SUPER-premiumization: A Sunny Forecast for the High Teens and Twenties

The wine business is still shaking off the effects of the great recession, but there are brighter days ahead.

The buzzword on everyone’s lips has been ‘premiumization,’ as wines over $10 have led in growth over the last five years. Sales have long been flat for wines under $10, and bottle rings are slowly but surely ticking upward. 2015 reports confirm the underlying trend and bring even more hopeful news, showing continued double-digit growth in this tier being overtaken by even stronger performance at higher price points.

“Premiumization is definitely here,” says Amy Hoopes, Chief Marketing Officer for Wente Family Estates. “Wines under $10 are struggling, but we’re seeing double-digit growth trends in the $15 to $20 category, and wines over $20 are growing even faster.” Retailers may be more cautious in their outlook by nature, but national scan data shows good reason to be optimistic about fine wine prospects.

“We’ve seen strong and steady growth in the $15 to $20 segment post-recession,” says Lorena Ascencios, head buyer of Lower Manhattan’s Astor Wines & Spirits, “though volume is higher in the next category down.”

At Sigel’s, an upmarket Dallas retailer with 10 locations, director of wine marketing Jasper Russo’s is even more bullish on higher-end sales. “Every time the economy notches up, we see the price point shift upward,” he says. “We see every stock market increase reflected in our numbers.”

This movement is not restricted to wealthy enclaves. Even competitive national chains are reporting the trend. “The key growth in our wine business is coming from the $15-and-above category,” says Melissa Devore, vice president of wine buying for Total Wine & More. “We are seeing extreme growth over $50 as well. This is partly due to the maturation of tastes among younger wine consumers as they grow older and earn more disposable income. But other factors include efforts by
our sales staff to make customers feel good about making a purchase at these price points and wine becoming more accepted for gifting.”

However, not everyone is seeing increases in these categories at the retail level. “Our wine sales have not recovered and have remained flat to this day,” says Don Carter at the Wine Seller, a hand-sell store in an affluent North Jersey suburb. “Customers adjusted their spending patterns downwards in 2008, and it appears that those who once drank $30 wines have gotten used to drinking $20 wines.”

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