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Despite a bleak economic picture for many Americans, it’s a good time for Washington State wines. Grocery story data collected both nationally and within the state show consistent growth in the wine category for the last two years, according to marketing and category management specialists.    

Since 2008, the United States has gone through an unprecedented economic trough with high levels of unemployment. But at the same time, shifts in consumer purchases in response to the recession are creating opportunities for food products, and especially Washington wines, said Steve Lutz, executive vice president of the Perishables Group, an independent consulting firm for the fresh food industry.

“Of 171 major food product categories at the grocery store, wine was in the top ten of the fastest-growing categories based on sales and unit growth in 2010 and 2011,” Lutz told Washington State vineyardists and winemakers during a November wine marketing seminar. “Despite the difficult consumer environment, wine was the third-fastest growing category over the past year. Wine products are doing well.”

Mike Looney, director of category management for Young’s Columbia, a Seattle, Washington-based malt beverage and wine distributor, narrowed the seminar’s focus specifically to Washington State. “In the Seattle market, wine accounts for 4.2 percent of total grocery store sales, but only about 2 percent on a national basis.”

But even more significant is the market share of Washington and Northwest wines in the state. Looney notes that Washington and Northwest wines account for 33 percent of the wine market in the state. “That’s huge.”

“Wine is a very important category for retailers in Washington State. If you watch the news, you hear that consumers aren’t shopping, and it’s all doom and gloom. But look at the wine category for the last 13 to 26 weeks—it’s the highest ­percentage of growth.”

What’s selling

Sales of wines priced in the $20 and above bracket, according to The Nielsen Group, increased 11.4 percent in the latest 13- and 26-week periods, Looney said, adding that increases were also posted in the $10 to $15 and the $15 to $20 ranges. Conversely, sales ­during the same period for cheap wines like Two Buck Chuck or Tisdale are down. ­“Consumers are trading up, and that’s a good thing.”

Washington State’s consumption of wine was about 10 million cases (9-liter case) of table wine in 2009, more than a 50 percent increase from 1998, he said. Consumption of table wine in the next few years is projected to show continued growth of 1.8 percent annually.

The top four wine varietals that showed an increase in sales in the last 13-week period were (in order of ranking) red blends, other reds, Cabernet Sauvignon, and Pinot Grigio, according to Nielsen data shared by Looney. Wine varietals showing a decrease were Merlot, Syrah, and white Zinfandel. Consumption of Riesling, a ­variety that was popular last year, is now relatively flat, showing only a 1.4 percent increase, while Chardonnay was down about 3 percent in volume.

Lutz and Looney were part of a growers’ caucus sponsored by the Washington ­Association of Wine Grape Growers that focused on today’s wine environment.

Value

Success in today’s market is tied to value, Lutz said. For example, sales of Roma tomatoes, the cheapest of all tomato types in the grocery store, have been flat. But sales of ­hothouse tomatoes, which sell for a 60 percent premium over Roma ­tomatoes, are increasing at impressive rates.

“It’s not about the cheapest product,” Lutz said. “It’s really important that we don’t get sucked in that vortex of the race to the bottom to see how cheap we can go.”

Consumers will continue to be under pressure in the coming year, he noted. “The market is polarized, and the consumer hourglass is more pronounced than
ever before.”

Food, home, and beverage products are increasingly important to consumers, Lutz said, adding that consumers are seeking out products that give or add to ­experiences at home.

“I think this means there is a huge opportunity that exists for products that communicate high value to the consumer,” he said. “That plays right into what the ­Washington wine industry can give to consumers.”

He encouraged growers and winemakers to understand where their products fit in the value-driven market and how to quantify and communicate that value.

“Ultimately, it leads to consumer preference, and that leads to success at the retail level.”