Wine News Weak Thanksgiving Raises Worries for Wine

Weak Thanksgiving Raises Worries for Wine

Traditionally dependable sales surges might not be quite so noticeable this year.
© Shutterstock | Traditionally dependable sales surges might not be quite so noticeable this year.
Christmas and New Year might not be as dependably profitable as previously, if Thankgiving is anything to go by.
By W. Blake Gray | Posted Wednesday, 23-Dec-2020

Thanksgiving is usually part of a big week for US wine consumption. But 2020 appears to have been different, and that doesn't bode well for wineries hoping for a Christmas sales boost – or sparkling winemakers counting on New Year's Eve sales.

The sales period right now is important. The National Retail Federation predicts a decent holiday season for US general (not specifically wine) consumers, forecasting a 3.5 percent increase over holiday spending in 2019. For wineries, with Dry January looming, the next 10 days are crucial.

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"The 3-week period from the week before Christmas through New Year’s are typically three of the four highest individual weeks of the year for [retail store] wine sales," Nielsen beverage alcohol industry consultant Danny Brager told Wine-Searcher. "Those three weeks make up about 5.8 percent of the full year, yet about 9 percent of the year’s (retail) sales of wine, so they are about 50 percent more important than what an average week represents."

November US wine sales figures were released this week by the trio of Nielsen, Sovos ShipCompliant and Wines Vines Analytics. They're not disastrous; a slight downward trend in sales both by volume and value was expected in November.

But there is usually a Thanksgiving bump that helps the wine industry at the end of November, and apparently that did not happen.

"The week leading up to Thanksgiving is generally the second or third highest selling week of the year for wine in US [retail stores], just behind the couple of weeks just before and including Christmas," Brager said. "While wine sales in the week ending November 28 were 25 percent higher than the week prior, that was well below the jump that we would normally see, as last year’s sales in the week prior to Thanksgiving were 38 percent higher than the week prior. This likely is a result of Thanksgiving festivities being smaller and/or shorter, if they happened at all."

Also, more drinking around Thanksgiving doesn't come only at home: usually people spend more money in restaurants and bars around the holiday, partly because they're traveling and also perhaps because they need to get away from their families.

Growth grinds to a halt

The wine sales report says: "It's evident that consumers were not celebrating Thanksgiving as they would have in prior years, and with that, their purchases of wine only minimally exceeded year-ago levels in [retail stores]. [These purchases] would have needed to be much higher to offset losses from ... restaurants, bars and tasting rooms, losses that might have deepened even further given greater restrictions in a number of states due to rising Covid cases."

In fact, US wine sales in November showed the lowest growth rates since the pandemic began in March. There is good news for wineries, though. In retail stores, all price categories above $11 showed double-digit growth. This drove the average price of a bottle purchased in the grocery and drugstores that Nielsen measures to an all-time high of $11.53. Nielsen said the regions doing best in retail stores in November were Napa Valley and Oregon (good luck finding bottles from either place for $11.53), while Washington state's difficult year continues.

The average price of a bottle ordered directly from a winery, though, dropped 8 percent compared to November 2019, to $43.94. This isn't terrible news as people ordered 17 percent more bottles direct from wineries than in November 2019; more people are ordering, and newer customers are ordering cheaper bottles. The best performing regions for direct winery sales, according to Sovos ShipCompliant and Wines Vines Analytics, were Sonoma County and non-West Coast states. Oregon struggled in direct sales in November.

Here's some bad news on direct sales; the report says: "Large wineries (over 500,000 annual case production) with the lowest average prices continued to lead growth by a very large margin. Average bottle prices of limited production wineries – traditionally the highest – dropped substantially."

Now with just 10 days to go New Year's Eve, it's almost showtime for sparkling wine. Unlike 10 years ago, though, Americans are drinking much more sparkling wine throughout the rest of the year. Sales growth of bubblies outpaced other types of wine by a significant degree in November, according to Nielsen. This is good news because New Year's Eve parties are likely to be subdued this year, despite the universal desire to bid farewell to 2020.

"For sparkling wine specifically, the week leading up to New Year's is number one in (retail) sales," Brager said.

If the stress of waiting to see what happens gets to you, may we suggest a nice glass of Champagne?

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