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Wednesday, January 30, 2013, 1:00 pm

Shortage slows California wine shipments

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    SACRAMENTO — Shipments of wine to the U.S. hit another record last year, but growth slowed considerably from 2011 as producers turned to imports in a big way to try to meet demand, according to experts at a major industry symposium in Sacramento.

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    NORTH COAST — Many wine industry experts figured the 2012 winegrape harvest was going to be the biggest in several years and refill grower pockets after two smaller crops, but the first official tally of the crop released Friday suggests it is the biggest ever, even crushing the giant 2005 harvest in value and tonnage. [read more]

    Total shipments of wine to U.S. markets last year increased to the equivalent of 363 million 9-liter cases, up from 2011 by 2 percent, or 8.1 million cases, according to industry analyst Jon Fredrikson of Gomberg Fredrikson & Associates. He based his whole-year figures on 11 months of state and federal data. The total figure includes table wine, cider, sangria, sparkling wine and sake as well as imports of bulk and bottled wine.

    “California ran out of wine,” Mr. Fredrikson told an audience of about 1,200 at the annual Unified Wine & Grape Symposium in Sacramento Wednesday.

    California case shipments last year dipped by 2 percent, or 5.2 million cases, to 211 million cases, according to Mr. Fredrikson. Wineries cut shipments in large-format bottles, boxes and other containers to maintain market supply in standard-sized 750-milliliter bottles.

    He pointed to full-year Nielsen data from food stores that showed sales in larger containers decreased last year by the equivalent of 1.3 million cases, or 4 percent. The one outlier was 3-liter boxed wine, which increased 4 percent.

    While California shipments declined, imports last year jumped to 127 million cases, up 11 percent, or 13.1 million. Bulk-wine imports boosted that to 133 million cases.

    Imports reached 35 percent of U.S. wine shipments for the first time, Mr. Fredrikson said.

    By contrast, domestic shipments increased by 6 percent in 2011 from 2010 and imports 7 percent. Total shipments to US markets in 2011 surged by 5.6 percent, or 20 million cases.

    Sales of wine retailing for $7 to $10 a bottle in food stores increased 4 percent, or by 546,000 cases, last year, according to full-year Nielsen data Mr. Fredrikson cited. Growth was 13 percent, or 881,000 cases, in the $10 to $14 segment and 11 percent, 282,000 cases, in for $14 to $20 wines.

    Restaurant wine sales growth is projected to be less than 1 percent through 2019, according to restaurant wine list tracker Charles Gill of Winemetrics, citing NPD Group data.

    Patrons of casual and upscale-casual restaurants are moving toward upscale wine purchases by the glass, according to Mr. Gill. By-the-bottle sales slipped 4 percent from 2008 through 2011; and by-the-glass, up 6.9 percent.

    Sales of wines over $60 a bottle decreased 14 percent; and over $25, fell 27 percent. Yet by-the-glass sales fell 56 percent for options less than $6 and jumped 52 percent for those over $9.

    “Restaurant wine growth will be anemic for the next five years,” Mr. Gill said. “If they do not sell more wine, they will be selling more beer and spirits.”

    He pointed to Cornell University research that showed recommendations could increase restaurant wine sales 39 percent; tastings and half-glasses, 18 percent to 47 percent. Having a wine list in the food menu and increasing the wine selection also increased sales. Winemetrics found that only 20 percent of its 9,000 client locations scored well in recommendations; 7 percent, tastings and half-glasses; and 36 percent, wine in the menu.

    The roots of the shortage of grapes and wine last year were planted during wave of overplanting in the late-1990s through 2000, according to Nat DiBuduo, president of Allied Grape Growers. After that time, growers pulled out vines, and wineries divested of vineyard ownership.

    Weather-hampered harvests in 2010 and 2011 drained reserves of wine available for purchase in bulk, while wineries in 2009 and 2010 trimmed wine inventories and grape purchases to match the sluggish economy.

    Last year, wine producers came out in force to buy grapes and wine, surging those prices. Yet the large 2012 California harvest quickly moderated pricing and brought the market roughly into balance, according to Mr. DiBuduo and Glenn Proctor, partner of San Rafael-based wine and grape brokerage Ciatti Co.

    Based on orders from nurseries, between 20,000 and 36,000 acres worth of vines were ordered, netting 15,000 to 20,000 new vine aces after replanting, particularly in the North Coast, according to Mr. DiBuduo. At the peak of the California wine boom, the net increase was about 40,000 acres a year statewide.

    From an estimated 3.89 million tons of winegrapes last year, statewide tonnage is projected to grow by 2.7 percent a year to 4.2 million tons in 2016, according to Mr. DiBuduo. The estimated need for California grapes this year is 3.73 million tons.

    “It will be a stable market for the foreseeable future,” Mr. DiBuduo said.

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