California Ag Network

Tag: Wine Exports

  • Impact of Tariffs on Wine Industry

    The wine industry continues to struggle with fewer buyers, while tariffs threaten to shrink the market further. A boycott by provincial governments in Canada is costing vineyards their second-most important wine market and some wineries are at risk of going out of business. At the Unified Wine & Grape Symposium, The Wine Economist editor Mike Veseth spoke with Matthew Malcolm of California Ag Network about the impact of tariffs on the American Wine Industry. Watch this quick video and learn more in American Vineyard Magazine.

  • CA Wine Sales Hit $35.2 Billion in U.S. Market

    California wine shipments in the U.S. reached an estimated retail value of $35.2 billion in 2017, up 3% from the previous year. The state shipped 241 million nine-liter cases in the U.S. in 2017, up 1%.

    California wine sales to all markets, including shipments to the U.S. and exports worldwide, were 278 million cases in 2017.

    “Consumers in the U.S. and worldwide continue to trade up to higher-priced premium wines,” said Robert P. (Bobby) Koch, Wine Institute President and CEO. “The quality, selection and commitment to sustainability make California wines well-positioned for growth.”

    “California wine sales in the U.S. market have grown 15% in the past decade from 209 million cases shipped in 2008 to 241 million cases in 2017,” said Jon Moramarco, founder and managing partner of BW166, and editor of the Gomberg-Fredrikson Report. “Last year the growth mainly came from premium wines priced over $10.”

    According to Moramarco, demographic trends play a significant role in wine sales. While per capita consumption has been flat over the last decade, wine sales have grown in line with the legal drinking age population, which increased roughly 10 percent over the same time period. Additional trends impacting sales included wineries focusing on tasting room and direct-to-consumer sales, which accounted for nearly $2.7 billion in retail value and 5.8 million cases in 2017. Wineries also found opportunities in independent, local restaurants with wine menus listing limited production wines to appeal to consumers shifting their spending to these smaller eating establishments.

    2017 California Wine Stats

    “Wine is growing but in a more challenging environment, with rapid and broad retail and consumer changes,” said Danny Brager, Senior Vice President of Nielsen’s Beverage Alcohol Practice Area. “Wine selling locations in the U.S. are up 20% from a decade ago to 565,000 off- and on-premise locations, with a wide range of formats such as natural/gourmet grocery stores, no frills/value-based formats, theaters, premium bars and fast/casual on-premise outlets. There is also a diverse range of consumers, from Millennials who have less disposable income than a generation ago to Baby Boomers who are retiring and likely slowing their wine consumption as an increasing number of Americans are entering their golden years. Marketers need to find the right balance in attracting these diverse sets of consumers. E-commerce is increasingly having an impact on expanding consumer access to wine, and wineries are working on several digital platforms where wine is being sold,” he explained.

    According to Nielsen-measured U.S. off-premise sales, top-selling varietals by volume are: Chardonnay, Cabernet Sauvignon, Red Blends, Pinot Grigio/Gris, Pinot Noir, Sauvignon Blanc, Merlot, Moscato/Muscat, Rosé and White Zinfandel/Blush. Rosé continues to be a phenomenal growth story, with sales volume jumping 60% compared to the previous year.

    Total shipments of sparkling wine and champagne to the U.S. reached 26.3 million cases in 2017. Up 8% from the previous year, sparkling wines/champagnes accounted for a 7% share of the U.S. wine market.

    The U.S. Wine Market
    Wine shipments to the U.S. from all production sources — California, other states and foreign producers — grew 1% to 403.4 million cases in 2017, with an estimated retail value of $62.2 billion, up 2% from the previous year. The U.S. has remained the world’s largest wine market by volume since 2010. California’s 241 million cases shipped within the U.S. in 2017 represent a 60% share of the U.S. wine market.

    U.S. Wine Exports
    U.S. wine exports, more than 90% from California, reached $1.53 billion in winery revenues in 2017. Volume shipments were 380 million liters or 42.2 million cases. The European Union’s 28-member countries were the top market for U.S. wine exports, accounting for $553 million; followed by Canada, $444 million; Hong Kong, $119 million; Japan, $94 million; China, $79 million; South Korea, $25 million; Mexico, $23 million; Singapore, $17 million; and Philippines, $14 million.

