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California wine shipments dip for first time in 11 years

Business Journal Staff Report
Wednesday, April 10, 2013, 2:02 pm
Categories: Food and Beverage, Industry News, North Bay News, Top News Stories, Wine Industry Business Journal | No Comments

The volume of California wine shipments to U.S. markets last year dipped for the first time in 11 years, but retail value of that wine rose by more than 8 percent for the second straight year, according to recently released figures.

Meanwhile, shipments of wine to the U.S. from all sources increased 2.4 percent, and retail value, 5.2 percent to new volume and sales records, according to data compiled by Woodside-based industry analysis firm Gomberg Fredrikson & Associates and San Francisco-based advocacy group Wine Institute.

“Wine shipments to the U.S. market climbed by nearly 50 percent since 2001, and it is likely that American consumption will continue to expand over the next decade as wine continues to gain traction among American adult consumers,” said Gomberg Fredrikson principal Jon Fredrikson in a statement. “The amazing diversity of choices and exciting new offerings are attracting new consumers and boosting consumption. Among the key growth drivers are favorable demographics, a widening consumer base and increasing points of distribution in both on- and off-sale outlets. For example, Starbucks is now serving wine in some key markets, and Amazon.com and Facebook Gifts both sell wine online.”

Wine shipments from California as well as other domestic producers plus from importers increased to record volume of the equivalent of 360.1 million 9-liter cases in 2012, according to Gomberg Fredrikson. Retail value of those shipments rose to a new high watermark of $34.6 billion last year.

For wine going just from California to U.S. markets, volume decreased 3.8 percent to 207.7 million cases, but its retail value increased 8.4 percent to a record $22.0 billion. That volume contraction followed the strongest such growth in more than a decade — 7.6 percent in 2011 — but remained ahead of the 200.7 million California cases shipped in 2010. California shipment value grew 8.6 percent in 2011 to $20.3 billion.

All California wine shipments, including exports, declined 4.0 percent to 250.2 million cases last year. Exports, excluding bulk-wine shipments, declined 4.7 percent, compared with 5.7 percent and 4.5 percent growth the previous two years, respectively. Total U.S. wine export volume in 2012 equated to 47.2 million cases.

Yet last year California wines, which made up 90 percent of U.S. wine export volume, increased 2.6 percent in value from the year before to $1.43 billion.

“The U.S. is the largest wine market in the world, with 19 consecutive years of volume growth,” said Wine Institute President and CEO “Bobby” Koch in a statement. “Competition for retail shelf space and consumer attention is intense, so California’s high-quality, record winegrape harvest in 2012 could not have come at a better time. California vintners continue to respond to growing worldwide demand with a wide array of outstanding wines from regions throughout the state, and Wine Institute is supporting the effort by opening markets and eliminating trade barriers in the U.S. and abroad.”

California share of U.S. slips

California’s share of wine shipments to U.S. markets continued its more than decade-long decline, accounting for 57.7 percent last year. By comparison, California wine made up 73.2 percent of shipments to the U.S. in 1998.

The state’s wine shipped to domestic markets accounted for 63.6 percent of total U.S. wine retail value last year, according to Gomberg Fredrikson figures. It was highest share of retail value since 2006 but lower than the 71.8 percent share in 1999 during the late 1990s boom in sales of high-end wine.

Top foreign markets for California wines last year were the European Union’s 27 member countries with $485 million, up 1.7 percent; Canada, $434 million, up 14 percent; Hong Kong, $115 million, down 30 percent; Japan, $111 million, up 6 percent; China, $74 million, up 18 percent; Vietnam, $27 million, up 22 percent; Mexico, $20 million, up 4 percent; and South Korea, $16 million, up 26 percent.

State’s wines outpace in off-premise

Wine sales in U.S. food stores and other off-premise measured channels from all domestic and foreign producers grew 2 percent by volume and 6 percent by value, according to consumer data provider Nielsen. Sales growth for California wines grew faster than the overall category by a full percentage point.

By varietal in the table wine category, chardonnay remained the most popular varietal with a 21 percent volume share, followed by cabernet sauvignon, 12 percent; merlot, 9 percent; and pinot grigio, 8 percent.

