The National Beverage Association says the U.S. wine industry is poised for a $1 billion recovery after years of falling prices, thanks in part to a surge in domestic sales, but that the market is not yet ready for the global surge of demand.
The NAB is a trade group that represents the U,K., and France’s leading wine makers, and its president, Gary Johnson, said last week that the wine industry needs to adjust to the global market.
“The U.K. is probably the best-positioned wine country to start,” Johnson said.
“It’s a big wine country, and the prices are lower than in Europe, which is a very competitive market.”
He also said that U.N. data shows the world’s largest producers of wine and spirits have already surpassed $2 billion in sales.
Still, the NAB says that prices are falling and there is room for more growth in the industry, especially with the global economic recovery.
The wine industry has a tough time getting into the global retail market because of high production costs.
“We’re looking at a lot of growth opportunities,” said Mark Smith, a spokesman for the trade group.
“But we have to keep the prices high to get into the U to make money.”
But some wine experts worry that prices may not be enough to sustain the industry.
The trade group predicts that prices for all wine brands will fall below $2 a bottle for the first time this year, as demand for premium wines such as Cabernet Sauvignon rises.
If prices continue to fall, the trade association says it expects the industry to suffer another loss in 2020 and 2021.
It predicts a $100 million to $200 million annual drop in sales and says consumers are turning to cheaper, less expensive alternatives.
The association’s chief economist, Chris Cargill, said the industry will have to focus on growing revenue, but he also warned that the price drop will hurt consumers.
“That will hurt us,” Cargil said.
Some wine makers have already cut prices by 30% to 40% or more in recent months.
But the trade union representing wine workers, the United Wine Workers Union, said in a statement that the industry is facing a “dangerous” financial crisis.
“Today’s price-cutting is another example of how the wine business is in deep trouble,” the union said.