    CALIFORNIA WINE SHIPMENTS1
    (In millions of 9-liter cases)
    Year California Wine Shipments to All Markets in the U.S. and Abroad2 California Wine Shipments to the U.S. Market2 Estimated Retail Value of CA Wine to U.S.3
    2017 277.9 240.7 $35.2 billion
    2016 279.7 239.1 $34.3 billion
    2015 278.2 233.7 $32.6 billion
    2014 273.0 229.7 $31.3 billion
    2013 263.8 221.2 $29.7 billion
    2012 250.4 210.8 $29.0 billion
    2011 265.5 224.3 $28.5 billion
    2010 246.1 206.3 $28.5 billion
    2009 253.2 213.8 $27.6 billion
    2008 255.3 208.8 $26.1 billion
    2007 241.2 198.3 $24.8 billion
    2006 235.8 196.9 $24.4 billion
    2005 231.6 194.1 $23.0 billion
    2004 226.3 182.4 $22.2 billion
    2003 211.9 177.0 $20.8 billion
    2002 195.4 168.3 $21.5 billion

    Sources: Wine Institute, BW166/Gomberg, Fredrikson & Associates and U.S. Dept. of Commerce. Preliminary. History revised.

    1Includes table, champagne/sparkling, dessert, vermouth, other special natural, sake and others. Excludes cider.
    2Excludes bulk imports bottled in U.S.
    3Estimated retail value includes markups by wholesalers, retailers and restaurateurs.

    WINE SALES IN THE U.S
    (Wine shipments in millions of 9-liter cases from California,
    other states and foreign producers entering U.S. distribution)
    Year Table Wine1 Dessert Wine2 Sparkling Wine/
    Champagne    		 Total Wine Total Retail Value3
    2017 336.3 40.8 26.3 403.4 $62.2 billion
    2016 333.2 41.2 24.4 398.8 $61.1 billion
    2015 325.6 40.2 21.7 387.5 $57.4 billion
    2014 323.7 34.6 20.6 378.8 $55.5 billion
    2013 327.0 31.6 18.9 377.5 $52.3 billion
    2012 319.5 30.3 17.9 367.7 $50.8 billion
    2011 308.1 31.4 17.5 357.0 $48.6 billion
    2010 290.8 28.9 15.4 335.0 $46.5 billion
    2009 282.4 27.2 14.0 323.5 $45.2 billion
    2008 272.2 27.7 13.6 313.5 $45.0 billion
    2007 272.5 26.7 13.9 313.0 $43.5 billion
    2006 258.8 24.3 13.6 296.7 $41.5 billion
    2005 255.4 22.5 13.1 290.9 $38.5 billion
    2004 245.3 20.3 13.2 278.8 $36.2 billion
    2003 237.0 17.6 12.0 266.6 $34.0 billion
    2002 222.5 15.9 11.5 250.0 $33.0 billion

    Sources: Wine Institute, U.S. Dept. of Commerce, and Estimates by BW166/Gomberg, Fredrikson & Associates. Preliminary. History revised. Excludes exports. Excludes cider as of 2011 going forward. Totals may not add up exactly due to rounding.

    1Includes all still wines not over 14 percent alcohol, including bulk imports bottled in the U.S.
    2Includes all still wines over 14 percent alcohol and sake, including bulk imports bottled in the U.S.
    3Estimated retail value includes markups by wholesalers, retailers and restaurateurs. Includes on- and off-premise expenditures.

  • California Wine Exports Reach Record $1.62 Billion in 2016

    San Francisco, Calif., (February 16, 2017) – U.S. wine exports, 90% from California, reached $1.62 billion in winery revenues in 2016, a new record. Despite challenges from a strong dollar, winery revenues were up 1% from 2015. Volume was 412.7 million liters or 45.9 million cases.

    “California wine exports continue to reflect the trend toward premiumization with the dollar value of our wine sales outpacing volume shipments. California wines are well positioned for this trend—our vintners are offering quality, value, diverse styles and environmental stewardship in their winemaking. Combined with the state’s iconic lifestyle, innovative cuisine and beautiful destinations, California wines continue to gain attention from consumers worldwide,” said Robert P. (Bobby) Koch, Wine Institute President and CEO.

    The top 10 export markets for California wines are: the European Union’s 28-member countries, accounting for $685 million, followed by Canada, $431 million; Hong Kong, $99 million; Japan, $87 million; China, $82 million; Mexico, $24 million; South Korea, $23 million; Switzerland, $19 million; Singapore, $14 million; and Philippines, $13 million.

    “California wine exports have grown 78% by value in the last decade despite heavily-subsidized foreign competitors and high tariffs. Our global trading partners are increasingly acknowledging the high quality of wine from the Golden State and responding to our California Wines marketing efforts throughout the world,” said Wine Institute Vice President International Marketing Linsey Gallagher. Gallagher manages Wine Institute’s California Wine Export Program, involving more than 170 wineries that export to 138 countries, and 15 representatives and offices in 25 countries across the globe.

