REPORT IN FOCUS - US wine market set for continued growth

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In spite of the economic downturn, the prognosis for the US wine market remains healthy, according to a new report from Wine Intelligence. Wine sales continue to grow year on year, but with per capita consumption still at around 11 litres, there is still huge potential for building sales, particularly among less regular wine drinkers. Ben Cooper reports.

The US may be the third largest wine market in the world behind Italy and France but unlike those countries it is firmly in the ascendant, according to a new report published by Wine Intelligence.

Pointing to the 3.5% volume growth last year, against 0.3% and a drop of 2.2% in Italy and France respectively, and rising per capita consumption, the USA Wine Market Landscape Report 2008 paints an upbeat picture for the future of the wine market in the US, and provides some interesting analysis of the different types of wine consumer stateside.

"Even in the tricky economic conditions of 2008, wine sales have still been rising," says Graham Holter, associate director - publishing at Wine Intelligence. "Americans are embracing wine as never before as a younger generation of health-conscious and cosmopolitan drinkers discover the pleasures of a glass or two with a meal. For the first time, the USA's reputation as a beer-swigging nation is being challenged. And yet, despite the advances wine has made in recent years, and the converts it has made, the opportunity for growth still remains huge."

Underlining the development potential, per capita wine consumption grew by 9.4% in 2007, but still only stands at 11 litres, far lower than in many European countries. "Wine is still not a mainstream product in most parts of the US," Holter continues.

While there are 73m regular wine drinkers in the US, the report points to the fact that some 85m Americans do not drink alcohol of any kind as evidence of the cultural diversity in the country, and the danger for marketers of viewing it as one market. These differences also include varying regulatory structures for different states, which are set out in the report, along with details of federal regulations and taxes.

"32 states can be described as 'Open' states; major wine consuming regions such as California, New York and Texas belong to this group," the report states. Indeed, the report points out that just three of the open states, California, Florida and New York, together account for more than 30% of total national wine consumption.

The report also points to some notable regional differences in the types of wine consumer. On the west coast, the researchers found, regular wine drinkers are generally "more broad-minded and adventurous".  Across the country as a whole, the report continues, there is a significant female bias, with women making up 57% of regular wine consumers.

Underlining the scope for expansion of the wine-drinking population, the report also points out that 46% of wine drinkers currently account for nearly 80% of the total market value.

Clearly there is potential to build sales among less regular wine consumers. Wine Intelligence divides the drinking audience into five distinct consumer groups:  Generation Treaters; Premium Brand Suburbans; Senior Sippers; Kitchen Casuals; and Un-engageds. Generation Treaters, with 42%, and Premium Brand Suburbans, with 32%, account for 74% of total wine sales in the US.

The contrasts between the ways these different consumer groups view wine makes interesting reading. For Generation Treaters, wine is an integral part of their social lives, they frequently bulk-purchase wine and the wine list will influence their choice of a restaurant or bar.

The Generation Treaters segment has the highest proportion of males of any group, at 54%, and is the highest earning group. Interestingly, it is also the youngest category with 60% aged 44 years and under. They have a significantly higher average spend on wine than the average for US wine drinkers, with 80% of off-premise purchases over $15 and 41% of on-premise purchases over $30 a bottle.

Premium Brand Suburbans, meanwhile, see wine as being fully integrated into their lifestyles.  Although highly involved with wine, they do not consider themselves experts. Around 50% of these consumers are aged between 35 and 54 years, while two thirds are from middle to high income households, and 60% are women. They are described as very frequent wine drinkers with more than two thirds drinking wine more than twice a week and one in five drinking wine daily. Around half spend between $10 and $15 a bottle on average in the off-premise market, the report states.

As the name implies, Senior Sippers are the oldest segment of wine drinkers with over half aged over 55 years. They are typically middle-income earners and there is a slightly higher proportion of men to women in comparison with the US wine-drinking population as a whole. Wine is consumed mainly at home and they are more likely to drink wine with food than on its own.

Kitchen Casuals have a lower interest in wine and it is not an integral or important part of their lives. Interestingly, they are the most accepting of screw caps. Not surprisingly, the Unengaged consumers are characterised as having a low interest in wine, being budget-driven and tending to stick to what they know. They lack perceived wine knowledge and wine is not integrated into their lifestyles.

Sectors: Wine

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