7,880,107 0.2 39,527,114 -808,870 -2.0CALIFORNIA 9,579,368,020 61,409,984 0.6 110,526,363 -2,612,746 -2.3WASHINGTON 608,937,551 -14,836,957 -2.4 5,038,221 -174,550 -3.3OREGON 219,134,411 24,091,075 12.4 1,114,914 121,110 12.2ITALY 1,213,754,152 18,509,681 1.5 10,407,186 -112,246 -1.1AUSTRALIA 717,867,363 -15,208,046 -2.1 11,730,989 -326,820 -2.7NEW ZEALAND 507,401,792 38,619,451 8.2 3,635,764 258,289 7.6FRANCE 485,741,469 12,401,969 2.6 2,921,598 -75,274 -2.5ARGENTINA 323,728,442 -21,833,939 -6.3 3,510,600 -294,756 -7.7CHILE 254,015,872 -4,423,065 -1.7 3,842,281 -2,201 -0.1SPAIN 158,766,744 -9,992,295 -5.9 1,987,319 -110,564 -5.3
Off-Premise Sales By Origin: In Rare Company!52 Weeks as of 12-28-2019
Source: Nielsen 12-28-2019
Cases - VolumeDollars-Value
TOC
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Table of Contents
Market : All Outlets • BA_SUBCATEGORY(C) : TABLE • Product Share Basis : TABLE
Report Name : Report ID : RB01Source : Nielsen AnswersData Context : MFG BevAl Suite WineRun Date : 10/11/18 3:58:13 PM PDT
Copyright © 2018 The Nielsen Company
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https://answers.nielsen.com/portal/site/answers/menuitem.0d4f8dc7a5fb276424fd3c70685072a0/?job_id=A936ABD5BCA94D67A03212F676372C75&open_selector=true
Market : All Outlets • BA_SUBCATEGORY(C) : TABLE • Product Share Basis : TABLE
Report1
Origin$$ CYA$ % Chg YA9L EQ9L EQ CYA9L EQ % Chg YA
DOMESTIC10,638,323,20869,990,0430.7119,123,670-2,748,337-2.3
IMPORTED3,826,915,1447,880,1070.239,527,114-808,870-2.0
CALIFORNIA9,579,368,02061,409,9840.6110,526,363-2,612,746-2.3
WASHINGTON608,937,551-14,836,957-2.45,038,221-174,550-3.3
OREGON219,134,41124,091,07512.41,114,914121,11012.2
ITALY1,213,754,15218,509,6811.510,407,186-112,246-1.1
AUSTRALIA717,867,363-15,208,046-2.111,730,989-326,820-2.7
NEW ZEALAND507,401,79238,619,4518.23,635,764258,2897.6
FRANCE485,741,46912,401,9692.62,921,598-75,274-2.5
ARGENTINA323,728,442-21,833,939-6.33,510,600-294,756-7.7
CHILE254,015,872-4,423,065-1.73,842,281-2,201-0.1
SPAIN158,766,744-9,992,295-5.91,987,319-110,564-5.3
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Predicted 2019 Year-End Sales Growth: Oregon
5Source: SVB State of the Wine Industry Survey
10%
13%11%
10%
14%
9%11% 10% 10%
13%
0%
2%
4%
6%
8%
10%
12%
14%
16%
2015 2016 *2017 2018 2019
Change in $ Sales Change in Case Sales
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3.60%
9.20%13.20%
6.60%
35.73%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
Oregon: 2019 Direct to Consumer StatsEye-Popping Results!
Source: Wines & Vines, Savos 2020 Report
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Average BritishColumbia Napa County New York OregonSonomaCounty Virginia Washington
2015 1237 1644 2507 527 1288 1096 7892016 1297 1369 2776 587 1099 1644 6562017 1114 1159 1497 2051 716 1039 2075 6182018 1160 1261 1453 712 1004 1482 8082019 1520 1815 1372 2729 1079 1098 1464 942
0
500
1000
1500
2000
2500
30002015 2016 2017 2018 2019
Average Monthly Visitors To the Tasting RoomOregon Taking from California?
