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How Big is the U.S. Wine Market Really?

On January 13th, IWSR issued a press release that pronounced “Wine Consumption in the U.S. Declines for First Time in 25 Years”. Past statements from IWSR suggest that the U.S. wine market was about 360 million 9L cases in 2019. However, based on available tax collection data, bw166 projects that the U.S. wine market in 2019 was 409 million 9L cases*, an increase of +1.1%. This discrepancy of 49 million cases is the equivalent of 588 million bottles of Wine.

Key Highlights of the U.S. Wine Market

  • The market is highly fragmented with the TTB approving over 123,000 wine labels in 2019
  • Due to this fragmentation, bw166 uses tax paid data to track the size of the U.S. Beverage Alcohol market accurately. Tax Paid Shipments is the only measure that adequately measures all products entering commerce – as it reflects the point at which suppliers recognize revenue on their financial statements.
  • Traditional industry sources have reported on the Wine Market for several years. Looking at the trends of one of these Traditional Sources versus tax paid shipments since 2005 shows an interesting comparison and discrepancy.
    • Tax Paid Shipments of Wine have had a CAGR of +2.6% per bw166 versus +1.2% per a traditional source
    • As an additional point of comparison, bw166’s Tax Paid Shipment CAGRs for Beer and Spirits (flat and +2.4% since 2005, respectively) are nearly identical to those of the traditional sources, providing evidence that bw166’s methodology is sound and highlights the discrepancy in the traditional sources’ Wine numbers.
    • One possible explanation is that these traditional sources are overly reliant on surveys and data of the largest suppliers and wholesalers and do not adequately capture the fragmentation in the wine market nor the evolving consumer landscape into channels such as DTC and private label products. For Beer and Spirits, where there is less fragmentation than Wine, that approach appears more accurate.
  • One verification method bw166 uses is comparing theoretical excise tax collection with actual tax collections reported by the TTB. Generally, actual tax collections are slightly less than the theoretical tax collections due to small producer credits.
  • As further verification of volumes entering the market, bw166 has been working on a project to look deeply at tax paid shipments by state. This project is over 90% complete, and the results are validating the national tax paid numbers.
  • Please find a link to a short deck highlighting information on the U.S. Beverage Alcohol Market here. This deck also includes long term charts for volumes, share of servings, the bw166 Serving Index, and Consumer Spending on Beverage Alcohol.

* The bw166 wine data expressly excludes Cider but includes Table Wines, Sparkling Wines, Fortified Wines, Sake, Vermouth, and Other Wine (which includes Sangria, Wine Coolers, Wine Based Cocktails, and Wine with Fruit). This latter group accounts for only 17 million of the 409 million cases.

For more details please subscribe to the bw166 – TBA Overview.

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Initial Impacts of Tariffs Show Significant Impact on Imports in November 2019

But, first, some highlights from the tariffs imposed on October 13, 2019:

  • The primary beverage alcohol imports impacted by the tariffs are French, German and Spanish Wines less than 14% ABV in 2L or smaller containers, Irish or Scotch Single Malt (or straight) Whisky, and German, Spanish, UK Cordials and Liqueurs.
  • Collectively the imports of these products were down -10% in volume and -30% in value in November 2019 versus November 2018.
  • French wines and UK Whisky account for roughly 75% of the Value of these imports.
  • French Wines were down -18% by volume and -42% by value in November 2019 versus November 2018.
  • UK Whiskies were down -9% in volume and -36% in value in November 2019 versus November 2018.
  • Given the timing of orders and shipments it is likely that there were orders in suppliers systems that were not possible to change and were impacted by the tariffs in November 2019.
  • Average case prices for French wines and UK whisky both declined significantly, roughly -30% – implying either some price decreases were implemented to reduce the cost of the tariffs or mix was significantly impacted.

And now, the regular longer-term updates.

Beer, Spirits, & Wine – Packaged Imports Grow +7.40% By Value Over Last Twelve Months through November 2019, Packaged Exports Decline -7.20%

Total Beverage Alcohol:

  • Total beverage alcohol imports (including bulk and packaged) grew +7.90% by value over the last twelve months and grew +8.70% by value over the last three months. 26.3% of all imported beverage alcohol by value came from Mexico over the last twelve months.
  • Total beverage alcohol exports (included bulk and packaged) declined -10.0% by value over the last twelve months and declined -2.20% by value over the last three months. 20.7% of all exported beverage alcohol by value went to Canada over the last twelve months.

Each of the bw166 Import and Export Reports (for BeerSpirits, and Wine) enable tracking Beverage Alcohol imports and exports on a monthly basis for volume, value in USD, and value in local currency for all major trading countries.

Beer:

  • Imported beer grew +2.40% by volume and grew +5.40% by value over the last twelve months. Over the last three months imports grew +7.20% by volume and grew +11.5% by value. 70.8% of imported beer by value comes from Mexico.
  • Exported beer declined -20.5% by volume and grew +17.8% by value over the last twelve months. Over the last three months exports grew +3.70% by volume and grew +48.0% by value. 21.2% of exported beer by value goes to Chile.

For more details regarding imported and exported beer across all countries, subscribe to the bw166 Beer – Imports and Exports report.

Spirits:

  • Imported packaged spirits for the last twelve months grew +9.20% by volume and grew +13.0% by value. Over the last three months volumes grew +10.0% and grew +7.80% by value.
  • Imported bulk spirits for the last twelve months grew +4.90% by volume and grew +20.5% by value. Over the last three months volumes grew +9.00% and grew +43.6% by value.
  • 29.6% of all imported packaged spirits by value arrived from France while 53.2% of all imported bulk spirits by value arrived from Brazil.
  • Exported packaged spirits for the last twelve months declined -34.1% by volume and declined -15.1% by value. Over the last three months volumes declined -45.5% and declined -1.60% by value.
  • Exported bulk spirits for the last twelve months declined -7.80% by volume and declined -13.9% by value. Over the last three months volumes declined -27.3% and declined -15.1% by value.
  • 13.5% of all exported packaged spirits by value is destined for Canada while 22.0% of all exported bulk spirits by value is destined for Canada.

For more details regarding imported and exported spirits including detailed category breakdowns across all countries, subscribe to the bw166 Spirits – Imports and Exports report.

Wine:

  • Imported packaged wine for the last twelve months grew +4.40% by volume and grew +2.30% by value. Over the last three months volumes grew +5.70% and grew +1.60% by value.
  • Imported bulk wine for the last twelve months grew +11.8% by volume and declined -6.60% by value. Over the last three months volumes grew +18.5% and grew +3.70% by value.
  • 34.2% of all imported packaged wine by value arrived from France while 26.8% of all imported bulk wine by value arrived from Chile.
  • Exported packaged wine for the last twelve months declined -7.20% by volume and declined -9.30% by value. Over the last three months volumes declined -3.00% and grew +3.60% by value.
  • Exported bulk wine for the last twelve months grew +2.40% by volume and declined -3.00% by value. Over the last three months volumes grew +4.10% and grew +10.9% by value.
  • 36.1% of all exported packaged wine by value is destined for Canada while 53.9% of all exported bulk wine by value is destined for United Kingdom.

For more details regarding imported and exported wine including detailed category breakdowns across all countries, subscribe to the bw166 Wine – Imports and Exports report.