Forecast: Wine, grape prices to rise in 2012

SACRAMENTO -- The prices of wine on U.S. store shelves could start rising this year because of an "emerging shortage" of winegrapes and wine plus a sales and marketing "blitz" last year, according to experts speaking at a major wine industry trade event this morning.

Sales of wine in the U.S. had roughly double the growth last year compared with the previous few years, but California winegrape production isn't keeping pace now or expected to in the next few years.

Wine shipments to U.S. markets increased last year by an estimated 15.4 million 9-liter cases, or 4.5 percent, to 345 million cases from 2010, according to preliminary federal and industry figures through November analyzed by Jon Fredrikson of Gomberg Fredikson & Associates.

"It has been a marketing free for all in the market last year," the Woodside-based industry consultant told an audience of several hundred professionals at the Unified Wine & Grape Symposium in Sacramento.

The U.S. Trade & Tax Bureau last year approved about 120,000 new wine labels, he noted. Now more than 7,000 wine producers are funneling through 675 distributors, with 10 distributors handling 60 percent of volume.

Domestic shipments of California wine through November increased 4.9 percent, or by 10.3 million cases, to 209.5 million cases from 2010, according to Mr. Fredrikson's preliminary analysis. All U.S. wine shipments increased 4.7 percent to 235.6 million.

Sales of wine for on-premise consumption may have increased 1 percent to 2 percent last year, based on the National Restaurant Association's recent survey of patron traffic and a recent estimate by Rob Sands of Constellation Brands, Mr. Fredrikson noted.

But successful restaurant efforts in the past three years to change how they buy and sell wine -- adding more high-end wine by the glass and buying in larger volumes such as 26-liter casks -- suggest on-premise wine sales grew at a higher rate, he said.

Imports grew 3.9 percent to 109.8 million cases. The equivalent of roughly 25 million cases of wine shipped to domestic markets is figured to be contributed by imported bulk wine, Mr. Fredrikson said. Including bulk wine, imports grew to more than 115 million cases last year and account for 32 percent of the volume of wine sold in the U.S.

Exports of California wine soared 23 percent to $1.16 billion through November of last year over 2010, with shipments to Canada and Asia up sharply, Mr. Fredrikson estimated. Bulk-wine exports slipped 2 percent, but bottled shipments increased 12 percent.

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