COVID-19 leads to decline in US wine market volumes

Modelling work based on Wine Intelligence’s COVID-19 consumer insights data from March and April 2020 has revealed that total wine consumption in the US will show static volumes for 2020, with consumers broadly drinking the same amount of wine, but doing more of it at home.

Off-premise volumes are predicted to grow by around 10% year-on-year, while on-premise volumes will fall 29%, according to the base case version of the Wine Intelligence model, based on recalled and intended consumption patterns and cross-referenced with US on- and off-premise wine market volume sales published by IWSR, Nielsen and Wines & Vines Analytics.

The base case model assumes no second wave of coronavirus infections hitting the US in the second half of 2020. A worst-case model, assuming a second virus wave with a lockdown in October and November, suggests a decline of around 2–3% in total wine volumes, with the on-premise seeing a year-on-year decline of closer to 50%.

The model was based on a survey of 2000 US adults who drink wine at least once a month. Participants were asked to describe their normal drinking behaviour, how their wine drinking had changed due to lockdown, and what their intentions were once lockdown restrictions were eased.

Researchers behind the model decided not to include a specific prediction in change in dollar value of the market, citing the fact that there were too many variables to consider and that industry estimates about on-trade sales value vary widely. However, the researchers noted that the implications of a switch from higher value on-premise product to mainstream priced off-premise product would lead to a ‘significant’ value decline in the US market this year, even though overall volumes are predicted to remain stable.

Lulie Halstead, CEO of Wine Intelligence, noted that wine volumes held up in the US market, in line with what was observed in the wine market during and post the global financial crisis of 2008–10. However, the mix shifted towards more value brands, favouring both domestic and more dominant import brands.

“Increased tariffs and the dominance of domestic wine sold through the online and DtC channels has already put pressure on import brands in the US market and these current shifts will further the pressure on exporters to the US market,” Halstead said.

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