American consumers' move toward white wines is happening fast. Most wineries will struggle to keep up.
December 12, 2024
We're in the middle of a major shift in the American wine market. Demographics are changing. High-end (and low-end) wines are suffering through their first prolonged slump in two generations. The market is adjusting to a profoundly negative (and in my opinion, incomplete) message on moderate alcohol consumption from a range of governmental and international organizations. That has led to some of the gloomiest headlines I can remember in my career in wine. But there are bright spots. The middle of the market (wines selling in the $20-$30 range) is actually doing pretty well. Categories like alternative packaging and chillable reds are hot. And there is one trend that we have noticed that that I don’t think enough people are talking about: a significant and accelerating switch in preference toward white wines.
Let's start with our example at Tablas Creek. When customers join our VINsider Wine Club they can choose between the Classic (Mixed) Selection that includes reds, whites, and the occasional rose, or they can choose Red Wine Selection or White Wine Selection if they want to limit their shipments to a single color. For the first five years that we offered people this choice, starting in 2014, the percentages who opted for each of the three alternatives hardly budged at all, with roughly 70% of people choosing the mix, 20% choosing all red wines, and 10% choosing all white wines. That held true right through to the onset of Covid. But starting in 2020 we began to see a shift, and that shift has accelerated in the last year.
Compared to 2019, the percentage of people choosing the White Wine Selection has jumped from 10% to 27% in four years. It's interesting that it hasn't taken that percentage from the red wine lovers; the percentage of VINsiders choosing the Red Wine Selection has stayed within a narrow range between 18% and 23% since 2014. Instead, it has taken its percentage from the people who would, last decade, have been choosing the Classic (Mixed) Selection.
We’re seeing something similar in the wholesale market. If you look at our 2024 wholesale depletions vs. 2023, and just at the three tiers of blends where we have red and white (so our Patelin, Cotes, and Esprit) depletions on our whites are up 35.3% vs. 2023 and the reds up 1.8%. I hesitate to make too much of this, as some of the issue is that last year we ran out of white and couldn't satisfy all the demand that we had, but it's still a pretty dramatic difference in performance.
We're not the only people reporting that white wines are hot in an otherwise chilly market. In a recent blog, Mike Veseth aka The Wine Economist dives into data showing that globally, white wine consumption was on a trend to surpass red, and white wine production already had. Traditional red wine regions as diverse as the Rhone, Australia, and Piedmont are making pushes to get more whites in the ground to respond to changing consumer preferences. Danny Brager and Dale Stratton, two of wine's most connected analysts, shared the following slide breaking down the performance in the American wholesale wine market by different categories last month to WineAmerica. Notice that over the last 12 months three of the five white categories show growth, while all six red categories show declines:
Why these changes are happening is surely due to a complex mix of factors, but I would suggest three that are the most significant:
- The move toward drinking wine away from formal meals. I believe that this is the most important and least understood factor driving changing habits around wine. Younger wine drinkers are drinking wine differently than previous generations did. They will have a glass of wine out at a bar. Or at the beach. Or in the back yard at a cookout. Or before a meal. These are occasions where you're not pairing a wine with a single dish. White wines can of course benefit from pairing as much as red, but they tend to feel more approachable without food than red wines (particularly rich, tannic red wines) do. At the same time, high-end restaurants, where many people would order bottles of powerful red wines as a matter of course, are struggling.
- A desire to consume wines with lower alcohol. There is a ton of data out there suggesting that lower-alcohol wines are a bright spot in a difficult market. Most white wines are lower in alcohol than most red wines, and more importantly, most consumers think that white wines are lower alcohol than most red wines. This is a part of a greater push toward wellness with complicated impacts on all alcohol, but it tends to push drinkers toward whites rather than reds.
- The relatively lower costs of white wines. White wines, because they spend less time in the winery than reds and therefore accumulate less winemaking costs, tend to be less expensive than red wines. With the top end of the wine market struggling, the relatively cheaper option that whites offer is a refuge for price-sensitive wine lovers.
Of course, none of these trends are absolute, and wine drinkers in the United States are a heterogeneous lot. But all three trends tend to shift people toward whites -- and toward the low-tannin chillable reds that are another bright spot in the wine marketplace -- and away from more traditional red wines.
Knowing that these trends are happening doesn't mean that it will be easy for an individual winery to make the necessary changes. Planting new vineyard takes time. It's typically five years from the decision to plant, which necessitates prepping the ground, ordering grapevines, planting -- to getting those vines into production. Then a winery needs to make (and potentially age) the wine, bottle it, and get it to market. Five years ago we were in a very different place! You can accelerate the process by grafting grapevines over from red to white, and I'm sure many vineyards are looking at that option, but even that requires investment and takes two years.
The relative scarcity of many of the white grapes that American wine lovers are looking for is another complicating factor. There's plenty of Chardonnay in the ground in California, but as the slide from Danny Brager and Dale Stratton showed, Chardonnay is the white wine category that is currently performing the worst here. And that makes sense if people are looking for lighter, fresher wines. Chardonnays, at least as typically made in California, tend to be on the rich and oaky end of the white wine spectrum, and both the demographics of the Chardonnay buyer and the situations in which Chardonnays are most likely to be bought likely correlate better with the traditional red categories rather than with the lighter-bodied whites that are the market's top performers. Yet more than half the total white wine grape acreage in California is dedicated to Chardonnay:
There are signs in the acreage data that people are starting to pay attention to the trends toward lighter-bodied whites. The complete list of varieties whose non-bearing acreage (basically grapes planted in the last 3 years) is greater than 8% of the total planted consists of Albarino, Chenin Blanc, Picpoul Blanc, and Vermentino. All four of those fit happily in the category of higher-acid, lighter-bodied white wines. (Side note: I’m also proud that two of these are here because of our grapevine nursery.) The significant nonbearing acreage of Pinot Gris and Sauvignon Blanc seems to me to be a positive sign as well. But the total acreage of the grapes that would make the white wines that it seems like consumers are most interested in buying is still relatively small and not growing as fast as it likely needs to to satisfy increasing demand.
If California wineries don't pivot quickly, they'll likely be giving up one of the few potential growth opportunities in a difficult market to imported wines. But even if they do, it's going to take a while to see the changes in what's available.
OK, fellow California wineries. Let's get pivoting.