by Barbara Insel

Labor costs, grape prices, and vineyard land prices are all rising. But the wine market is narrowing, and few vintners are able to raise prices.

Wine Sales & Channels

Sales of luxury wines through the wholesale channel have been slowing since at least 2015. Nielsen found that the sales volume of wine costing over $30 per 750ml bottle at retail rose just 0.6 percent in 2018 and Silicon Valley Bank concluded that, for 2018, “consolidated annual volume growth of wine consumption is close to becoming negative for the first time since the early 1990s,” and the “price increase on average was zero.”
Since 2007, sales of imported wines have increased by 28.6 percent, while sales of domestic wines increased by 16.2 percent, as newly value-oriented consumers discovered wonderful wines were produced all over the world at very reasonable prices.

Consumers also shifted wine purchases from wine specialty stores to grocery, even as groceries limited the number of suppliers they carried and reduced inventories. After years as the fastest growing category in groceries, the rate of growth of wine sales in began to decline, from 5 percent annually in 2015 to 2 percent annually in 2017.

Restaurant sales and traffic also began to slow dramatically in 2015. Consider these statistics:

  • Traffic in full-service restaurants was down 2.4 percent in 2018, after a 4.2 percent decline in 2017.
  • Restaurant sales increases of less than 1 percent are now forecast for 2019, entirely due to food take-out and delivery.
  • 57 percent of restaurant food sales are now consumed off-premise. Most restaurants cannot sell wine for consumption off-premise, further shifting such sales to retail channels.

Winery Costs

Winery costs have been rising far faster than producers could possibly raise prices:

  • Napa’s average grape prices increased by 21 percent since 2015, Sonoma’s by 32 percent, and prices in the Central Coast (Santa Barbara, San Luis Obispo, and Paso Robles) grew by 9 percent, with the increases at the highest end particularly drastic.  
  • From 2013 to 2017, average winery labor costs rose by 13 percent in Napa, 18 percent in Sonoma, 10 percent in Santa Barbara County and 16 percent in San Luis Obispo County.
  • In the same period, average vineyard labor costs grew by 25 percent in Napa, 34 percent in Sonoma, 24 percent in Santa Barbara County and 24 percent in San Luis Obispo County, as the labor market tightened.

Nevertheless, new producers keep chasing their wine dream, adding more than 1,100 new wineries just in California since 2013.


Wine Institute annual press release on CA and US wine sales and Consumption; Federal data on US wine imports; Nielsen presentations and internal data provided by Danny Brager, SVP of Nielsen; Silicon Valley Bank’s State of the Industry for the last 2 years; Napa Valley Vintners’ Economic Impact of Wine and Grapes 2017 report; Federal Dept of Labor/BLS wage data for Napa and Sonoma; the 2018 Crush report supplemented by interviews with growers; report on economic impact of wine and grapes for Lodi District, completed in 2017; restaurant data from Restaurant Business and National Restaurant Association; ASFMRA, Agricultural Land and Lease Values, 2017; Trulia’s report on Bay Area housing costs, TTB.


Barbara Insel (LinkedIn)

Insel has over two decades of experience in international investment, finance, and related research. Insel held senior positions at Salomon Brothers, Morgan Stanley Asset Management and Kleinwort Benson, working in New York, Washington D.C., London, Prague, Moscow, and Latin America. Throughout her career, Barbara has been involved in wine-related investments and transactions. Insel was the 14th employee of the European Bank for Reconstruction and Development, created to rebuild Eastern Europe and Russia after the fall of the Soviet Union, and worked on financial institution restructuring and privatization with the World Bank before becoming an International Affairs Fellow at the Council on Foreign Relations. Most recently Insel was the Managing Director of MKF Research LLC.


Three-part LIVE webinar series—fully exclusive to Napa Valley Wine Academy

We have partnered with industry-leading researcher and recognized expert on the economics of the wine Industry, Barbara Insel, MBA and CEO of Insel & Co. and author of forthcoming book, “A Profile of the Wine Industry: Global, Local, Earth and Glitz” due to hit shelves in 2020.

Barbara will be presenting a three-part LIVE webinar series—fully exclusive to Napa Valley Wine Academy:

  • Part 1: Tuesday, April 2; 10:00am-11:30am PST
  • Part 2: Wednesday, April 3; 10:00am-11:30am PST
  • Part 3: Thursday, April 4; 10:00am-11:30am PST

The future of high-profile work, and data-driven wine sales is at your fingertips. This is a MUST signup for those enrolled in the WSET Diploma program, Master of Wine students, or if you work in the wine distribution chain (winery, distributor, importer, or major retailer).

Regular price $795. Register by March 29 for early bird price of $595.

Limited to maximum 12 webinar attendees to allow for interaction and Q&A.