The largest gains were for muscat or moscato wines, up 33 percent in volume and holding a 6 percent market share; domestic red blends/sweet red wines, up 22 percent in volume on 5 percent share; and malbec, up 21 percent on 1 percent share.

“Retailers recognize that wine is a large and growing category, even in economically challenging times, and tends to attract upper income consumers, and all legal drinking age groups,” said Danny Brager, vice president of Nielsen’s alcoholic beverage practice. “Wine also pairs well with food, leading to larger, more profitable shopping baskets.”

Consumers have more access to wine throughout the country, he noted. Wine-selling locations in the U.S. expanded by well more than 50,000 from five years ago. Off-premise locations expanded 15 percent to almost 175,000 outlets, while restaurants and other on-premise venues increased 12 percent to 332,000 locations.

Moscato drives California sparkling wine

Shipments of sparkling wine and champagne reached 17.7 million cases in 2012, up 2 percent from the previous year. California sparkling wine grew 3 percent, and moscato-based bubbly driving the growth, according to the Wine Institute.

While overall total 2012 volume slowed after a major surge in 2011, sparkling wine shipments to the U.S. in 2012 were at their highest level since 1987.

By the numbers

California, total wine volume shipments to U.S. markets

 Year  CA wine to U.S. (mil. cases) chg. Total wine to U.S. (mil.  cases) chg. CA % of U.S. wine
2012 207.7 -3.8% 360.1 2.4% 57.7%
2011 216 7.6% 351.5 6.6% 61.5%
2010 200.7 2.0% 329.7 2.7% 60.9%
2009 196.7 0.2% 321.1 2.3% 61.3%
2008 196.3 2.1% 313.8 0.5% 62.6%
2007 192.3 2.1% 312.1 3.5% 61.6%
2006 188.4 1.5% 301.6 3.6% 62.5%
2005 185.6 3.1% 291.1 4.1% 63.8%
2004 180.1 2.7% 279.7 4.1% 64.4%
2003 175.4 4.0% 268.8 3.6% 65.3%
2002 168.7 3.6% 259.5 7.5% 65.0%
2001 162.8 -1.3% 241.4 1.0% 67.4%
2000 164.9 -1.3% 238.9 4.6% 69.0%
1999 167 3.2% 228.4 3.3% 73.1%
1998 161.9 221.2 73.2%

Sources: Gomberg Fredrikson & Associates and Wine Institute. Notes: Volume in millions of 9-liter cases. Preliminary figures include table, Champagne and sparkling, dessert, vermouth, other special natural, sake and other wines, and exclude foreign bulk shipped by California wineries. Estimated retail value includes markups by wholesalers, retailers and restaurateurs. History revised based on Tax & Trade Bureau reports.

Retail value of California, U.S. shipments

 Year  Retail value of CA wine to U.S. (bil.) chg. Total U.S. retail value (bil.) chg. CA % of U.S. value
2012 $22.0 8.4% $34.6 5.2% 63.6%
2011 $20.3 8.6% $32.9 9.7% 61.7%
2010 $18.7 4.5% $30.0 4.5% 62.3%
2009 $17.9 -3.2% $28.7 -4.3% 62.4%
2008 $18.5 -2.1% $30.0 -1.3% 61.7%
2007 $18.9 6.2% $30.4 9.4% 62.2%
2006 $17.8 7.9% $27.8 7.8% 64.0%
2005 $16.5 10.0% $25.8 7.5% 64.0%
2004 $15.0 4.9% $24.0 7.6% 62.5%
2003 $14.3 3.6% $22.3 2.3% 64.1%
2002 $13.8 3.0% $21.8 7.4% 63.3%
2001 $13.4 3.1% $20.3 5.7% 66.0%
2000 $13.0 0.0% $19.2 6.1% 67.7%
1999 $13.0 8.3% $18.1 6.5% 71.8%
1998 $12.0 $17.0 70.6%

Sources: volume — Wine Institute and U.S. Department of Commerce, value — Gomberg Fredrikson & Associates. Notes: Preliminary figures exclude exports and Canadian malt coolers, include all still wines not over 14 percent alcohol. Estimated retail value includes markups by wholesalers, retailers and restaurateurs. History revised based on Tax & Trade Bureau reports.


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