The 3 Reasons This is the Most Exciting Time in Decades in the U.S. Fine Wine Market
The sky over the fine wine market is not falling, in fact it’s never looked so vast and promising. The key to reaching the stars will be in leveraging modern sales & marketing strategies.
—Peter Baedeker, January 29, 2025
Historian and classicist Victor Davis Hanson identifies a recurring pattern in civilizations at their peak, characterized by a nostalgic longing for an imagined past. He recently stated in a podcast, “If you talk to a Roman in the first century AD, whose life was just incomparably better than a Roman in first century BC, he would tell us he loves to read Virgil, that his grandfathers were better off and greater than he is. I think that’s just the human condition…we’re stuck with it. The richer and more prosperous we get, the more we become ambiguous about appreciating it.”
This notion mirrors the current sentiment in the fine wine market, particularly within the U.S. We seldom hear anymore about the astonishing growth of the wine industry, from approximately 89 million 9-liter cases in 1970 to nearly 380 million in 2023. Instead, we find ourselves engulfed in debates online about whether the wine market is on the verge of collapse. Amidst this noise, we overlook the broader context; a reduction of almost 37 million cases in 2023 compared to 2022 is often viewed through a lens of panic, reminiscent of how investors reacted to Nvidia’s recent stock price drop this week even after its historic rise over the last two years. For many in the fine wine sector, celebrating this market correction away from the low-price, low-quality products that characterized the COVID day-drinking boom feels impossible. Instead, they focus on sensationalist headlines warning of “neo-prohibitionism” and an unraveling market.
If we’re wise, though, and if we happen to focus on premium fine wine products, this can be seen as the most exciting and opportunistic moment in the American premium wine market in the last thirty years. These are my three reasons why:
1) Corrections Separate the Wheat from the Chaff and Allow New Competitors
The principles of market correction are essential for economic health. If stock markets never corrected, there would be no opportunity for young investors to reap the rewards of lower prices, and poorly managed companies would dominate the landscape indefinitely. The recent loss of 37 million cases in the U.S. wine market can be attributed primarily to changing consumer preferences, which have unearthed vulnerabilities in brands heavily reliant on mass-market appeal and low-quality production. The increasing retail value of wine sales while volume has declined also demonstrates that consumers are now willing to pay for quality. Simply delivering quality, though, is no longer enough.
As we navigate this market correction, many high-quality, authentic brands are struggling and will continue to do so if they cannot adapt. Many of them will go out of business. Undercapitalized boutique brands lacking a compelling consumer promise will be at a disadvantage compared to well-financed wineries capable of enduring tough times and slowly adapting to change. It is crucial for smaller producers who believe in the authenticity and quality of their wines to reassess their sales and marketing strategies to remain viable in today's landscape and to do it quickly. There has never been a better time for succeeding with authentic wine, but the old tactics won’t cut it.
2) High Quality, Small Brands Can Gain Market Share in a Correction
In a market correction, larger, outdated brands like Campo Viejo have few alternatives but to decline. However, high-quality producers equipped with modern sales and marketing strategies can capitalize on this opportunity to capture market share. While the wine market has essentially quadrupled in volume since the 1970s to a staggering 380 million cases, the number of available brands in the market has gone up over eight times, from about 1,200 available brands in 1970 to around 10,000 available brands today. Today we see more volume being consumed by Americans than we did fifty years ago, and more choices for them on their journey through a life of wine discovery. Likewise, the U.S. market has become more global as the consumer is increasingly educated and wealthier, making world travel much more common and making rich visual and content information about remote wine regions available at the click of an iPhone. In 1970, only 15% of wines sold in the U.S. were imported, and today imports represent nearly half the market!
For 2024, we anticipate a continued contraction of 1-3% in U.S. wine case sales volume, potentially reducing the market size to around 370 million 9 liter cases. Let’s entertain a hypothetical nightmare scenario where the U.S. market sees a 10% decline this year, resulting in a market of just 333 million cases.
Now, consider a quality producer with an authentic story and exceptional wine hoping to sell 10,000 cases in the U.S. during a massive market correction to 333 million cases. This represents only 0.003% of the still available market! Even in a shrinking environment, this is an achievable goal for those who focus their marketing efforts effectively and have a compelling story that speaks to the curiosity and demands of today’s American consumer. If the data above prove anything, it’s that Americans demand new and fresh experiences in the premium products that we buy. Your family winery could be three generations old, but if it’s relevant and new to the American consumer, you can grow in this market.
3) This is the Most Affordable Time Ever for Marketing Your Boutique, Authentic Brand
The iPhone provides a remarkable example of democratization in technology. In 1980, a computer with the same power would have occupied an entire room 300 meters squared, and a comparable battery would have weighed tons. Today, everyone—from the Prince of Wales to Taylor Swift to your affluent friend—uses the same iPhone without being able to pay for a better version. This represents a positive shift in technological advancement, a shift that is also occurring in the fine wine industry.
Small, boutique brands now have unprecedented access to marketing platforms that offer the same reach once available only to Madison Avenue firms catering to massive brands. When I joined the Dierberg family estate three years ago as Managing Director of Sales & Marketing, our outdated and glitchy website was hampering sales. Instead of paying $50K to $125K I was quoted for new websites, I chose to redesign them using Squarespace and my limited coding skills. All the developers I consulted said it was impossible to connect Squarespace to the necessary compliance software for legal wine sales online. I was determined, believing that with the right approach, I could find a solution without excessive costs.
After months of consultations with frustrated developers, I secured a partnership with a marketing company’s developer who successfully coded our Squarespace site to integrate with the required APIs for Direct-to-Consumer sales compliance, achieving the entire project for around $10K and a monthly hosting fee of $60.
This experience illustrates the immense potential for boutique brands to leverage modern technology and independent creativity to market their authentic products effectively. If you’re ready to capitalize on the evolving landscape of the fine wine market, now is the time to act. Just make sure you have a guide!