Silicon Valley Bank Releases 24th Annual State of the US Wine Industry Report

Rhea-AI Summary

Silicon Valley Bank (SVB), a division of First Citizens Bank, released its 2025 State of the US Wine Industry Report, revealing significant market shifts. The report highlights a demand-based correction in the wine industry, with total wine consumption decreasing by volume. While the premium wine segment showed resilience with small single-digit sales declines, the top quartile of wineries achieved 22% sales growth.

Key findings include: total wine category sales ending 2024 with negative volume growth between -3% and -1%, weighted average winery revenue decline of 3.4%, and bottom quartile seeing a 16% revenue decline. No- and low-alcohol wine, white wine, and prosecco experienced positive growth, with white wine outpacing red wine sales for the first time in years. The market conditions are creating the most accessible bottle pricing in 30 years.

The report emphasizes a critical generational shift, with younger consumers showing different consumption patterns and often choosing alternatives to wine. Growing consumption share in the 30-45 segment is deemed important for industry recovery.

Positive

• Top quartile of wineries achieved 22% revenue growth
• Growth in no/low-alcohol wine, white wine, and prosecco segments
• Most accessible bottle pricing in 30 years for consumers

Negative

• Total wine category sales declining between -3% and -1%
• Average winery revenue decline of 3.4%
• Bottom quartile experiencing 16% revenue decline
• Wholesale-heavy wineries performing worse than direct-to-consumer brands
• Expected decrease in tasting room visitation for 2025
• Supply exceeding demand in California and Washington markets

Insights

Market Research Analyst

The 2025 SVB Wine Industry Report presents a pivotal moment for the US wine industry, revealing structural challenges that extend beyond cyclical market fluctuations. The data points to a fundamental reset in the premium wine sector, with significant implications for industry stakeholders and investors.

Several critical trends warrant attention:

• Market Polarization: The stark contrast between top-quartile performers (22% growth) and bottom-quartile wineries (-16% decline) suggests a market consolidation phase. This divergence typically creates opportunities for stronger players to acquire distressed assets at attractive valuations.
• Distribution Model Evolution: Direct-to-consumer focused brands outperforming wholesale-heavy operations indicates a structural shift in distribution economics. This trend could accelerate industry consolidation as smaller players struggle to maintain wholesale relationships.
• Supply-Demand Imbalance: Oversupply in California and Washington points to potential asset write-downs and consolidation opportunities in these regions. Oregon's better supply-demand balance might attract premium valuations and investment interest.
• Demographic Headwinds: The generational shift from high-consuming older demographics to more abstinent younger consumers represents a secular challenge that will require fundamental business model adaptations.

For First Citizens Bank (FCNCA), which now owns SVB's wine division, these trends suggest both risks and opportunities. The bank's specialized wine industry expertise positions it well to navigate the industry reset, potentially capitalizing on consolidation opportunities while managing credit risk in its existing portfolio. The direct-to-consumer trend could also create opportunities in payment processing and financial services tailored to this channel.

This market reset likely marks the beginning of a multi-year transformation period, with implications for valuations, lending practices and industry structure. Investors should monitor for signs of accelerated consolidation and adaptation to new consumer preferences, particularly in direct-to-consumer channels and alternative product categories.

Wine industry reset is here, fueled by a generational shift to younger consumers redefining consumption patterns

NAPA, Calif., Jan. 23, 2025 /PRNewswire/ -- Silicon Valley Bank (SVB), a division of First Citizens Bank, today released its 2025 State of the US Wine Industry Report. Widely regarded as the leading source of market trends in the premium wine sector, SVB's annual report provides an analysis of current market conditions and forecasts for the year ahead.

The report uncovered several positive market indicators, despite an overall decline in global wine demand in the last year. The premium wine segment once again demonstrated resilience with small, single-digit sales declines overall, and the top quartile of wineries producing average sales growth of 22%. With total wine consumption decreasing by volume, wine supply is backed up throughout the production and sales channels. While challenging for industry players, the market environment is poised to create some of the most accessible bottle pricing of the last 30 years, a golden era for wine consumers in search of value.

"The wine industry is undergoing a significant change, marking the first demand-based correction in three decades," said Rob McMillan, Silicon Valley Bank Wine Division founder and author of the report. "We have been predicting a generational shift for many years, and the 2025 report data solidifies the wine industry is now living that reality. Different parts of the industry will heal at different times, but we can expect a continued downturn for some time before we reach flat growth.

