Bella Carrara Vino

Americans bought a record amount of wine in 2007 -- and more imports
By KEVIN MCCALLUM THE PRESS DEMOCRAT

SACRAMENTO -- Americans uncorked 314 million cases of wine last year, a new record that underscores the nation's status as the fastest-growing wine market in the world.

Wine sales rose almost 4 percent last year in the United States, Jon Fredrikson, a prominent wine industry analyst, reported Wednesday at the annual Unified Wine & Grape Symposium in Sacramento.

The United States is now the second-largest wine market in the world, behind France, and the most lucrative market in terms of sales, with $30 billion of wine sold last year, Fredrikson said.

While Americans' thirst for fine wines has sent winery profits soaring, competition from imports is greater than ever. A bevy of slick new wine brands from overseas have flooded the U.S. market trying to entice Americans to look for new tastes beyond their borders.

"We are the target for everybody in the world and will continue to be so," Fredrikson said.

Through a combination of better marketing, improved wine quality and good values, imports are gaining ground on their U.S. counterparts.

Last year, 31 percent of all wine purchased in the United States was imported. Imports hit an all-time high of 97 million cases, up 9 percent from 2006, Fredrikson said.

California is still king, responsible for 192 million cases sold in the United States in 2007. But California vintners increased domestic sales just 2 percent, Fredrikson said. Wineries in others states performed slightly better on a much smaller base, up 3 percent to 25 million cases.

The surge in popularity of imports is striking because it comes at a time when the dollar is weak, which pushes up the prices of foreign wines sold in the United States.

"Imports have continued to gain even as the dollar has been at historic lows," said Glenn Proctor, a partner at the Ciatti Co., a San Rafael wine and grape broker.

One of the key reasons may be the willingness of young wine drinkers to experiment with foreign wines, Proctor said. For the so-called millennial generation, four in 10 wine purchases are imports, he said.

And, unlike their baby boomer parents, young people are more accepting of foreign goods in general and wines in particular, Proctor said.

Spain, for example, is a country whose wine industry has made heavy investments in marketing its wines in the United States, and younger wine drinkers have come to see Spanish wines as "sexy," Proctor said.

Italy, too, poses significant challenges given the continuing surge of wines like pinot grigio, Proctor said.

"These are countries we need to really watch here in the U.S. market," Proctor said.

Yet Fredrikson, who is fond of saying "there are no one-liners in the wine industry," pointed out the line between domestic and imported wines continues to blur, making generalizations difficult.

U.S. wineries aren't sitting back watching foreign wineries ship their vintages to our shores. Massive wine companies like E&J Gallo and Constellation Brands are actually fueling the trend by importing much of the foreign wine into the U.S themselves, selling it here under their own labels, Fredrikson said.

About 10 million cases of wine were imported in this manner in 2007, sometimes because of cheaper prices abroad, sometimes because domestic grape supplies can't keep up, he said.

For example, Woodbridge by Mondavi, a Constellation label with roots in California, is selling an inexpensive pinot noir from France in a 1.5-liter bottle, Fredrikson said.

Meanwhile, U.S. wineries continue to increase their exports, sending 18 million cases overseas themselves, mostly to Europe.

This phenomenon of "ships passing in the night" is likely to continue as the world market for wine continues to flatten, he said. But as long as Americans' thirst for wine keeps growing, the rising tide should lift all the boats, he said.

The main caveat is the economy. There were signs of slowing demand toward the end of 2007, perhaps due to people and businesses cutting back as the housing market continued to slide and economists began to talk about the increasing risk of recession.

"Clearly, there is some evidence of a slowdown in recent periods that is of concern," Fredrikson said.

You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.mccallum@pressdemocrat.com.

Labels: california, competition, imports, industry, Italy, large wineries, metrics, Spain, symposium, US