In the song “Surface Pressure” from the animated film “Encanto,” Luisa Madrigal sings “Pressure like a drip, drip, drip that’ll never stop / Pressure that’ll tip, tip, tip ‘til you go pop whoa, oh oh” in regards to being the reliable older sister.

In a different way, the U.S. wine market is feeling the pressure as beverage alcohol contends with changing consumption habits and attempts to appeal to younger legal drinking age (LDA) consumers.

“Overall, the wine market continued to remain under pressure due to rising costs and consumers shifting to lower ‘alternative’ beverage alcohol (e.g. RTD spirits, FMBs, and RTD wine beverages),” says Brian Sudano, S&D Insights LLC, Norwalk, Conn. “The market volume will finish down between 2 and 3%.”

Cara Piotrowski, client insights consultant at Circana, Chicago, notes that for the 52 weeks ending Dec. 29, 2024, total wine sales were down 2.2% with volume down 4.3% compared with the prior year, which was a downward trend compared with 2023, but an improvement when compared with 2022.

Understanding a new generation

As wine contends with these challenges, efforts are being made to help the category understand the habits of the younger LDA consumer base.

“Younger consumers’ wine occasions differ from Gen X and boomers before them,” S&D Insights’ Sudano says. “They don’t engage with wine as a food complement but more for socialization. This has had an impact on the on-premise restaurant business. They also tend to drink newer varietals such as Ganache and Tempranillo.”

Circana’s Piotrowski adds that flavor and sparkling have resonated with Gen Z LDA consumers.

“LDA households gravitate to flavor forward varietals and sparkling offerings within the category,” she says.

Additionally, a November 2024 Insight from IWSR titled “Innovation in wine branding and packaging,” highlights that Gen Z, those born between 1997 and 2012, have come of age during the rise of non-alcohol spirits and are known to be health-conscious and sober-curious.

“With LDA Gen Z less familiar with wine-specific regions and varietals ― and increasingly swayed by moderation concerns ― they are also sensitive to price increases,” IWSR’s insights states. “Data suggests they are moving away from occasions usually associated with wine consumption, forcing the wine category to adopt a new approach to reach them, and prove its relevance to their lifestyle.”

Given the generations’ moderation interest, the category is seeing new entrants in the lower-alcohol wine space, IWSR notes.

“LDA Gen Zs tend to be open to exploring zero-ABV and low-alcohol wine options for a more mindful, health-conscious approach,” it states. “This group’s interest in lower-ABV wines, and moderation in general, has prompted some low-alcohol brands to highlight ABV rather than hide it.”

Butter Wines, a brand of JaM Cellars, released ButterLight Chardonnay. Crafted with the same dedication to quality that defines the Butter portfolio, ButterLight offers consumers an authentic grape-to-bottle glass of wine at just 85 calories and an 8.5% ABV, based on a 5-ounce glass.

“The demand for lighter wines has clearly been growing, but until we were confident we could truly make a delicious wine at meaningfully lower calories and alcohol levels, we weren’t going to put the Butter label on it,” said Jeff Kandarian, executive winemaker of Butter Wines by JaM Cellars, in a statement. “The R&D process was extensive to retain full control over flavor first. This wine truly delivers on the Butter brand promise of quality for every wine drinking occasion. We’re thrilled to add it to the Butter lineup and offer a delicious alternative to consumers looking for lighter wine.”

The non-alcohol wine segment also is seeing new entrants. In response to growing consumer demand, 90+ Cellars entered the zero-proof space with the addition of two, dealcoholized sparkling wines from France.

The wines, a Sparkling Brut and Sparkling Rosé, are made using traditional winemaking methods. To finish the wines, the alcohol is removed through reverse osmosis, a technique designed to preserve the aromas and flavors, resulting in fresh, fruit-forward wines, the company says. The two sparkling varieties are low in calorie as well as sugar, and are offered at an accessible price point of $12 a bottle.

“Drinking culture, especially in younger generations, is changing,” said Alexandra Shaughnessy, wine director at 90+ Cellars, in a statement. “And while the low ABV/no alcohol market has been predominantly owned by the beer industry, nonalcoholic wines are gaining popularity, and are expected to rise 7% globally through 2027. This growing interest, in addition to the meteoric rise in sparkling wine consumption in recent years, makes us believe this is the perfect time to enter the market with delicious, everyday-priced dealcoholized sparkling wines.”   

Circana’s Piotrowski notes that although it might be small, the non-alcohol wine segment was a bright spot for the category in 2024 with double digit dollar growth of 41% compared with the prior year.

Areas of success

Beyond interest in lower alcohol and non-alcohol wine, the U.S. wine market still is seeing pockets of growth to support the category.

“Super-premium has outperformed as consumers continue to look for quality as a perceived value price point,” S&D Insights’ Sudano says. “Wines at $10 to $25 communicate quality at affordable price. While wines above $25 are out of reach for many consumers. The value wines suffer from perception of inferior quality.”

Circana’s Piotrowski also highlights the contributions from higher price point wines, but also calls attention to sub-segments within the premium wine arena.

“Premium Box ($4.50-plus) led dollar growth among table wine segments, gaining 3.2% vs. [year ago] (YA) in [last 52 weeks],” she says. “While ‘premium,’ boxed wines deliver on value while preserving product freshness, appealing in the current economy. Ultra-premium and above segments also delivered growth, led by ultra-premium gains (plus 1.4% vs.YA). As wine continues to premiumize, consumers who are willing to spend are looking for higher quality offered in these segments.”

In terms of non-traditional packaging, Piotrowski notes that box and aseptic packaging have increased the past two years, highlighting brands such as Bota, Black Box and Vandange.

S&D Insights’ Sudano notes that cardboard and bag-in-box have been around for a while, but the aluminum and single-serve cardboard have been more recent in the past several years in an attempt to appeal to younger LDA consumers.

“It has performed very well as the part of the wine market continues to gain share,” he says. “The most notable brand is Beat Box which continues to expand distribution and consumer pull, especially among younger consumers.”

The wine market also is seeing a boost from traditional varietals, following more recent gains from niche ones. Although some smaller varietals still are delivering on growth.

“There has been some resurgence in traditional varietals like Cabernet Sauvignon, Merlot, Sauvignon Blanc and Chardonnay while some smaller varietals continue to maintain momentum like Ganache and Malbec,” Sudano says.

In terms of top varietals, though, Circana’s Piotrowski says it has remained stable the past few years with Cabernet Sauvignon and Chardonnay as leaders. However, “Sauvignon Blanc and Pinot Grigio have moved up in the ranks among the Top 5 selling varietals,” she adds.

One area that has been challenged in the past year is sparkling. Piotrowski explains that for the past 52 weeks, sparkling wine dollar sales were down 3.5% compared with the prior year with volume down 5.1%. This was led by premium sparkling wine, which saw declines of 10.3%.

S&D Insights’ Sudano also calls attention to the challenges experienced by the segment.

“Sparkling wine has recently experienced headwinds after several years of growth as it has moved from a more seasonal drink to an all year-round drink,” he says. “This has been driven by the growth of Spritz cocktails.”

It was not all bad for the sparkling wine segment though, as Circana’s Piotrowski highlights that modest gains were recorded for popular, up 1.9%, and super-premium, up 0.7%, within the sparkling wine sub-segments.

As wine brands feel the pressure to return the category to growth, premiumization as well as non-alcohol offerings might be celebratory solutions to the market.