California wine takes off at home and overseas as exports hit record heights
Californian wine is doing as well in its domestic market as overseas, with shipments of wine from the Golden State to the rest of the US hitting record levels of 238 million cases last year a 2% increase on 2015. This amounted to a retail value of $334.1 billion, a 4.5% increase on the previous year.
At the same time, California wine sales to all markets, including shipments to the U.S. and exports, also set a record of 285 million cases in 2016.
“Consumers worldwide recognize the high quality of California wines from diverse regions across the state,” said Robert P. (Bobby) Koch, Wine Institute president and CEO.
“As consumers in the US and around the world continue to trade up to premium wines, California is ideally positioned.”
California wines in the U.S. market have increased from 191 million cases shipped in 2006 to 238 million cases in 2016, pointed out Jon Moramarco, founder and managing partner of BW166.
This growth has largely been driven by population, which is up more than 12% over the last decade, and by the fact that baby boomers, traditionally the biggest wine consumers, have been joined by millennials aged 21-38 who are also driving the growth in wine consumption,” Moramarco explained.
The increasing number of outlets selling wine in the US is also helping to boost wine sales, with more than 550,000 locations according to Nielsen, around 120,000 more than a decade ago. “Wine is a growing category, and it is being offered in new and different venues, as well as interesting, alternative packaging vehicles, such as cans, single-serve containers, premium boxes and wines on tap,” said Nielsen’s Danny Brager.
“Consumers are finding more “in store” restaurants and bars and also wine service in less traditional locations such as bookstores, nail salons, coffee shops and movie theatres, even car wash and car repair shops. Wine is a growing category, and it is being offered in new and different venues, as well as interesting, alternative packaging vehicles, such as cans, single-serve containers, premium boxes and wines on tap.””
Major retailers and distributors continue to consolidate in the US market, creating fierce competition and crowded sales channels. Consequently, many wineries are targeting niche sales channels, such as tasting rooms and direct-to-consumer sales, which have now reached more than 4% of the total volume.
Another emerging trend is that California wines selling for $10 and above are showing growth, accounting for 19% of the volume and 40% of the value in U.S. food stores.
Wines under $10 are flat or down, but still holding 81% share of the shipment volume and 60% of the revenues.
Chardonnay remains the largest varietal of all wine types accounting for 20% share of the cases, followed by Cabernet Sauvignon (15%), Red Blends including Sweet Reds (12%), Pinot Grigio/Gris (9%), Merlot (7%), Pinot Noir (6%), White Zinfandel/Blush (6%), Moscato/Muscat (5%) and Sauvignon Blanc (5%).
The largest gains for whites came from Sauvignon Blanc with Pinot Grigio trailing well behind. Red wine growth, meanwhile, was driven by Red Blends, Cabernet Sauvignon and Pinot Noir. From a smaller base of 1% share, Rosé is rocketing with a 35% volume gain, but more than 60% in value.
Total imports of sparkling wine and champagne to the U.S. reached 25.6 million cases in 2016. The category is showing strong growth, up by 14% from the previous year, with Prosecco a key driver. Sparkling wines and Champagne accounted for a 6% share of the U.S. wine market.
Total wine shipments to the US from California, other states and foreign producers grew to 399 million cases, up 3% from 2015, with an estimated retail value of nearly $60 billion.
The U.S. has remained the world’s largest wine market by volume since 2010, with California’s 238 million cases shipped within the US last year representing a 60% share of the U.S. wine market.
A full 90% of all US wine exports originate from California, and these reached a record $1.62 billion in 2016. Volume shipments were 461 million litres or 51.2 million cases.
The biggest market for US wines is the EU accounting for $685 million; followed by Canada, $431 million; Hong Kong, $99 million; Japan, $87 million; China, $82 million; Mexico, $24 million; South Korea, $23 million; Switzerland, $19 million; Singapore, $14 million; and Philippines, $13 million.