According to the U.S. Department of Commerce 2007 Census of Manufacturers, the value of industry shipments of the U.S. wine and brandy industry (NAICS 31213) reached an estimated $12.3 billion,1 employed 33,319 individuals (14,863 production workers), with a total payroll of $1.4 billion.
U.S. VINEYARD AND WINERY INDUSTRY
There are more than 23,000 farms that grow grapes, of which 90 percent are on plots smallerthan 100 acres (40.5 hectares). In 2008, while total U.S. grape bearing area rose a modest 0.2percent to 938,951 acres (379,980 hectares), total grape production rose 5.4 percent to 6.44million tons. About 64 percent of total grape production is wine grape production and thatportion rose 1.7 percent to 4.11 million tons.Between 1999 and 2008, the number of wineries has increased, at an annual compound growthrate of 10.25 percent, from 2,688 bonded wineries to 6,459.2 California wineries accounted for44 percent of total U.S. wineries and 88 percent of total domestic wine production.
U.S. WINE MARKET
According to the Wine Institute’s news release, total shipments to the United States in 2008 fromall production sources--California, other states and foreign countries--increased just 1 percentover the previous year to 753 million gallons (2.88 billion liters) for a total retail value of $30billion. This value makes the United States the largest retail wine market in the world.
Of the 753 million gallons of wine sold in the United States in 2008 (2.85 billion liters):
• Table wine sales were 657 million gallons (2.49 billion liters);
• Desert wine 64 million gallons (242.3 million liters); and
• Sparkling wine 32 million gallons (121.1 million liters).
The U.S. Department of Commerce estimates that California accounts for 62 percent of all winessold on the U.S. market; imported wines account for 28 percent; and other 49 U.S. state winesaccount for 10 percent.
According to supermarket data from ACNielsen, more consumers are now drinking red winesthan white and/or blush. Reds now account for about 44 percent of wines sold at retail, whites,42 percent and blush, 14 percent. This change is more dramatic when comparing figures from 15years ago, where reds only accounted for 25 percent, compared to whites with 41 percent, andblush with 34 percent.
GLOBAL WINE INDUSTRY TRENDS
European vs. Non-European Wines
The international importance of non-European wwinine producers, especially WWTG members, isgrowing at the expense of our European friends. According to industry sources, while totalvineyard acreage fell 3.7 percent from 2004 to 2008 in the European Union (EU) to about 8.95million acres, total vineyard acreage for World Wine Trade Group members (WWTG) grew 6.3percent to 2.80 million acres.
Wine production mirrored similar results within those two regions. While 2008 wine productionin the EU fell 7 percent from 2004 to 168.6 million hectoliters, wine production among theWWTG grew almost 4 percent to 74.9 million hectoliters during that same time period. Totalworld wine production fell 2.7 percent to 283.9 million hectoliters from 2004.
In 2008, total world exports of wines are estimated at 95.4 million hectoliters, a 20 percentincrease from 2004. In 2008, the EU accounted for about 59 percent of the total world wineproduction and 68 percent of world exports. Wines from WWTG accounted for about 29 percentof world production and world exports.
U.S. GLOBAL WINE MARKET PROSPECTS
U.S. Wine Exports
In 2008, total value of U.S. sparkling and non-sparkling wines exports rose 6.7 percent to $918million compared with 2007, as quantities rose 10 percent to 448 million liters. (Total wineindustry exports in 2008 were $1.02 billion which also include other winery type products, suchas wine lees, vermouth, grape must and wine spirits). Between 2004 and 2008, U.S. wine exportsgrew 25 percent in value and 19 percent in volume.
Between 2007 and 2008, in dollar value, U.S. wine exports to the European Union rose 4.2percent to $477.5 million (grew 9 percent in quantity to 281.2 million liters). On the other hand,U.S. wine exports to our WWTG members grew in value to $231.1 million (11 percent increase)and 16.5 percent in volume (to 81.5 million liters). Most of this gain came from U.S. wineexports to Canada, our largest export market, which grew almost 19 percent.
In 2008, the top five countries accounted for almost 71 percent of the value of U.S. wine exports.
• The United Kingdom (28 percent),
• Canada (25 percent),
• Italy (6.2 percent)
• Japan (6.1 percent),
• Germany (5.3 percent).
U.S. Wine Exports to EU and WWTG Member Countries
In years past, the European Union has been our major wine export market. In 2004, theEuropean Union accounted for 61 percent of total U.S. wine exports. Now, they represent lessthan half (47 percent). On the other hand, U.S. wine exports to our WWTG members accountedfor only 16 percent in 2004, but now in 2008, they account for one-quarter (25 percent).
Besides increases of U.S. wine exports to our WWTG members, the United States has witnessedmajor increase to a variety of other countries. Those countries include Korea, China, HongKong, Switzerland, Mexico, the Philippines, and Russia.
U.S. wine consumers still depend on imports to fully satisfy their demand for wines. Imports oftable and sparkling wines account for more than a quarter of U.S. domestic consumption.
Between 2007 and 2008, the value of U.S. wine imports remained flat at $4.55 billion (quantityfell 1.5 percent to 825 million liters). Between 2004 and 2008, U.S. wine imports grew 36 percent in value and 30 percent in quantity.
In 2008, wine imports from the top five countries accounted for almost 86 percent of the totalvalue of wines imported into the United States:
• France supplied 31 percent
• Italy, 28 percent;
• Australia, 15 percent;
• Spain, 6.1 percent; and
• Chile, 4.9 percent.
The next five major U.S. suppliers of imported wines combined accounted for another 13 percentof U.S. wine imports (Argentina, Germany, New Zealand, Portugal, and South Africa).
U.S. Wine Imports from EU and WWTG Member Countries
Although the EU is the largest regional supplier of imports to the United States, its share hasdeclined in recent years. In 2008, the EU accounted for about 71 percent of the value of allimports, down from 77 percent in 2000.
On the other hand, imports from WWTG members have garnered a larger share of the U.S.import market. In 2008, U.S. imports from WWTG members at $1.3 billion, accounted for 29percent of total U.S. wine imports, up from 22 percent in 2000.
By Donald A. Hodgen