Winescape: Winter 2024/2025

Published four times a year, “Winescape” offers comprehensive analysis of the wine and grape markets as well as trending topics. It is written by Terrain’s senior wine and grape analyst, Chris Bitter.

In the Winter 2024/2025 issue of “Winescape,” a wine industry report series from Terrain and American AgCredit, senior analyst Chris Bitter focuses on the wine industry’s most pressing topic: the state of the market.

“Retail wine sales fell across price tiers and sales channels during the first nine months of 2024,” Chris writes in the Market Happenings section. “But on a positive note, the pace of the decline appears to be moderating a bit, with the high end of the market experiencing the most pronounced improvement.”

In terms of the grape market, Chris states that the combination of lower yields and less acreage points to a substantially smaller grape crop this year. “The smaller crop was still more than needed to satisfy demand. Some uncontracted fruit went unpicked again this year for lack of a buyer. Thus, the crush is likely to be significantly below the long-term average of nearly 4 million tons.”

“Given that the market is likely to remain challenging for some time,” Chris writes in the report, “growers will need to be more creative than ever in finding ways to cut costs and secure grape commitments.”

When it comes to the economy, consumer sentiment is an important indicator for the wine industry at the moment. “Consumers appear to be more price-conscious and less willing to splurge on discretionary items and luxury goods,” Chris writes. “Thus, the negative economic vibes may be contributing to softness at the high end of the wine market.”

Still, sentiment has improved a bit in recent months. Along with rising wealth among high-income consumers, this could provide a boost to wine spending in 2025.

In the Trending Topic section, Chris provides a detailed outlook for the wine market in 2025 and beyond.

“Under Terrain’s base-case scenario of a relatively steady economic backdrop in 2025 (no severe slowdown or sharp rebound), I believe that cyclical and idiosyncratic factors will generally have a positive impact on the wine market, and I expect wine sales to improve, particularly at the high end.”

He also provides insight into the new normal for wine, addressing three important headwinds: demographic and generational shifts, competition with substitutes, and changing attitudes toward alcohol consumption.

“It is more important than ever for wineries of all sizes to have an up-to-date, creative and well-thought-out strategic plan in place that addresses the evolving wine consumer and market.”

The Winter 2024/2025 issue is available to read in full here: Winescape.com