A new edition of Wine by Numbers was released a few days ago and it is required reading for anyone interested in global wine market dynamics. Wine by Numbers presents current data about global wine exports, imports and patterns of trade. It is a free resource provided by the Unione Italiani Vini, the Italian wine association.

Who Buys? Who Sells?

This special edition provides more data and deeper analysis, including essays by leading figures in the Italian wine industry about some of the most important export and import markets. Carlo Flamini of the Corriere Vinicola, which publishes Wine by Numbers, asked me to write an introductory essay for the “Who Buys” issue.

My essay presents a “Big and Hot” analysis of global wine market dynamics based upon the Wine by Numbers data. I invite you to download the pdf and check it out along with the rest of this valuable publication.

Writing the Wine by Numbers essay got me to thinking that it might be time to update my “Big and Hot” analysis of the U.S. market, so today’s column is part of an occasional series here at the Wine Economist where we analyze recent U.S. retail sales data looking for interesting and important trends. The data this week comes from Nielsen reports on U.S. off-premise table wine sales for the 52 weeks ending on April 22, 2017 as reported in the July 2017 issue of Wine Business Monthly.

Here’s how “Big & Hot” analysis works. The idea is to look at which parts of the market are big (in terms of total sales) and which are hot (or not) based upon rates of growth, both over the 52 week period and in the most recent 4 weeks covered by the data.

Sometimes as we see below, big and hot are the same, but sometimes they are very different. There is often something to be learned in either case.

Big and Hot Price Points

The overall U.S. off-premise market for table wines as measured by Nielsen grew by 3.5 percent in the 52 weeks of this study, but grew at a faster 6.1 rate in the final four weeks, showing some welcome acceleration that might be related to  Easter and Passover holiday wine sales.

This growth was not distributed uniformly over all price segments. This WBM Nielsen report aggregates price data by three dollar increments ($0-$2.99, $3-$5.99, etc.) up to $14.99 and then $15-$19.99 and $20 and above. The Big price segment measured by total expenditure is $3-$5.99 followed by $9-$11.99. The data suggest that the market is increasingly bifurcated  — the $6-$8.99 price segment between the two Bigs is actually shrinking. A tale of two markets?

Value wines are still Big and probably always will be, but they are not especially Hot. The fastest growing price segment is $15-$19.99, where total expenditures increased by more than 10 percent for the 52 week period. Wines priced $20 and above were “Hot Hot.” Sales shot up by 17.6% in the final four weeks of the reporting period. Amazing!

Big and Hot Imports

The Nielsen retail data reported here show that domestic table wines account for about 72 percent of total off-premise sales. Imports are somewhat stronger in restaurants and in the sparkling wine category, too, and if these sales were included the split would be more like 70% domestic and 30% import.

Italy is far and away the largest import wine source in these data (and growing faster than the overall market)  followed by Australia, New Zealand, and Argentina. France, which is only #5 by total sales, leads the hot parade, however, with 15% growth for the year and more than 25% 4-week growth. New Zealand, which normally is top of the Hot table, grew almost as fast followed by up-and-coming Portugal.

While Australian sales were essentially flat (an improvement over their dismal performance in recent years), Argentina, Chile, Germany, and South Africa had falling import sales in the Nielsen data.

Big and Hot Varietals

Conventional wisdom has it that American consumer reach for wine based upon brand, price, and grape variety. Chardonnay is the Big grape variety, accounting for 18% of all wine sales in the Nielsen table. Growth in Chardonnay sales rose slightly less than the overall market in this period. Cabernet Sauvignon, however, is only a little behind Chardonnay after a Hot surge and will soon take over the top place.

Sauvignon Blanc is the hottest grape variety, with 10.8% growth. Pinot Noir and Pinot Gris/Grigio are also growing while many varietal wine types (Merlot, Syrah/Shiraz, Malbec, Riesling, Zinfandel) have flat or falling sales.

Where is the growth going if not to these classic varietal wines? Look to the next category, which I call the Wild Card wines.

Big and Hot: The Wild Cards

The Hottest categories in today’s market are those wines that defy the conventional wisdom. Consumers are supposed to be drawn to the security of varietal wines, so it is a bit of a surprise that the “Red Blend” category is so Hot, growing at more than twice the rate of the overall market during these 52 weeks. “Sweet Red Blends” are even Hotter, with sales rise at more than triple the overall market growth rate.

The conventional wisdom also holds that pink wines are a pretty narrow category and that is true in part. Sales of White Zinfandel, once a really Hot pink wine ticket, fell by 5% in this period.

So the Rosé wine boom comes as a bit of surprise. Sales of  Rosé table wine selling at $8 and above per 750ml rose at a startling 61.7% for the year and 84.2% for the final four weeks of the survey period.

That last number (84.2%) is especially interesting and not just because it is so big. Remember that these Nielsen data cover the period that ended on April 22, 2017, so the final 4-week period included parts of March and April.  Rosé wine was long thought to be “summer wine,” but these surging sales came in early Spring. Maybe Rosé is a Thing now, and not just a summer Thing?

Economists like numbers like these, but what’s the story behind them? Come back next week and I will try to tease out some broader implications.