Despite Plunging Stock Market, Premium Wine Sales Are Up

by | Nov 29, 2022 | Wine & Spirits

Reading Time: 3 minutes

Despite the turbulent stock market, one thing that has remained stable is baby boomers love for premium wine.

Sales of bottles of wine priced at $100 or more were up 34.2% in value and 36.1% in volume in the second quarter of 2022. In contrast, sales of wine at $30 or less were down 9.4% in volume and 8% in value.

“Affluent consumers drive demand for super-premium brands and may be more recession-resistant under some circumstances, but a look at the results during the global financial crisis suggests that even these consumers are not recession-proof,” Rabobank’s global strategist for beverages Stephen Rannekleiv told The Drinks Business.

Stock market down, premium wine is up

Inflation, recession, potential nuclear crisis, and other scary global factors have sent the stock market into a tailspin. As a result, the S&P 500 was down 17.02%, and the Dow Jones Industrial Average was down 13.29%, year-to-date, as of August.

Usually, businesses think poor economic factors lead to less consumer spending. But in the world of premium wines, spending is going up.

“When the stock market goes up, rare wine tends to rise more, and when stock goes down, rare wine may go down a little, but not nearly as dramatically,” David Parker, the founder of the rare wine buyer and seller Benchmark Wine Group, told Wine Searcher.

According to the 2022 Q2 DTC Report from Enolytics and Wine Direct, luxury wines priced $90 and up enjoyed a 32% bump in sales, while bottles priced $20 and lower were down 1%.

“The more expensive the wines, the bigger the share of male boomer consumers,” says Chris Huyghe, co-founder and lead analyst of wine data aggregation service Enolytics. “Many of them tend to be collectors, and they are less influenced by economic factors. The lower priced wineries have a larger millennial and female consumer base who have a lower disposable income, which is, therefore, more affected by economic factors.”

Those who enjoy premium wine memberships spent generously in the Napa and Oregon direct-to-consumer (DTC) markets.

In Oregon, DTC shipments were up 18.7% in value, with a rise of only 12.9% in volume and an average price per bottle averaging an 11.8% increase.

In Napa, DTC shipments were up 18.8% in value, and just 4.1% in volume, meaning that the price per bottle was significantly higher year-over-year, according to SOVOS.

How brands can recession-proof their wine portfolios

Wine collectors take years to build their wealth and collections and won’t buy just any wine simply because it’s priced high.

“Those high-priced goods are largely purchased by consumers who have established wealth and income. We will always have the wealthy, so there should be demand for wines that are rare and possess a strong brand,” Rob McMillan of the Silicon Valley Bank told Wine Business International.

For brands looking to focus on premium wine, consider which wines have the best showing and consolidate. Many brands are offloading wines under $11 a bottle, such as Constellation Brands, who sold E&J Gallo Winery to focus on their premium offerings.

Rannekleiv suggested, “super premium wine and spirits brands can easily shift sales from one channel to another (on-premise to off-premise) and will enjoy certain advantages.” For example, the data from Napa and Oregon showed the wineries didn’t have to make a significant amount more volume and only slightly increased prices but saw increases in sales by focusing on the DTC channel.

Meredith Galante

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