7
*Only three years worth of information for British Columbia.*2017 New York did not have a significant number of responses to calculate average in 2018
Silicon Valley Bank and Wine Business Monthly 2019 Insights to Successful Consumer Wines Sales Survey
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Trended Oregon Off-Premise Sales Growth by Value ($) 52 Weeks through December 2019
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
3/28
/15
6/28
/15
9/28
/15
12/2
8/15
3/28
/16
6/28
/16
9/28
/16
12/2
8/16
3/28
/17
6/28
/17
9/28
/17
12/2
8/17
3/28
/18
6/28
/18
9/28
/18
12/2
8/18
3/28
/19
6/28
/19
9/28
/19
12/2
8/19
Still Showing Handsome Annual Growth
Source: Nielsen
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Great Results TodayBut Oregon is part of the Wine Industry
… and
the Industry is Hitting a Ceiling
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Total US Table Wine Consumption Flat at BestConsumer Change Driving Trends
300
400
500
600
700
800
900M
illio
ns o
f Gal
lons
Source: California Wine Institute, Gomberg-Fredrikson
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What Consumers Is Oregon Attracting?Oregon is Attracting the Same Age Consumers as Other Regions
11
1.3%
16.9%
34.6%
41.3%
6.0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Gen Z (21-22) Millennials (23 - 38) Gen X (39 - 54) Boomers (55 - 73) Mature (74+)
2014 2015 2016 *2017 2018 2019
Source: SVB Winery Conditions Survey, 2019
This is a Problem
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155,000,000
156,000,000
157,000,000
158,000,000
159,000,000
160,000,000
161,000,000
162,000,000
163,000,000
164,000,000
165,000,000
$12,000,000,000
$12,500,000,000
$13,000,000,000
$13,500,000,000
$14,000,000,000
$14,500,000,000
$15,000,000,000
Dollars Cases
Total US Off-Premise Wine Sales Trends 2014 - PresentVolume Turned Negative 2017. Value has flattened. Some Channel Shifting
Dollars
Cases
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Copy
right
© 2
017
The
Nie
lsen
Com
pany
. Con
fiden
tial a
nd p
ropr
ieta
ry. 16.7%
16.6%
17.1%
17.5%17.7%
2015 2016 2017 2018 52 we 9/28/2019
Private Label Wine Growing StronglyPlays to Frugal Consumers Pocket Books
Source: Nielsen Retail Measurement Services, 2015, 2016, 2017, 2018 and 52 weeks ended 3/30/2019
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Who is the Wine Consumer?
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Exclusive Beer18% People/7% $
Exclusive Spirits6% People/2% $ Vol
Wine & Beer19% People/17% $
Wine & Spirits7% people/7% $
Beer & Spirits8% people/9% $
Exclusive Wine15% People/4% $
Sixty-One Percent of Alc. Bev. Consumers Regularly Drink From Two Categories Only 15% of Drinkers Are Exclusive to Wine. Competition is from Spirits & Beer
Source: Nielsen Homescan Panel, Total US: 52 weeks ending 06/29/19 Wine includes Still & Sparkling; Beer includes FMB and Ciders
WineBeerSpirits
Wine/Beer/Spirits27% People/55% $
Wine Beer
Spirits
-
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 100
Male Female
MatureBoomerGen XMillennial
Gen
Z
Population is Hitting Key Points in MaturityThe New Consumer Opportunity is Younger
Source: U.S. Census Bureau
Num
ber o
f Peo
ple
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Category Sales Growth. Spirits Are Winning the Battle (& Spiked Seltzer)Spirits Are Better at Marketing versus Wine
Source: Nielsen Syndicated Bev Al Databases 52 weeks ending 11-2-2019
2.8
1.31.7
2.1
5.8
2.6
BEER WINE SPIRITS
Wine is 2X more expensive than Beer or Spirits per serving
-
0
50
100
150
200
250
$-
$2,000.0
$4,000.0
$6,000.0
$8,000.0
$10,000.0
$12,000.0
$14,000.0
$16,000.0
4 Yr Ago 3 Yr Ago 2 Yr Ago 1 Yr Ago Lat. 52 weeks
Num
ber o
f Bra
nds
Mill
ions
of D
olla
rsDollar Sales Number of Brands
Annual Growth Rate in Spiked SeltzersEst. 40% of Spiked Seltzer Growth is Coming From Wine
Source: Nielsen, 11-16-2019
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017
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ieta
ry.
