SILICON VALLEY - The 16th annual Silicon Valley Bank State of the Wine Industry report has been released, and the results for restauarant wine sales are not good. "These reports show that restaurant wine sales are growing less than 1 percent in dollars and are shrinking 2 percent by volume," (SVB.com). With the wine industry growing, why are wine sales in a restaurant falling?
The answer lies in distribution. "Without the ability to attract distribution, the small producer has limited restaurant access. Every day, restaurant lists are becoming increasingly captive to large producers with access to distribution. Big restaurant chains are served by big wholesalers, who in turn get their wine from big wineries," (SVB.com).
ANNUAL CHANGE IN RESTAURANT SALES
Restaurant wine sales have declined over the past three years largely due to changing consumer behaviors. For small family owned wineries, access to restaurant sales is further negatively impacted by wholesale dominance in chains. Consistent with that view, only the wine segment larger than 250,000 cases increased restaurant sales year over year.
Source: SVB Annual Wine Conditions Survey
Source: Silicon Valley Bank Annual WIne Conditions Survey
Essentially, the only wines that make it on to a wine list are the ones that have enough muscle from their distributor to push their way in. In the past this has worked, but as consumers are becoming more educated, it's quickly beginning to fail. Why? The blame falls on millennials.
"Our frugal millennial consumers don’t want to pay restaurant wine markups. They know they can buy a bottle of wine at the store for less, so in the restaurant they are more likely to satisfy their consumption needs by starting with a beer or cocktail and having a glass of wine with dinner," (SVB.com). As a millennial wine consumer myself, I already know the ball-park retail prices for nearly every brand I see on a wine list. The only time I feel comfortable ordering wine at a restaurant is when I don't know the brand. That way even though I know the wine's been marked up, at least I feel like I'm getting a unique wine experience I couldn't recreate at Safeway.
So, how do restaurants make better profits off of wine sales? By listing lesser known brands, they've purchased at wholesale prices. Thankfully, Merchant23 is here to assist you with just that. In our online marketplace, wineries register as Sellers and upload their products at wholesale prices. Then restaurants can register as Buyers and order samples, negotiate prices, and make purchases directly on Merchant23.com. The best part of all? We are cleared to ship winery-direct in all 50 states!
We want to hear from you! Restaurants; what trends have you noticed with your consumers? Consumers; how do you feel about ordering wine at a restaurant? Share your experiecnes with us and let us know how we can help!