Friday, December 3, 2010

What is the future for the US wine market?

Wine in the USA is undergoing a fundamental change. We are in a formational time of rapid development. But what will a mature US wine market look like when wine becomes part of America’s cultural fabric? Which parts of the market will resemble Europe, Asia, or South America, and which parts will be uniquely American? In each society wine is at a different point in evolution and serves different roles.

With the excitement surrounding wine in the USA at this moment it is hard to picture what the market will look like 10 years down the road. With the explosive growth, and relative recession proof behavior of wine as an asset and a consumable over the last few years, a new wine equilibrium in America is being found. The resilience of this product to the downward market trends is a good sign that wine is here to stay in America and that there is momentum to the movement. When we add the influence that the internet is having on the wine scene, we end up with something that is evolving at the speed of light. Right now the American wine market is on the steepest part of the exponential growth curve that occurs with new developing markets and trends. At this point, every passing moment brings about huge changes. In (x) number of years, the wine market will saturate and find equilibrium. The pace of change will slow down making entry and impact on the market more difficult.

To get an idea of what a mature US wine market might look like we can look to Europe for hints. In Europe, wine is much more established as a foundational part of every day life. The question is, is this a product of the wine culture of Europeans, the time during which wine became part of society, or simply a product of the relative maturity of the markets? The answer most likely lies in all three.

The European market is naturally heavily Eurocentric due to the proximity of so many great wine regions literally hours away as well as hundreds of years of wine culture centered around the classic wine regions. Wine here has been a part of society for thousands of years and was even preferred to water for sanitary reasons! The European wine scene certainly provides options to its consumers, but with less ferocity than its new world counterparts. This is because the wine culture has matured around certain wines and regions, and for all but recent history the wines of Europe were the only real show in town.

Now lets contrast Europe’s eurocentrism with America's young and undeveloped wine scene. Brazen, adventurous, demanding of options as consumers, there are no limits to Americans "wine scope." Wine as a central part of life is just starting to become part of American cultural fabric. There is no tradition for Americans to fall back on. I argue that the American wine scene is flat as Thomas Friedman put it. New pinot from Chile for 8 bucks? Sure ill try that and if its better than that pinot made in California im drinking now, well ill take a case and tell people how X producer in Chile is making better than Y producer in California for 5 times less! I imagine in time the American wine scene will mature, but wherever it ends up it will certainly be uniquely American and vastly different from what we have seen with other countries. I see consumers that will have more of a willingness to expand into new wine regions, or to try things that are firmly outside the mainstream. Americans are known for this sense of adventure and yearning for the unknown. I see this sense of adventure as a positive for the future of wine in America. Consumers will have a broader base of knowledge and more options for being more and more satisfied with each dollar they spend on wine.

Where the USA wine scene is headed is anyone’s guess, but the best guess as to the future lies in the wine markets of other nations with a uniquely American twist.