Anyone keeping up with the wine world is probably familiar with the consistent drum of negative data and hyperbolic headlines suggesting the industry is on death’s door. This panic has been primarily fueled by Silicon Valley Bank’s (SVB) 2024 report that donned a foreboding “survival of the fittest” theme for the U.S. market. The report sounded alarm bells for many in the business, driving home that consumer demand for wine is dwindling in favor of RTDs, spirits, and cannabis.

Wine professionals have long relied on SVB’s annual state of the industry report for data, but there’s a new bank in town — and it comes bearing less bleak news. On Wednesday, BMO Financial Group released their inaugural BMO Wine Market Report, which offers a surprising glimmer of hope.

“2023 was a challenging year for the U.S. wine industry, but more than half of all U.S. wineries met or exceeded their sales goals,” the report states. BMO claims that this report is the first of its kind to assess 100 percent of wine sold in the U.S. market, using extensive data from partners like WineBusiness as well as market research firms Bw166 and Gomberg, Fredrikson & Associates. The report also used insights from a survey of 630 U.S. wineries.

Though the industry certainly faces some persistent challenges, this report is cautiously optimistic about the future. Here are three key takeaways from the new BMO report.

Premiumization is fueling growth.

Even though sales by volume are on the decline, premium wine sales have remained steady. This shows that even though sales of budget bottles under $10 are weakening, consumers are consistently spending on higher-priced bottles. In 2023, sales of wines over $10 in grocery stores rose to $4.8 billion, which is 34 percent more than in 2019. Additionally, nearly 30 percent of wine consumers say they purchase an over-$20 bottle monthly, if not more often.

“Though the volume of wine shipments were down in 2023, the actual dollar sales of all wine sold in the U.S. market was up over previous years—to $107 billion,” Adam Beak, managing director and head of the wine and spirits vertical of BMO, told Forbes. Wine sales were reported to be just over $73 billion in 2018, so the 2023 sales suggest an increase of 46 percent.

The future for small wineries is bright.

The pandemic led to abnormally high sales levels for certain industries, wine included. So while dwindling sales within the category appear ominous at first glance, the report suggests that the market is just stabilizing post-pandemic, and will land on a stable — if not stronger — course. The BMO data suggests that 71 percent of wineries are expecting to experience increased year-over-year revenue growth, with 22 percent of wineries projecting flat revenue in 2024 and 6 percent predicting a decline.

As premium bottles are seeing more positive numbers than sub-$10 bottles, the nation’s smaller premium wineries are predicting growth. Forty percent of those producing between 1,000 and 5,000 cases expect growth of more than 10 percent, and 34 percent of wineries with an average price of more than $50 per bottle have similar expectations.

Additionally, wineries large and small are focusing their sales through direct-to-consumer channels. Nearly a quarter of all wineries are planning to increase wine-club sales and expand wine club memberships.

Consumers are drinking more than they let on.

The NA and low-ABV movements have been instilling fear in the wine industry, particularly after the SVB report called out that wine is failing to capture younger generations. According to BMO data, 61 percent of wine drinkers are from the Gen X, Millennial, and Gen Z segments, with baby boomers still making up a solid portion of the wine-drinking population.

According to Gallup data, 39 percent of Americans view moderate drinking as bad for their health, which is the highest number ever recorded. Further, 52 percent of younger Americans aged 18 to 34 reported saying that they think moderate drinking is a detriment to their health. The negative sentiment around alcohol consumption continues to grow, but according to BMO, the reported consumption and sales numbers don’t necessarily add up.

“In 1985, what Americans estimated they spend on beverage alcohol accounted for 68 percent of actual consumer spending,” the BMO report states. By 2022, the share of estimated spending had shrunk to just 36 percent. Americans appear to understate their beverage alcohol consumption and spending when surveyed much like when their doctor asks about their drinking. The current cultural trendiness of being ‘sober curious’ provides another incentive for the average consumer to understate consumption.”

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