For the first time in two decades, wine consumption is expected to drop. With the new Millennials now growing up and finally becoming legal to drink, it is expected that they won’t rely so much on wine. While previous generations always preferred wine, the Millennials are expected to make a permanent shift. It might be because of more frugal options or just because the new generation prefers beer and spirits.
The predictions are already in for the wine industry
According to Rob McMillan, the founder of Silicon Valley Bank’s Wine Division and author of their annual State of the Wine Industry report, “While demand for premium wine will increase this year, there are clouds on the horizon that should be considered. We believe total and per capita wine consumption in the U.S. will drop for the first time in more than 20 years due to emerging generational shifts in consumption patterns that we see accelerating in the near term,” McMillan said. “We believe this is the case, since there is a permanent shift from generic wine, and aging baby boomers are being replaced by frugal Millennial consumers. Millennials, at this point in their development, have proven more agnostic in their choice between beer, spirits, or wine compared to retiring boomers.”
Is this going to continue?
Not so much. According to the trend report, BGen Xers will replace baby boomers as the largest fine wine consumer demographic in the U.S. by 2021.
“We’re training Millennials to drink foreign wine,” explained McMillan. “But how do we brand American wines? We have to be able to say something more than price. American-produced wines have to mean something. We have to get our hands around this for the long-term growth of the domestic industry.”
If the trends are to be believed, imported fine wine is supposed to be more popular this year. This is because the value of the U.S. dollar is strengthening, and Americans will have direct access to wine suppliers around the globe, all thanks to the internet. But because of that, bulk fine wine imports are expected to lose market share.
McMillan thinks that this will impact Central Valley the most, which is California’s largest wine region. Central Valley will be hit the hardest by the drop in consumption in 2016, which will ultimately force tens of thousands of additional grape acres to be removed from the 300-mile stretch of land.
“If you’re in the Central Valley of California, this is alarming,” he said. “People in that area will have to make massive changes in order to define themselves in the long run and become more relevant.”
“Regional wineries in New York are a lot more isolated from the world and national wine trends,” McMillan said. “They are selling direct. For them, it gets down to how well the economy is doing. If Wall Street sneezes, the wineries get a cold.”
Whether this prediction will come true or not, only time will tell.
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