SACRAMENTO — Growth in U.S. wine sales slowed in 2015 as competition heats up globally to slake the thirst of wine consumers for higher-priced wines, according to experts at a major wine industry conference.
“When you look at it from 60,000 feet overall, the wine business is great; it’s booming and things look very good for the coming year, including this year,” said Jon Fredrikson of Woodside-based wine industry analysis firm Gomberg Fredrikson & Associates to about 1,500 gathered for an industry status check at the Unified Wine & Grape Symposium on Jan. 27.
The good news is the U.S. wine market hit another all-time high in the U.S., but the worrying news is that growth has slowed overall, dragged by lower-priced wines, and competition from craft beer and spirits and from bottled imports is growing, he said. Sales in the U.S. last year grew by 2 percent, or by 7.2 million cases, to the equivalent of 383 million 9-liter cases, based on 10-11 months of government data plus estimates. The gap is widening between wines retailing for under $9 a bottle, which account for three out of four bottles sold, and higher-priced wines, which account for half of wine sales dollars, he said.
By another measure, sales of wines with more than 14 percent alcohol content, which tend to be higher-end labels, grew by 12 percent last year to an estimated 37 million cases. And sparkling wine made a significant comeback in 2015, with 10 percent growth to 22 million cases.
Pressure on lower-priced wine is being felt worldwide, as a number of large-producing wine regions around the world are rapidly working to increase the level of quality to compete, said Steve Fredricks, president of Novato-based Turrentine Brokerage.
A “shocking” picture in this competition in wine below $10 is the growth of craft beer and spirits, Fredrikson said. Craft beer sales passed those of these lower-priced wines in 2011, and craft brew sales doubled in the past four years, along with the number of such breweries.
“Craft beers are delivering complexity and mystique,” he said.
While there were 4,054 bonded wineries in the U.S. last year, there were 4,144 breweries and 1,500 distilleries and 15,000 imported wines, with about 135,000 label applications being processed by the U.S. Tax & Trade Bureau, Fredrikson noted.
“Name another industry with that much competition,” Fredrikson said.
Demand for wines over $10 a bottle is driving planting of California coastal grapevines, as well as in Oregon and Washington, and pricing for wine sold in bulk from those areas, according to Nat DiBuduo, president of farmer marketing group Allied Grape Growers.
“Premiumization is where the action is,” he told the audience. “There is pricing pressure because of a shortage of good grapes.”
For wines retailing for $10-$20, commercially bearing acreage in California is projected have increased by 32 percent for cabernet sauvignon through 2018 on a large base, 11 percent for chardonnay on a equally large base and 23 percent for pinot noir, based on a survey of grapevine nurseries.
For wines priced above $20, largely in Napa, Sonoma and Santa Barbara counties, acreage growth is projected to be 8 percent each for cabernet sauvignon and pinot noir and 2 percent for chardonnay, while merlot acreage is forecast to slip 4 percent, DiBuduo said.
Acreage is coming out of production for grapes bound for “value” wines, or those retailing for $7 or less, DiBuduo said. About 21,000 acres were pulled out between the 2014 and 2015 harvest, and another 20,000 have been taken out since the last harvest, largely for varieties that can no longer compete.
“Unless we see a change in demand, we will see more vines removed,” he said.
The decrease for this segment is seen in shrinking sales by vine nurseries: from 30 million in 2013 to 27 million the next year and 19 million last year. Sales are on track to be 16 million this year, DiBuduo said.