No- and low-alcohol wine, white wine and prosecco experienced positive growth, with white wine outpacing red wine sales for the first time in many years. According to the report, varietal shifts from red to white could be a forward indicator that a rotation to younger consumers is underway. More broadly, the youngest consumers are increasingly abstaining from wine altogether or choosing alternatives, all trends expected to persist into 2025 and beyond.

"Consumers are not changing their minds about wine. Older, 60+ year-old consumers who historically index higher for wine purchases are sunsetting, replaced by younger consumers who index lower for wine and prefer other drink categories," said McMillan. "To restore the balance between demand and supply, growing consumption share with consumers in the 30-45 segment is critical. The industry can shorten the recovery by evolving marketing and promotion strategies to meet that consumer at their value points."

The 2025 SVB report examines the latest consumption, pricing and sales data as well as the most promising wine industry marketing strategies. It provides an in-depth analysis of the key trends and data impacting the US wine industry:

• Total wine category sales will end 2024 with negative volume growth, between minus 3% and minus 1%.
• The weighted average of wineries produced a 3.4% revenue decline, with the top quartile seeing an average of 22% revenue growth, and the bottom quartile seeing a 16% revenue decline.
• Wholesale-heavy wineries fared worse than direct-to-consumer-focused brands.
• Tasting room visitation is predicted to be slightly lower in 2025 compared to 2024.
• California- and Washington-planted acreage exceed demand while Oregon is closer to being in balance with demand.
• 42% of winery survey respondents said they will take a small price increase in 2025, which may prove difficult in an over-supplied market with prevalent discounting.

Silicon Valley Bank will host a live webinar to discuss the annual report and state of the wine industry on January 23^rd at 9:00 a.m. PST. The panel will include Rob McMillan at Silicon Valley Bank, Kaleigh Theriault, Beverage Alcohol Thought Leader at NielsenIQ, Alison Smith Story, Co-Founder of Smith Story Wine Cellars, and Peter Yeung, Wine Industry Consultant. Register for the live webinar here. A replay of the discussion will be available after the event.

Read the full 2025 State of the Wine Industry report here: www.svb.com/trends-insights/reports/wine-report.

Silicon Valley Bank's Wine Division
Founded in 1994, SVB's Wine Division specializes in commercial banking for premium wineries and vineyards and the industries that support them. With the largest team of commercial bankers dedicated to the wine industry of any bank nationwide, SVB's Wine Division has offices in Napa, Sonoma and Oregon serving clients in the fine-wine producing regions of California, Oregon and Washington.

About Silicon Valley Bank
Silicon Valley Bank (SVB), a division of First Citizens Bank, is the bank of some of the world's most innovative companies and investors. SVB provides commercial banking to companies in the technology, life science and healthcare, private equity and venture capital industries. SVB operates in centers of innovation throughout the United States, serving the unique needs of its dynamic clients with deep sector expertise, insights and connections. Learn more at svb.com.

About First Citizens Bank
First Citizens Bank helps personal, business, commercial and wealth clients build financial strength that lasts. Headquartered in Raleigh, N.C., First Citizens has built a unique legacy of strength, stability and long-term thinking that has spanned generations. First Citizens offers an array of general banking services including a network of more than 500 branches and offices in 30 states; commercial banking expertise delivering best-in-class lending, leasing and other financial services coast to coast; innovation banking serving businesses at every stage; and a nationwide direct bank. Parent company First Citizens BancShares, Inc. (NASDAQ: FCNCA) is a top 20 U.S. financial institution with more than $200 billion in assets and a member of the Fortune 500™. Discover more at firstcitizens.com.

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SOURCE Silicon Valley Bank

FAQ

What are the projected wine sales figures for FCNCA's wine division in 2024-2025?

According to SVB's report, total wine category sales will end 2024 with negative volume growth between -3% and -1%, with an average winery revenue decline of 3.4%.

How did the top-performing wineries perform in SVB's 2025 industry report?

The top quartile of wineries achieved an average of 22% revenue growth, significantly outperforming the industry average.

What wine segments showed positive growth in SVB's 2025 report?

No- and low-alcohol wine, white wine, and prosecco segments demonstrated positive growth, with white wine outpacing red wine sales.

How is the generational shift affecting wine consumption according to SVB's 2025 report?

Younger consumers are increasingly abstaining from wine or choosing alternatives, while older 60+ consumers who traditionally purchased more wine are declining in market influence.

What are the supply-demand dynamics in different wine regions for 2025?

California and Washington have planted acreage exceeding demand, while Oregon's supply is closer to being in balance with demand.