Wine in Cans – Occasion Driven?Ready to Drink Sizes Breaks Down Price Barriers for Frugal Consumers
Source: Nielsen Total U.S. 52 weeks ended 11-2-2019
0
100
200
300
400
500
600
$-
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
$140,000,000
4 Yr Ago 3 Yr Ago 2 Yr Ago 1 Yr Ago Lat 52 weeks
# of
Item
s Sel
ling
Dolla
r Sal
es
Dollar Sales # of Items
Led by …• White and Pink• 375 ml; 250 ml; 187ml
About 1% of dollars
-
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
Wine On Premise Spirits On Premise
On Premise Sales Favoring Spirits ProducersBy-The-Glass Programs Suffer in Restaurants Today
Source: SipSource, 2019
Spirits
Wine
-
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
187 ML 375 ML 500 ML 750 ML 1.5 L 3 L 4 & 5 L
Shar
e of
For
mat
Gro
wth
Rat
e
Growth Rate Share
Growth and Share of FormatsSmaller and Alternative Formats Growing – Old & Younger Drinkers
21Source: Sip Source, 9-19Tetra Pak in 500ml
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Varietal Growth & Share of MarketBubbles and Rosé Leading Growth – Both Skew to Younger Drinkers
22
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
Shar
e of
Mar
ket
Gro
wth
Rat
e
Growth Rate Share of Market
Source: SipSource, 12M rolling Sept 2019
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Consumption Preference Alcohol & CannabisWill Younger Consumers Continue to Move to Wine as they Age?
Sources: Scarborough Research, SVB Analysis
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
180.0
200.0
Millennials (22 - 37) Gen X (38 - 53) Boomers (54 - 72) Matures (73+)
Inde
x Ba
se =
100
Recent Beer Recent Liquor Recent Wine Recent Cannabis
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Young Consumers Drinks Less AlcoholWhat Happened to the French Paradox and the Mediterranean Diet?
• Source: Nielsen Beverage
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5%5%
9%10%
13%14%
15%17%
18%19%
21%24%
32%
0% 10% 20% 30% 40%
I/my partner is expecting or recently had a child
Other
Friends/family are drinking less
More interested in Cannabis
Consuming more non alcoholic beverages
Want to maintain clarity/control
Can't afford to drink as much
Don't want to be hungover
Health related reasons
Don't go out as much as I used to
Consuming more of a different Alcohol beverage
Lost interest in drinking alcohol in general
Opting for healthier lifestyle
Why Are Younger Consumers Are Cutting Back?Health Cited as the Main Reason
Survey conducted online by The Harris Poll in partnership with Nielsen (January 7-9, 2019); n=1,964U.S. adults21+
-
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
$180.00
$200.00
White Hispanic AfricanAmerican
Asian
Young Consumers Are More Ethnically DiverseOpportunity is with Hispanic, African American and Asian Consumers
• Source: Nielsen Syndicated Bev Al Databases
Annual Wine Purchases by Ethnicity
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Changing the Message
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Millennials Aren’t BoomersIf You Want to Sell to Someone, Sell Features they Care About
Value Boomer Millennial Action
Support Group Family Friends Drive Club Socialization
Choice in Food Don't eat if it's bad for you Only eat if it's good for you Ingredients, Calories, "Better for You"
Business Capitalism is the path to individual wealth Wealth comes with social responsibility Define Social Reason You Exist
Diversity Civil Rights Movement drove change Social and ethnic diversity drives change Staffing, tasting room diversity, advertising
Landfills and Waste Disposable culture Green, reuse and repurpose culture Packaging, Carbon Footprint, Sustainability
Spending Conspicuously On important things Improve Wine Value. Hit Important Points
Fun Work Yes please Embed into Events, Tasting Room, Marketing
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The Mixologist: An Example of Good Engagement
Curling lanes …Entertainment
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More Fun Social Venues Popping Up Daily
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More Fun Social Venues Popping Up Daily
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Alcohol Occasions Increasingly ActiveIs Wine Something that is Shared in These Type Environments?
