We’re buying less (but better) wine

Consumption is down, but more are buying in the $15-$20 range.

Boomers are buying less wine. Millennials aren’t picking up the slack. As a result, the growth of wine sales is slowing, while buying patterns are shifting in ways that are sending chills down the collective spine of the U.S. wine industry.

We’re also buying more wines in cans and other alternatives to bottles. And while the vast majority of wine continues to be purchased at retail outlets such as grocery stores and wine shops, more and more is sold “direct to consumer,” or “DtC,” either at the winery or over the internet, shipped directly to our homes.

Such are the pronouncements, prognostications and thunderings of a blizzard of annual reports issued this time of year by a cottage industry of trend-spotters. Just as Dumbledore could pull a thought from his ear and drop it in a birdbath to reveal the secrets of the past, these soothsayers pore over sales data of the past year to divine hints of the future.

In the short term, “business is pretty good,” says Rob McMillan, author of the Silicon Valley Bank’s annual report on wine industry trends. The booming economy and tax reform mean more discretionary income for consumers, and “getting those few extra dollars in your paycheck through fiscal stimulus or tax relief is probably good” for the wine industry, McMillan said in a videocast of his annual findings on Jan. 17. There’s logic to this. I’ve found myself drinking more as I watch the news.

But McMillan sounded an alarm. Growth in U.S. wine consumption is slowing after a 20-year run spurred by the famous “60 Minutes” report in 1991 on the “French paradox” and wine’s health benefits. The growth in sales flattened to just 0.3 percent last September, a low not seen in decades. In part, this is because we are drinking less wine, but better — sales under $9 a bottle have decreased, while we are buying more in the $15 to $20 range. “Something is changing,” McMillan said.

Boomers are retiring to fixed incomes, inclined to spend less per bottle and drink through their cellar collections. Mil-

lennials, who in the past seemed to have disposable income to spend in restaurants and on travel, are now seen as taking on debt as they purchase homes and start families.

That leaves the more narrow band of gainfully employed Gen Xers to carry the brunt of wine demand.

All three groups are increasingly focused on value — that $15 to $20 range.

And where is that demand going?

We are buying more wines from Oregon, France and New Zealand, especially, while sales of wines from Australia, Spain, Chile and Argentina declined.

Our definition of “wine country” keeps expanding. Consumer visits to wineries increased last year in New York, Virginia and Oregon, but decreased from 2016 levels in Washington state and Napa and Sonoma counties in California.

The lower numbers in Northern California are no doubt a result of October’s wildfires.

“We lost six weeks of sales in our haymaking period,” Jake Bilbro, owner and winemaker at Sonoma County’s Limerick Lane Cellars, said Jan. 19 at the annual Zinfandel Experience conference in San Francisco.

Meanwhile, wineries shipped 5.78 million cases of wine directly to consumers last year, at an average cost of $38.75 a bottle, bypassing the traditional three-tier system of distributors and wine stores.

That was a 15.3 percent increase over 2016, according to an annual report by Wines & Vines magazine and ShipCompliant by Sovos, a company that helps wineries navigate the labyrinth of state laws governing wine shipments.

Oregon led the surge with a 31 percent jump over 2016, followed by Washington state with 26 percent and Sonoma County with a 25 percent increase.

The rise came despite the effect of October’s fires, which depressed direct-to-consumer sales by $20 million in Napa County alone, the report estimated.

And what will we be drinking in 2018, aside from more Oregon wine? According to Nielsen, “This year, alternative packaging, rosé and prosecco should remain top of mind for wine producers and distributors, as well as retailers, as three areas of high growth sub-segments within wine.” Well, okay, that’s what we’ll be sold, not what we’ll be drinking.

But sales of wine in cans increased nearly 60 percent last year (but still are only 0.2 percent of all U.S. wine sales), Nielsen said, so we can expect to see more wine in cans as producers strive to stand out in the crowded market.

More premium wine in boxes, too, which increased 15 percent last year to about 10 percent of all wine sales.

And rosé? I could drink that all day. And all year.