This week, 3000 trade and media professionals are expected to arrive at the Jacob K. Javits Center for Vinexpo New York, a two-day wine trade fair featuring more than 400 wine producers.
This is the first time in more than 10 years that Vinexpo has been held in the United States of America (USA). Each day, Vinexpo will offer master classes, panel discussions and sector networking spaces for attendees.
More than 30 Australian wineries from 20 regions will be showcasing their exceptional wine at Wine Australia's two pavilions.
The largest market for wine in the world
The USA is the world’s largest wine market, consuming 319 million cases of still wine each year. Per capita consumption is relatively low for a western country, with each person consuming an average of 9.8 litres of still wine per year (compared to 23.9 litres in Australia).
After 20 years of growth, USA wine consumption is starting to level out (see Figure 1), according to Silicon Valley Bank’s State of the Wine Industry 2018. While the premiumisation trend is expected to continue, it is likely to soften as baby boomers retire onto fixed incomes and value-seeking Millennials become a larger part of the market.
The value of off-trade wine sales in the USA increased by 1.3 per cent in 2017 to US$13.8 billion, according to IRI. The on-trade was equally flat, growing by 1.7 per cent to US$17.3 billion (Nielsen CGA). However, while Australian value declined by 1 per cent in the off-trade last year, on-trade value increased by 2.6 per cent to US$265 million.
Navigating the USA alcoholic beverages market can be difficult as each state has its own laws regulating the sale of alcohol, then there is the three-tier distribution system to consider that was set up after the repeal of Prohibition back in 1933. The three-tiers governing the distribution of alcohol are: the importer, the distributor, and the retailer. This means that any imported wine must work with an importer to get distribution in the USA.
Source: Adobe Stock
New York
New York is one of the largest wine markets in the USA, being the third most populous state after California and Texas. According to Wine Intelligence, in 2016, New Yorkers consumed 24.7 million cases of still wine, 8 per cent of total USA consumption. Forty per cent of the population drink wine (compared to the US average of 30 per cent), with average spend in the off-trade being US$15 per bottle and US$29 per bottle in the on-trade.
In New York, wine can only be sold at liquor stores, while beer can also be sold at grocery and drug stores (pharmacies). Alcohol regulations allow direct-to-consumer shipping at the cost of a license that must be renewed every three years.
Wine sales in the New York off-trade liquor channel decreased by 3.1 per cent in 2017 to US$1.3 billion, pushed down mostly by a decline in the US$4–7.99 per bottle segment. Sales value in the New York on-trade increased by 1.4 per cent to US$1.9 billion. Cabernet Sauvignon is offering opportunities for growth in both channels, up by 3 per cent by value in the off-trade and 5 per cent in the on-trade.
Australia is the third most imported country of origin for wine in the New York off-trade with a 4 per cent value share behind Italy (18 per cent share) and France (13 per cent) and ahead of New Zealand (3 per cent). The value of Italian wines sales is decreasing at 5 per cent per annum and the value of Australian wine sales is decreasing at 6 per cent, while France is stable, and New Zealand wine sales value is growing at 7 per cent. This demonstrates the importance of Australia reengaging with the trade and media in the USA at events like Vinexpo to turn the Australian category around.
To this end, Australia is delivering targeted marketing campaigns in the USA (as well as China) as part of the Australian Government’s $50 million Export and Regional Wine Support Package (the $50m Package). The $50m Package’s $1 million Wine Export Grants program and $2 million export and tourism readiness programs are an opportunity for wineries to leverage the $32.5 million investment in international marketing activities – all of which are designed to enhance the perception of Australian wine and drive demand for our exports.
Over the next three years, Australia will have a bigger and bolder presence at key international wine shows, with hundreds of wineries travelling to the USA and China to showcase their wines and educate consumers, trade and media about the way Australian wine is made. You can learn more about the $50m Package and Wine Australia’s efforts in the USA at erwsp.wineaustralia.com
Sources: Wine Intelligence, IRI, Nielsen CGA, Drinks Business