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Sales of European and fine wine set to grow in US

Published:  20 January, 2014

The US wine industry is facing challenges as it hits "transition point" with younger consumers moving into the market, but sales of European and fine wine are set to grow, says Silicon Valley Bank.

SVB, a prominent financial institution in the US and UK wine business, released its annual report on Thursday, predicting challenges ahead for the US wine industry in the next five to seven years.

The report stated: "We believe we are trending to a transition point as Boomers hit retirement and the economic condition of the Millennials replacing them is burdened with high levels of student debt and weak job prospects."

The report outlined the challenge specifically around Millennials saying: "Within the next five to seven years however, the evolution from Boomers to Millennials as dominant purchasers of wine will prove a significant headwind to sustained growth in the wine business." Specifically, Millenials will be slower to trade up into higher price points for the long-term future, with the report stating: "All data suggests higher per capita trends in the US population, but economic weakness should restrain younger consumers from trading up into higher price point wines for another five to seven years."

However it was not all bad news, particularly for European and fine wine producers. SVB predicts that both segments will see an increase in sales in the US market.

Sales of fine wine should grow from 6 to 10% in 2014. "Sales growth in fine wine will increase for the first time after three years of consecutive and accurate predictions of growth rate declines. Sales in the fine wine business will increase 6 to 10% over 2013. Luxury wines and those wines priced between $10 and $18 should see the greatest growth in demand in 2014."

SVB releases an in-depth report on the wine industry annually. Milennial consumers are defined as those aged between 16 and 34