Wine shipments, sales increase in 2016

Continuing an expansion that has lasted more than 20 years, U.S. wine shipments grew 2.8 percent in volume last year even as competition increased from cheaper-priced imports.|

SACRAMENTO - Continuing an expansion that has lasted more than 20 years, U.S. wine shipments grew 2.8 percent in volume last year even as competition increased from cheaper-priced imports, according to industry figures released Wednesday.

Revenue from domestic wine sales jumped 4 percent last year as Americans continued to trade up for higher-priced wines, according to data published by BW 166, a Santa Rosa consulting firm. The price for the average bottle of wine sold in the U.S. surpassed $10 for the first time, a reflection of consumers’ willingness to pay more for better wines.

“The U.S. wine market continues to expand,” Danny Brager, senior vice president of the beverage alcohol practice at Nielsen, said Wednesday during a presentation at the Unified Wine and Grape Symposium, the largest wine industry trade show in North America.

“It’s still the envy of the wine world,” he said.

U.S. wineries sold a record 383 million cases of wine in 2016, according to preliminary figures released by BW 166.

Even with the wine industry’s continued expansion, there was still concern at the conference about the threat posed by restrictive trade barriers in the global marketplace. Analysts warned the U.S. wine industry could face reverberations from the United Kingdom’s decision to exit the European Union market and the more protectionist trade polices that President Donald Trump has started to implement. In addition, a strong dollar is making premium imports a good deal for U.S. retailers.

Mike Veseth, an economist and wine blogger, said Brexit will likely decrease sales for French, Italian and Spanish wine producers in the United Kingdom, forcing them to look toward the United States, which is the biggest and most lucrative global market for wine.

“The (domestic) market is going to be very much more competitive than it has in the past,” Veseth said. He added that Brexit would cause further disruption, though the United States - the eighth-biggest wine exporter into the United Kingdom - may not be harmed as much as European rivals that hold a much larger share of the market.

Trump this week pulled the U.S. out of the Trans-Pacific Partnership with 11 other Pacific Rim countries, upsetting the California wine industry that had hoped for passage because it would lower tariffs for American wine sold in Japan.

Trump also wants to renegotiate the NAFTA accord with Mexico and Canada, which could cause concern among U.S. wineries. Canada is the second-largest export market for American wine, bringing in more than $461 million in 2015. Ninety percent of wine exports are from California.

“I think it’s a question mark if a lot of these trade agreements are looked at. Sometimes wine is not the most powerful thing that is negotiated,” said Glenn Proctor, a partner at Ciatti Co., a global wine broker located in San Rafael. “It’s thrown in at times to make other things work. I think that’s my bigger fear.”

Meanwhile, foreign wineries have continued to gain market share in the U.S., helped by the strong dollar, especially for vintners in the premium category. Sales of packaged imported wine increased 3.2 percent by volume and 3.1 percent in value during the 12-month period through November, according to BW 166.

Foreign wines have captured large U.S. segments in a few hot categories. Sales of Italian prosecco has led growth in the sparkling category, increasing more than 25 percent annually, Brager said. It now accounts for 17 percent of the dollars spent on bubbly.

Another revitalized category has been rosé, which has been growing nearly 50 percent annually and now represents 1.5 percent of the table wine market. The French led this sector with a 62 percent share in sales, while the U.S. followed well behind at 30 percent, though more local producers are getting into the category.

The competition is increasing for California wineries, who are vying for consumers’ attention against the vast array of wines from around the world and the burgeoning wine regions of Oregon and Washington, Brager noted.

“I almost can’t think of any other consumer category where there is such a huge choice today. If (wine) consumers can’t get something, they will find something else,” he said.

Despite the competition, California wine has held its own domestically. Golden State wines increased sales by almost 5 percent from a year ago, based on a Nielsen survey of major retail outlets. California vintners shipped more than 2.5 million additional cases of wine to U.S. consumers in 2016, compared to the previous year - four times the amount of its nearest rival, Italy, Brager said. New Zealand, France and Spain followed much farther behind.

“That’s obviously a huge differential,” he said.

You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com.

UPDATED: Please read and follow our commenting policy:
  • This is a family newspaper, please use a kind and respectful tone.
  • No profanity, hate speech or personal attacks. No off-topic remarks.
  • No disinformation about current events.
  • We will remove any comments — or commenters — that do not follow this commenting policy.