Silicon Valley Bank, a leading provider of commercial banking services to the wine industry, released its annual “State of the Wine Industry Report” last week.
Based on in-house expertise and primary research, the report reveals trends and tackles critical issues facing the U.S. wine industry, including bottle pricing, grape and inventory supply, foreign competition, the weak dollar, regulations and sales distribution challenges.
The report forecasts the next 12 months to be generally positive for the industry as a whole. However, it predicts that the fine wine segment of the industry is likely to experience a drop in sales growth and profitability compared to a record high in 2007.
“The fine wine industry in particular is dealing with a lot of obstacles — a potential recession, an emerging grape shortage, sluggish restaurant sales, distributor consolidation, foreign competition and higher manufacturing costs to name a few,” said Rob McMillan, founder of Silicon Valley Bank’s Wine Division and author of the report. “What will separate successful wineries from the rest, more than any other factor, will be their ability to market and sell their wine effectively.”
Nearly 500 wineries throughout California, Oregon and Washington participated in the bank’s annual wine survey in March, which informs much of the report and forecast. Data from the bank’s Peer Group Analysis program, which contains information from more than 100 premium wineries over several years, also is used.