California wine shipments rise 3% by volume, 5% by revenue

The volume of California wine shipments to U.S. markets returned to growth mode last year, after dipping in 2012, while the dollar value of those shipments slowed in 2013 following two years of strong growth, according to figures released Thursday.

The equivalent of 214.6 million 9-liter cases of wine were shipped from California to domestic markets last year, an increase of 3.1 percent, according to estimates by Woodside-based Gomberg, Fredrikson & Associates and San Francisco-based Wine Institute. That's still not back to the recent peak of 216 million cases in 2011.

Yet, the estimated retail value of California wine bound for the U.S. continued a four-year upward climb, increasing by 5.0 percent last year from 2012 to $23.1 billion. Growth slowed from 8.6 percent in 2011 and 8.4 percent in 2012.

Wine from the Golden State to all domestic and international markets increased 3.0 by volume last year to 258 million cases.

"With two record winegrape harvests in 2012 and 2013, California wineries were able to meet consumer demand, and these recent vintages are receiving high praise worldwide," said Bobby Koch, Wine Institute president and chief executive officer.Highly competitive wine market

"In 2013, wineries gradually released the highly acclaimed wines from the large 2012 California harvest, offsetting the slowdown in American wine market growth due to short vintages in 2010 and 2011 and continuing soft economic conditions," said wine industry consultant Jon Fredrikson of Gomberg, Fredrikson & Associates. "In response to these market factors, California wineries focused on sales of premium table wines priced at $10 and above, which increased by 9 percent in volume and made up nearly half of winery revenues."

Last year remained a highly competitive wine market, Mr. Fredrikson said.

The U.S. Tax and Trade Bureau approved nearly 99,000 wine label registrations, the majority of these from foreign producers. That crowded trade channels and vied for consumer attention and shelf space, he noted.

In addition, over the past five years the number of alcohol-production permits increased by 4,100, up 47 percent. Those were not only for new wineries but also for craft breweries, distilleries and cider producers, expanding the beverage mix, Mr. Fredrikson noted.

The large number of beverage-alcohol products continued to squeeze distribution channels, according to the report. Many small- and medium-sized wineries looked to direct-to-consumer sales through tasting rooms, wine clubs, online marketing and other direct sales channels, using social media and other digital communications to reach out to consumers.Retailers step up their game

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