Silicon Valley Bank, a leading provider of commercial banking services to the wine industry, has released its annual “State of the Wine Industry Report.”
Based on in-house expertise and primary research among West Coast wineries, the report forecasts flat growth in the fine wine segment and modest growth in higher volume segments in 2009. Silicon Valley Bank’s research also finds that the distribution channel for modest wine producers and many smaller brands is effectively closed, suggesting lasting changes in sales strategies.
“Wine businesses across the board are being pushed to new limits in the current environment,” said Rob McMillan, founder of Silicon Valley Bank’s Wine Division and author of the report. “The sustained negative market conditions will have an impact on high-end family wine businesses that will last well past the bottom of the present recession.”
Silicon Valley Bank’s annual wine report captures trends and addresses critical issues facing the U.S. wine industry in 2009-10, including the credit markets, distribution, bottle pricing, grape and inventory supply, foreign competition, marketing and alternative sales channel challenges. The report also offers strategic and tactical recommendations to wine businesses as they adapt to current and anticipated market conditions.
As an example of the changes taking place in the marketplace, some wineries that declined to share product with wine clubs now are embracing that distribution option. This is making it possible for Vinesse to share a wider array of labels than ever before with members of its various clubs.
Nearly 500 wineries throughout California, Oregon and Washington participated in Silicon Valley Bank’s annual wine survey. Financial data from the bank’s Peer Group Analysis program, which contains information from more than 100 premium wineries obtained over several years, also was used.