SVB Report: California Wine Is About To Get Cheaper

By Neat Pour Staff |

Tariffs might be driving European wine prices up in the US, but according to a new report, other factors will push the price of American wines down this year. Silicon Valley Bank (SVB)’s annual State of the US Wine Industry report predicted a glut of California and Oregon wines domestically… and a subsequent retail price drop.

“Today, the supply chain is stuffed. This oversupply, coupled with eroding consumer demand, can only lead to discounting of finished wine, bulk wine and grapes,” wrote SVB Founder Rob McMillan.

Specifically, the shift will affect lower end offering. McMillan predicts that the premium wines favored by collectors will remain steady if not experience a slight uptick in price.

The report addressed n abundance of grapes from the recent harvest depleting prices down the chain. The past few years were marked by increases in grape production and subsequent subsequent drops in grape prices at the wholesale level.

Yet, the authors specifically fingered a failure to address a younger demographic for the overstock. 

“Wine companies aren’t addressing the values of the young consumer in their marketing. We aren’t giving them a reason to buy wine over spirits.”

The report cited some of the usual suspects such as millennial gravitating towards Ready-To-Drink (RTD) cocktails, spirits, and even cannabis.

In addition, the Report criticized the industry’s failure to respond to anti-alcohol campaigns which it characterized as misleading. To regain market share for wine, SVB called for wine producers to counter teetotaling efforts and stress positive medical studies.

“Absent offsetting promotion of the health benefits of moderate wine consumption, the cumulative impact of negative health messaging will continue to cast a shadow over consumption, particularly for the young consumer.” McMillan warned.

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