SVB – State of the US Wine Industry, 2024

The State of the US Wine Industry in 2024 will be influenced by the industry's ability to adapt to changing market dynamics. The survival of the fittest concept, often attributed to Darwin, actually refers to the adaptability of species under external pressure. Businesses that cling to outdated strategies and fail to adapt will suffer predictable outcomes. To overcome these challenges, the wine industry must either collaborate or find individual solutions to expand market opportunities. Successful adaptation is more likely to occur when the industry works together to find solutions, as competition within the industry is a net zero-sum game. Looking ahead to 2024, the economy is not expected to enter a recession without an external event. Tasting room visitations, which have been lower in recent years, are predicted to increase. Direct-to-consumer (DTC) sales will also grow modestly after a slower period in 2023. However, total wine category sales are expected to decline, while premium wineries will experience slightly negative volume sales. Value sales for premium wineries are expected to grow between 1% and 4% in 2024. The industry currently faces overproduction issues, with total wine consumption decreasing, inventories piling up in the wholesale market, and retailers being cautious about carrying inventory. The planted acreage in California and Washington is exceeding current demand, while Oregon's planted acreage is in balance. Market corrections for grapes and bulk wine, especially lower-priced wine, are likely to occur in 2024. The industry may resort to using flash sales sites and increasing discounts and promotions to manage the surplus supply.