California Wines Still Rule

No matter how much Americans talk about how much they are interested in expanding beyond California wine, the figures keep telling another story. Last year, total shipments in the U.S. were 225 million cases, up 4.4 percent from the previous year, with an estimated retail value of $24.6 billion, up 6.7 percent. California wine sales to all markets, both domestic and international, increased just 3.7 percent by volume to 269 million cases in 2014.

“California has had three excellent harvests in both quantity and quality in 2012, 2013 and 2014 and these vintages are receiving global recognition,” said Robert P. (Bobby) Koch, Wine Institute president and CEO regarding the annual report of California wine sales.

“The premium wine segment -- $10 and above -- is strong and with excellent prospects for continued growth over the next few years,” said wine industry consultant Jon Fredrikson of Gomberg, Fredrikson & Associates in Woodside. “The value-priced wine segment has been shrinking because consumers are buying more expensive wine and because of competition from the increasing number of alcohol beverage offerings.”

2014 represents the 22nd consecutive year of growth for all wine sales in the U.S., with wine shipments to the U.S. from all production sources up 1 percent to 375 million cases with an estimated retail value of $37.6 billion. The U.S. has been the largest wine consuming nation in the world since 2010, and California’s 225 million cases shipped within the U.S. in 2014 represent a 60 percent share of the U.S. wine market.

Fredrikson said that value-priced wines made up 75 percent of California table wine volume in 2014 while premium wines accounted for 25 percent of volume but almost half (47 percent) of winery revenues.

“With beverage alcohol production permits exploding by 68 percent in six years to 14,700 in the U.S., there is enormous competition in the market with a large number of wine, beer and spirits offerings that continue to squeeze distribution channels... Premium keg wines have also been a positive development for wine, providing draft wine at restaurants and other on-premise outlets,” he said.

Because of the consumer transition to higher value wines, dollar sales grew faster than purchase volumes in 2014, according to Nielsen, a global provider of information and insights into consumer preferences and purchases In U.S. food stores, total wine volume sales grew 1 percent while total revenues increased 4 percent.

According to Nielsen, in measured U.S. off-premise channels, the most popular wine types by volume were Chardonnay (19 percent share), Cabernet Sauvignon (13 percent), Red Blends/Sweet Reds (10 percent), Pinot Grigio (9 percent) Merlot (8 percent), followed by Moscato (6 percent), Pinot Noir (5 percent), White Zinfandel (5 percent), and Sauvignon Blanc (4 percent). Red blends accounted for the strongest volume gains, along with Moscato, Sauvignon Blanc, Pinot Noir and Cabernet Sauvignon.

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