    “Trade agreements, such as the North American Free Trade Agreement (NAFTA), have helped to dramatically grow U.S. wine exports yet discriminatory non-tariff trade barriers continue to be crafted by foreign governments at a steady pace,” said Tom LaFaille, Wine Institute Vice President and International Trade Counsel. “We applaud U.S. government efforts to eliminate these barriers and strengthen our competitiveness globally, including the World Trade Organization (WTO) challenge against Canada which seeks to ensure that British Columbia grocery store consumers can choose from the vast array of the world’s great wines.”

    Wine Institute’s Regional Trade Directors in key export markets reported on 2016 exports:

    Canada

    “Canada remains a strong market for California wines and despite a slowdown in momentum, U.S. wines were still #1 in the table wine category in Canada in 2016. Retail sales of U.S. wines are now at a record 6.5 million cases and $1.1 billion dollars with the strongest increases in the provinces of Ontario, New Brunswick, Manitoba and Saskatchewan. We anticipate continued growth and are also hopeful that provincial governments will extend to California wineries equal access to retail distribution channels,” said Rick Slomka, Wine Institute Trade Director for Canada. “Canadian consumers have confidence in the quality and value offered by California wineries whose wines are successful in all price segments. Recent price increases resulting from exchange rate fluctuation may lead to slower growth.”

    Continental Europe

    “As the dollar moves towards parity with the Euro, export volumes to Europe are down in most countries, mainly in the lower priced segment. The good news is that the dollar value of California’s exports to the EU countries (excluding UK) is up 2.7% as the interest in premium California wines continues to be strong,” said Paul Molleman, Wine Institute Trade Director for Continental Europe.

    United Kingdom

    “It’s a fantastic result for California wine in the UK, continuing three years of accelerating growth. There is a very clear trend towards premiumization with +18% value growth and rising volumes (+5%). The conversation is increasingly about exceptional wine quality from California across both powerful and elegant styles. Volume shipped exceeded 13 million 9-liter cases to the UK, making it the top volume export destination for California wines globally. With the value of California exports to the UK now worth $337 million, the industry is on track to meet its target of $400 million in export sales by the end of the decade,” said Wine Institute United Kingdom Trade Director Justin Knock.

    Japan

    “U.S. bulk wine exports to Japan have been growing as major Japanese importers are now importing popular-priced California wine brands in bulk and then bottling in Japan. This reduces the burdensome import duty to a limited extent and makes inventory control easier. In 2016, we saw the last major generic California wine brand switch to local bottling,” said Ken-ichi Hori, Wine Institute Japan Trade Director. “Japanese importers of U.S. wines were disappointed to learn of the U.S. withdrawal from the Trans-Pacific Partnership. They now hope the U.S. will establish a Free Trade Agreement with Japan as soon as possible to abolish the heavy import duty on U.S. wines, which will help the entire American wine category grow in Japan. This is critical for the U.S. wine industry, since our competitors, Chile and Australia, already have free trade agreements with Japan and benefit from a duty advantage over U.S. wines.”

    China

    “The significant growth in U.S. wine exports to China in 2016 is particularly important because it demonstrates a meaningful growth in higher value products. A 47% increase in value in one year, coupled with an 11% increase in volume, speaks to the inherent strength in consumer acceptance of California wines in China, despite the rising value of the U.S. dollar versus the Chinese RMB currency throughout the year. Additionally, according to research firm Wine Intelligence, the total number of imported wine consumers in China increased by 26% over the last two years. These concurrent developments signal an increasing healthy market in China and Chinese consumers’ burgeoning interest in California wines,” said Christopher Beros, Wine Institute Trade Director for China and Pacific Rim.

    Since 1985, Wine Institute has served as the administrator of the Market Access Program, a cost-share export promotion program managed by the USDA’s Foreign Agricultural Service. Wine Institute’s Export Program supports California Wines worldwide with a consumer website discovercaliforniawines.com in eight languages, social media campaigns in 16 countries, an educational California Wines PowerPoint tool and videos, and a strong partnership with Visit California to increase tourism to California wine regions. Wine Institute organizes California’s participation in international trade shows and trade missions, offers master classes and seminars as well as tastings for trade, media and consumers worldwide. Last year, the program hosted 150 international media and wine buyers from 15 countries for visits to California wine country. For information, see: Wine Institute’s California Wine Export Program