America’s Leading Wine Markets

Bragging rights aside, the country’s metropolitan areas differ greatly in their consumption of wines. Often, we see consumption expressed as gallons per capita. That measure doesn’t tell the whole story, though.

The “gallons” in gallons per capita are usually “all wines”, which includes sparkling wines, dessert wines and specially-flavored natural wines in addition to the table wines we think about. Table wines are still (no spritz) wines of no more than 14% alcohol. What’s that? You say you’ve been enjoying red table wines with more than 14% alcohol? Where are they classified? Well, as far as the federal government is concerned, those are dessert wines and are taxed at a higher rate than table wines. For wine marketers, however, those high alcohol wines are usually thought of as being table wines because they are displayed on the shelf alongside all of the other table wines and are sold the same as table wines.

The ratios differ from city-to-city, but the typical relationship is: table wine accounts for 87-88% of all wines. In the northeast and Midwest states, Champagne is still part of many cultural traditions, so the table wines share would be lower than elsewhere.

The bar chart (Figure 1) shows the top 20 metropolitan areas of America in estimated volume of table winesconsumed during 2011. Los Angeles-Long Beach-Riverside and New York-northern New Jersey-Long Island are in a class by themselves.

Table Wine Consumption

The term “metropolitan area” generally is defined as Metropolitan Statistical Areas (MSAs) and Combined Statistical Areas (CSAs) by the Census Bureau. CSAs are combined MSAs where more than one MSA make up a seamless urban area. For example, Los Angeles-Long Beach-Riverside CSA combines Los Angeles-Long Beach-Santa Ana MSA and Riverside-San Bernardino-Ontario MSA in California. In defining these areas’ analyses, the way in which distributors organize their distribution was taken into account.

The challenge in conducting estimates for metropolitan areas is found in the way wine consumption statistics are compiled by government. ATTTB compiles them by state, because that is the way the tax collection apparatus works. Therefore, the analyst must construct the metropolitan area share of consumption for all or parts of one or more states. A special analytical exercise has to be performed for the Washington, DC-Arlington-Alexandria MSA. That’s because three states are involved for Washington, DC; Arlington and Alexandria, Virginia; Bethesda, Maryland and the District of Columbia itself.

Table Wine Consumption List

Some pertinent observations are:

  • Viewing the consumption by metro areas illustrates why every winery wants to be in New York, Boston, Washington, DC and San Francisco. For some reason, Chicago seems largely to be ignored. But the exercise also reveals that many alternative metro areas make good sense for the new winery just beginning to penetrate national wine markets.
  • Because the wine-related media is concentrated in New York and San Francisco, trends for most of the country are motivated by what happens there. If a new winery can gain a toehold in either of them, the media exposure that can follow will ease acceptance by distributors in other metro areas.
  • Imagine what San Francisco Bay Area/s standing would be if you added purchases at Napa and Sonoma Valley wineries made by San Franciscans.
  • A very large share of wine purchases by residents of Virginia and southern Maryland are made in Washington, DC. The District has no wine excise tax.
  • Tourist meccas draw significant wine purchases from far-away cities. Large city examples are Los Angeles, New York City, San Francisco, Miami, Washington, DC, Phoenix, Denver, Orlando, Las Vegas and New Orleans. Smaller ones are Reno and Atlantic City.

The next 10 metro areas (21-30), in descending order (from 7.52 to 5.49 million gallons), are: Orlando-Kissimmee-Sanford; Baltimore-Towson; West Palm Beach-Boca Raton-Boynton; Charlotte-Gastonia-Rock Hill; Las Vegas-Paradise; Sacramento-Arden-Arcade-Roseville; Columbus, OH; Cincinnati-Middletown; Austin-Round Rock; and Hartford-West Hartford-East Hartford.

Wineries should look to these leaders in table wine volume because, as a star sales manager once told me: “if you want to catch a fish, it makes sense to fish where the fish are!”

[box]Incremental growth[/box]

However, a more important statistic may be the metro area’s growth rate in table wine consumption. The reason is this: it is only in the rapidly-growing metro areas that wine distributors are taking on the representation of more wineries. In metro areas where the demand for table wines has stagnated, or is decreasing, a distributor has to jettison a winery from its portfolio in order to take on a new one. And, this happens in an environment where wineries already represented are asserting pressure on the distributor to increase their sales volume.

The picture wouldn’t be complete without a ranking of the large metro areas by growth of gallons of table wine consumption. Figure 2 and Table 2 present the fastest-growing metro areas in terms of increased gallons of table wine during 2005-2011.

Table Wine Consumption Increase

Table Wine Consumption Growth

Some interesting observations:

  • Washington DC-Arlington-Alexandria’s 24.8% increase reflects how recession-proof government and the lobbyists are.
  • Austin-Round Rock (TX) is the fastest-growing table wine market at 34.7% for the seven-year period.
  • Tucson, Seattle-Tacoma, Phoenix-Mesa-Glendale, Orlando-Kissimmee-Sanford, Milwaukee-Waukesha-West Allis, Raleigh-Cary, Charlotte-Gastonia-Rock Hill and Oklahoma City also stand out on the basis of percentage growth rate. These growth rates were accomplished in spite of three years of national recessionary conditions.

[box]Metropolitan Areas with decreasing consumption[/box]

Within the metro areas with the largest table wine consumption are six that experienced reduced table wine consumption between 2005 and 2012. They are shown in Table 3.

Decreasing Consumption

Hurricane Katrina took an enormous toll on New Orleans and Birmingham. Recession-reduced tourism is no doubt the reason for the losses in Las Vegas (casinos), Providence (Newport and the rest of the coast) and Virginia Beach.

The performances of Philadelphia and Pittsburgh are puzzling. Has the state’s liquor monopoly chased its wine consumers to go out of state in search of lower prices or better selection? Pittsburgh’s economy is heavily dependent on steel and coal, both of which are depressed. Philadelphia’s is not.

[box]Conclusion[/box]

If you live in a metropolitan area that has very large table wine consumption, consider yourself blessed. You will have a wide array of quality wines to choose from. If you live in a metro area that is not similarly endowed, you will have to turn to the internet and direct shipment to obtain the wines you are reading about.

Buon vino!