Stories in this reportApril 18 forum of experts to tackle shrinking supply, globalization, financeThe supply puzzle: Experts weigh in on how a shortage will impact industryNavigating the global markets: Plan on a long-term commitmentWinegrape shortage could last six to eight years
More wine is moving in and out of this country, which recently grabbed the distinction of being world's largest wine market away from Europe.
U.S. exports, 90 percent from California, last year reached a new record of $1.39 billion in revenue for wineries, an increase of 21.7 percent from 2010, according to Gomberg Fredrikson & Associates and Wine Institute. Volume shipments grew 5.8 percent to 455.7 million liters, or 50.6 million 9-liter cases.
Imports grew 3.9 percent to 109.8 million cases, Mr. Fredrikson said. Including the equivalent of 25 million cases of 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.
Foreign producers and investors are interested in U.S. wineries and brands, often for the prestige or gaining a platform for U.S. distribution of portfolio brands. A key example of the latter is the April 2011 acquisition of Fetzer Vineyards of Hopland by publicly owned Viña Concha y Toro of Chile for $238 million.
The Business Journal asked experts set to be on the globalization panel at the 2012 Wine Industry Conference on April 18 about major factors affecting the success of U.S. wines abroad, imports and acquisitions of domestic producers by multinational companies. Panelists include Stephen Brauer, head of Treasury Wine Estate's Beringer brand business unit; Eva Bertran, executive vice president of Freixenet USA, producer of Gloria Ferrer sparkling wine; David Hayman, senior vice president of operations, Diageo Chateau & Estate Wines; and Paul Hobbs of Paul Hobbs Wines, Paul Hobbs Imports and Paul Hobbs Consulting.What are major considerations for California wines at popular and higher price tiers in competing in global markets?
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Eva Bertran: The first consideration is if as a company you have an export mentality or you are looking at selling a few cases abroad. This is important because export sales need a long-term vision. It's often complicated because of regulations, taxes, language and lack of knowledge of Californian wines. Finding suitable partners far away is never easy.
Too often, wineries jump into exporting when sales domestically slow down and pull out when sales go up. Export may not be as profitable in the short term, but if you have an export vision, it means that you see the advantage of diversifying your sales. It may provide potential growth when your domestic market is not growing.
Gloria Ferrer's parent company, Freixenet Group, exports 80 percent of production. As you can imagine, this is what has made the Ferrer family leaders in Spain, but also among the top 10 wine groups in the world. If they would have concentrated in the Spanish market, their sales would be 2 million cases of Spanish cava and other wines vs. more than 10 million cases globally that they are selling now.
Once you are committed to export, you need to have a long-term strategy and allocate money and time.
The next steps are not that different from selling domestically: find a good partner, understand the market conditions, understand your competitors, educate trade and consumers.