California leads US wine exports to record high

US wine exports, 90% of which come from California, reached a record value of $1.62 billion in 2016, the Californian Wine Institute has revealed.

A global trend towards premiumisation in wine has been credited for California’s record-breaking export performance in 2016

The record figures came despite challenges from a strong dollar, with winery revenues up 1% from 2015, the institute said. Total volumes of wine exported from the US were recorded at 412.7 million litres or 45.9 million cases.

Wine Institute President and CEO Robert P (Bobby) Koch attributed the strong export performance to the ongoing trend towards premiumisation in foreign markets.

“California wine exports continue to reflect the trend toward premiumisation with the dollar value of our wine sales outpacing volume shipments,” he said.

“California wines are well positioned for this trend – our vintners are offering quality, value, diverse styles and environmental stewardship in their winemaking.

“Combined with the state’s iconic lifestyle, innovative cuisine and beautiful destinations, California wines continue to gain attention from consumers worldwide.”

The top 10 export markets for California wines are: the European Union, accounting for $685m, Canada ($431m); Hong Kong ($99m); Japan ($87m); China ($82m); Mexico ($24m); South Korea ($23m); Switzerland ($19m); and Singapore ($14m).

Wine Institute vice-president of international marketing Linsey Gallagher, who manages the institute’s export programme, involving more than 170 wineries that export to 138 countries, observed that California wine exports had grown by an impressive 78% by value in the last decade, despite the challenges of heavily-subsidised foreign competitors and high export tariffs.

“Our global trading partners are increasingly acknowledging the high quality of wine from the Golden State and responding to our California Wines marketing efforts throughout the world,” she said.

Tom LaFaille, the institute’s vice-president and international trade counsel, added that it was important that the US government continued in its efforts to remove discriminatory barriers to trade. “Trade agreements, such as the North American Free Trade Agreement (NAFTA), have helped to dramatically grow US wine exports, yet discriminatory non-tariff trade barriers continue to be crafted by foreign governments at a steady pace.

“We applaud US government efforts to eliminate these barriers and strengthen our competitiveness globally, including the World Trade Organization (WTO) challenge against Canada which seeks to ensure that British Columbia grocery store consumers can choose from the vast array of the world’s great wines.”

Illustrating the premiumisation trend in the US, in January of this year, db reported how California’s Silicon Valley Bank had predicted sales of premium wine ($12 to $25) in the US to grow between 10 to 14% in 2017.

This prediction tallies with US producers’ apparent efforts to streamline their portfolios and prioritise their higher end brands. Several major brands, including Treasury Wine Estates, have been working to streamline their offer, prioritising their more premium brands to capitalise on a trend toward drinking ‘less, but better’.