Consumers are broadly drinking the same amount of wine, but are drinking more at home, according to consumer data collected by the insights and consultancy company in March and April this year.
Off-premise volumes will grow by around 10% year on year, while on-premise volumes will fall 29%, according to the base case version of the Wine Intelligence model, which is based on recalled and intended consumption patterns, cross-referenced with US on- and off-premise wine market volume sales published by IWSR, Nielsen and Wines & Vines Analytics.
Shift from high value on-premise to mainstream priced off-premise
The model was based on a survey of 2,000 US adults, who drink wine at least once a month, which was carried out in March and April 2020.
Consumers were asked to describe their normal wine drinking behaviour; how their wine drinking had changed as a result of lockdown; and what their intentions were once lockdown restrictions were eased.
The model looks at volume, not value: with the researchers citing to many variables and drastically different estimates for on-trade sales to make an accurate projection.
But with consumers switching from high value on-premise to mainstream priced off-premise products will inevitably lead to a ‘significant’ value decline in the US market this year, even if overall volumes do remain stable as predicted.
That's in addition to a broader trend where wine consumers may start to turn away from premium products and instead increase their focus on value for money.
Lulie Halstead, CEO of Wine Intelligence, says the 2020 model lines up with what was seen in the wine market during and after the global financial crisis of 2008-2010. ”Wine volumes held up in the US market, but the mix shifted towards more value brands, - favouring both domestic and more dominant import brands - both of which we anticipate seeing in 2020,” she said.
“Increased tariffs and the dominance of domestic wine sold through the online and DtC channels has already put pressure on import brands in the US market and these current shifts will further the pressure on exporters to the US market.”
Second wave scenario
The 2020 wine volume model, however, assumes there is not a second wave of coronavirus infections in the US later in 2020.
A worst-case scenario model – which considers a second wave and a second lockdown in October and November – would result in a decline of 2-3% for total US wine volumes. In this scenario, the on-premise sector would be particularly badly hit, with a year-on-year decline of near 50%.