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The Wine Industry's Idea of Fun is Dated
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The Solution For Tasting Rooms?
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Current Marketing for Non-Wine Products
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Selling Features that Resonate with ConsumersServing Size, Calories, Low Sodium, Low Sugars, Green, Authentic, Natural, Causes
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“Natural”, Non-GMO, Mixed Varieties (trial)
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No Artificial Sweeteners, Certification Badges, Gluten Free
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Plant-Based, Natural, No Sugar, Organic, Gluten Free
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Moving Away from Long Days and Cool Nights
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What’s the Secret to Alpha Growth?
41
1. Connect with Old and Young generations. Don’t create or perpetuate “Your parent’s tasting room.” (Consider activity and outdoors.)
2. Internet sales: We can do better than 3% when Luxury sells 17% on line3. Sell a destination, values, or a brand concept – then sell wine4. Boots on the Street in the US – Regional Focus. Take advantage of the “side
hustle” economy5. Big Data: Make DtC marketing and sales more efficient6. “On-ramp” your young consumers – “Two Lenses” for every event and project
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Thank You!
Questions:Rob [email protected]
Slide Number 1Slide Number 2Change in Oregon Industry Sentiment:�Ebullience!Slide Number 4Predicted 2019 Year-End Sales Growth: OregonSlide Number 6Average Monthly Visitors To the Tasting Room�Oregon Taking from California?Trended Oregon Off-Premise Sales Growth by Value ($) � 52 Weeks through December 2019Slide Number 9Total US Table Wine Consumption Flat at Best�Consumer Change Driving TrendsWhat Consumers Is Oregon Attracting?�Oregon is Attracting the Same Age Consumers as Other RegionsSlide Number 12Private Label Wine Growing Strongly�Plays to Frugal Consumers Pocket BooksSlide Number 14Sixty-One Percent of Alc. Bev. Consumers Regularly Drink From Two Categories Slide Number 16Category Sales Growth. Spirits Are Winning the Battle (& Spiked Seltzer)�Spirits Are Better at Marketing versus WineSlide Number 18Wine in Cans – Occasion Driven?�Ready to Drink Sizes Breaks Down Price Barriers for Frugal ConsumersSlide Number 20Growth and Share of Formats�Smaller and Alternative Formats Growing – Old & Younger DrinkersVarietal Growth & Share of Market�Bubbles and Rosé Leading Growth – Both Skew to Younger DrinkersConsumption Preference Alcohol & Cannabis� Will Younger Consumers Continue to Move to Wine as they Age?Slide Number 24Slide Number 25Slide Number 26Slide Number 27Slide Number 28The Mixologist: An Example of Good EngagementMore Fun Social Venues Popping Up DailyMore Fun Social Venues Popping Up DailyAlcohol Occasions Increasingly Active�Is Wine Something that is Shared in These Type Environments? The Wine Industry's Idea of Fun is DatedThe Solution For Tasting Rooms?Slide Number 35Slide Number 36Slide Number 37Slide Number 38Slide Number 39Slide Number 40Slide Number 41Slide Number 42