US fine wine market larger than thought
Source: the drinks business
by Patrick Schmitt
11th July, 2012
The US fine wine market is significantly bigger than many believe according to Vinfolio chairman Jean-Michel Valette MW.
Speaking at the Fine and Rare Specialist course at Vienna's Palais Coburg on 29 June, he said that annual US fine wine sales through retailers amounted to US$3.2 billion, before commenting, "The US is a larger fine wine market than people think".
Jean-Michel then gave a detailed analysis of the make-up of the US fine wine market, and explained that the $3.2bn figure was defined as wine sold for over $50 a bottle at retail.
Stressing that these numbers referred to wine that has been sold for the first time, he added that in addition to the $3.2bn of fine wine retail sales there is an estimated $250m secondary market, which he described as "vibrant and growing".
Breaking down the fine wine retail market by category, he said that US top end wines accounted for $1.2bn worth of sales, and that these bottles were mostly Napa Valley Cabernet Sauvignon.
He attributed a further $0.8 billion to sales of cru classé Bordeaux; $0.5bn to grand and premier cru Burgundy; $0.3bn to vintage Champagne, and finally, $0.4bn to "other" fine wines, such as those from Italy, or the Rhône Valley.
As for the value of wines sitting in cellars across the US, Jean-Michel proposed a conservative figure of $10bn.
He said that 4.3 million people had cellars according to the Wine Spectator, and he believed that there were around 100,000 private cellars containing 500 bottles or more.
"So, 500 bottles multiplied by 100,000 cellars, multiplied by a $125 bottle average gives you $10bn," he said, adding, "and I think it is a bigger number than that."
For example, he noted that the average bottle price among Vinfolio customers is over $200, while he also said that Cellar Tracker have 28 million bottles in their system.
"If you take the bottles just tracked by them, and give them a $200 average [value], then that's almost $6bn."
Jean-Michel also gave a break down of the most collected wines among Vinfolio and Cellar Tracker customers by volume (see lists below) before turning his attention to the length of time fine wines were remaining in US private cellars.
He explained that 82% of the bottles owned by both Cellar Tracker and Vinfolio customers were from the 2000s, but that 15% or fewer were from the 90s, and as little as 3% from the 80s.
"This shows that the wines are being consumed," he said, "and although I guess that if this was the UK you might see a slightly older mix, but I also guess that when these wines go to Asia, they are being drunk."
Summarising his presentation on the US fine wine sector, he reiterated the impressive scale of the market and emphasised the potential value of the secondary market in North America.
"There is a lot of wine in private cellars and at some point some of that will change hands. Why? Because it is worth a lot more [than people paid for it] and they may want to get their money out, or someone wakes up and realises they have too much to drink in their lifetime.
"Or they have a 'life event' - they get divorced, die, go bankrupt or their tastes change; for example, they suddenly discover Barolo or Burgundy and want to sell some of their Bordeaux."
He also reminded attendees of the course that it is illegal for one person to sell wine directly to another collector in the US.
As for influencing what is bought, he pointed out that Parker is still extremely important, and hence, "the wines people are keeping tend to have higher scores."
As for decision-making without Parker, he pointed out the increasing role of "user groups".
"These are people who actually pull the corks and you can see their notes for example on Vinfolio or Cellar Tracker.