PORTLAND — Generational changes are expected to stymie per-capita U.S. consumption of wine in 2016, at least temporarily stunting the longtime upward trend, experts say.
The “baby boomer” generation, which consumes the most wine, is now preparing for retirement and feeling pressure to spend less and save more, said Mark Freund, managing director for Silicon Valley Bank, which tracks the wine industry.
Meanwhile, the “millennial” generation faces its own financial concerns — such as paying off student debt — and isn’t as dedicated to wine, he said Feb. 23 during the 2016 Oregon Wine Symposium in Portland, Ore.
Over the long term, though, there’s reason to believe that history will repeat itself and young people will come to prefer wine as they grow older, Freund said.
Other economic factors cut both ways.
Fuel prices are lower, allowing consumers to spend more on wine, but the volatile stock market has raised concerns about recession and inflation-adjusted incomes remain flat, he said.
“It’s difficult for the middle class to get ahead when there hasn’t been real wage growth,” Freund said.
U.S. wineries can also expect to face more foreign competition: While the output of wine-producing countries such as France, Italy and Spain has trended upward, their domestic consumption is down, he said.
That means those countries will be eager to export to the U.S., which has emerged as the top wine consumer in the world, he said.
Young drinkers’ appetite for craft beer doesn’t necessarily have to come at the expense of the wine industry, said Christian Miller, proprietor of Full Glass Research, a market analysis firm.
The popularity of craft beer is associated with consumers seeking higher quality and more intense flavors, which is a “cultural trend” that may also help wine, he said.
“What they’re shedding is the Budweisers and Coors of the world,” Miller said.
The millennial generation represents about 30 percent of the “high frequency” class of U.S. wine drinkers, who buy roughly 80 percent of the wine in the U.S., he said.
Baby boomers comprise 38 percent of high frequency wine drinkers, while the older generation represents 13 percent and “Generation X” represents 19 percent.
Sparkling wines are experiencing consistent growth since 2010, which may bring new consumers to the overall wine industry, Miller said.
Consumers associate Oregon wines with small producers, food friendliness and good value, though the region still isn’t as well-known as the Napa and Sonoma regions of California, he said.
The main reasons cited by high-frequency drinkers for not buying Oregon wine is that they prefer wine from other regions, that Oregon wines aren’t available where they shop and that Oregon doesn’t produce the varietals they commonly drink, Miller said.
In 2016, Oregon wine producers surveyed by Silicon Valley Bank said they expect sales to increase 13 percent in value and 9 percent in volume, which reflects the trend of consumers “trading up” to higher-quality wines, said Freund.
However, about 28 percent of Oregon wineries said they were experiencing poor financial performance, compared to 16 percent for all wineries surveyed, he said. Oregon wineries also reported being more willing to sell their companies than the industry as a whole.