126,000 wine labels were approved by federal regulators in 2012.
Bureau Report
SAN FRANCISCO/WASHINGTON, DC: For the connoisseurs and the beginners alike, there is good news on the wine front: foreign wineries are making heady progress in the United States, with a total of 126,000 wine labels approved by federal regulators, giving consumers a wide array of choices as well as competitively priced bottles and cases.
At the same time, US wine shipments too showed healthy increase in sales, with an uptick of two percent making it a total of 363 million cases in all, according to noted wine analyst Jon Fredrikson at a talk he gave at the industry’s largest trade show in California, reported The Press Democrat.
“This market was brutally competitive,” Fredrikson told a crowd of 1,200 wine industry executives gathered at the annual Unified Wine & Grape Symposium in Sacramento.
Imports now account for 35 percent of the wine sold in the U.S. by volume, Fredrikson said. Short harvests and high grape prices in California in 2010 and 2011 drove both wineries and consumers to look for value-priced alternatives overseas, said the Democrat.
Argentina was the greatest supplier of bulk wine imports to California, followed by Chile and Australia, said Glenn Proctor, a partner and broker with Ciatti Company. New Zealand could become a larger player in coming years, because the country boosted its planted vineyard acreage by 23 percent from 2007 to 2010, and is appreciated as a producer of sauvignon blanc, he said.
As wine consumption declines in France and Italy, foreign vintners are targeting American consumers. The U.S. is now the largest wine market in the world, consuming 13 percent of the wine produced globally, Fredrikson said. But despite the growth of wine, the beer market is still eight times bigger than the wine market, he said, said the Democrat report.
There will be even more California wines for consumers to choose from in the future. While the numbers are not yet final, the 2012 harvest appears to be the largest on record, said Nat DiBuduo, president of Allied Grape Growers. The California crop will likely weigh in at 3.8 million tons, compared to the state estimate of 3.7 million tons, he said.
Growers are continuing to plant new vineyards and replant older vineyards, which could lead to even larger harvests in the future. Growers purchased enough vines to plant or replant 27,000 to 36,000 acres of vineyards, based on a survey of nurseries, DiBuduo said, according to the Democrat report.
About 12 percent of wineries raised retail prices last year, passing along higher costs for grapes used primarily to make higher-priced bottles, Fredrikson said. But lower-priced wineries are starting to test pricing, too. He commended E&J Gallo Winery and Constellation Brands, based on their growth in both volume and value.
Gallo, which is based in Modesto but has a major presence in Sonoma County, is growing faster than the rest of the industry, increasing shipments 9 percent in 2011 and 5 percent last year, Fredrikson said.
In Sonoma County, Fredrikson singled out “The Other Guys” as one of the hot California wineries in 2012, said the report. The company makes wine brands with names such as “Hey Mambo,” “MooBuzz” and “Plungerhead.” Such names stand out in a market that’s increasingly creative about targeting millenials, with beer and spirits companies selling infused drinks like Dogfish Head’s “Noble Rot,” a craft beer infused with botrytis-infected viogner, and vodkas flavored with everything from wasabi to fresh grass, said the report.
And consumers will welcome the decision by the Justice Department today, who filed suit to block Anheuser-Busch InBev NV’s $20.1 billion deal to buy Grupo Modelo SAB, saying U.S. consumers would suffer harm if the makers of Bud Light and Corona Extra merged, according to The Wall Street Journal.
AB InBev hammered out the deal for Grupo Modelo last summer, hoping to augment its position in the fast-growing Mexican market while expanding the reach of Modelo brands globally. The companies are the first and third largest brewers of beer sold in the U.S.
AB InBev already owns a 50% noncontrolling stake in Modelo, whose stable includes Corona Extra, the best-selling imported beer in the U.S., as well as Modelo Especial and Pacifico. AB InBev proposed to buy the rest from the Mexican families that control Modelo in a cash deal, said the report.
The Justice Department said it filed suit in U.S. District Court for the District of Columbia seeking to prevent the companies from merging. The deal “would result in less competition and higher beer prices for American consumers,” said the department’s antitrust chief, Bill Baer.