Is the US Luxury Wine Market as Profitable As They Would Have You Believe?

There’s been a tradition over the past few years of lauding the US wine industry for its innovation and expansion. However a new report suggests that despite a positive forecast, there is actually somewhat of a crisis in the US wine industry.

A report released this week known as the 2014 Silicon Valley Bank State of the Wine Industry Report warned that US wineries gross profits are set to be “negatively impacted in 2014.”

In further details the report stated that fine wine sales are set to increase between 6%-10% in 2014. This is the first uplift after three consecutive years of growth rate decline in the American fine wine industry.

However it continued by saying that “due to the higher volume of wine available for sale in a slow economy, we don’t believe the opportunity is there to take broad increases with the exception of selective increases in the higher priced luxury segment.”

This has been put down to a run of two huge harvest in wineries on the West Coast. The US West Coast is its primary wine production centre. Wines from California are world famous; we even have luxury wines from the golden state on the Ideal Wine Company list.

The report also heralded the coming of a “transition point” for the sales of wine in the US. This comes down to generational shifts in America.

Traditionally ‘baby-boomers’ are the ones who buy wine in the country. However they are reaching retirement and being replaced by the millennial generation. This generation have so much debt they don’t have the expendable income needed to prop up the US wine industry.

Rob McMillan, executive vice-president and founder of SVB’s wine division spoke on this to the drinkbusiness.com. He said that “within the next five to seven years however, the evolution from Boomers to Millennials as dominant purchasers of wine will prove a significant headwind to sustained growth in the wine business.”

It’s quite clear here that the US luxury wine industry is going through a shift at the moment that could redefine its very existence. At the Ideal Wine Company we’ll be keeping an eye on this to make sure that we continue to bring you the best US luxury wines at prices you can afford.

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