U.S. wine exports soar in value

U.S. wine exports, mostly from California, soared 30% in value and 4% in volume last year, after slipping in 2005, according to a study of Commerce Department data released Monday by the Wine Institute trade group.

Exports rose to $876 million and 404.5 million liters last year, with California generating 95% of the total. In Europe, where the U.S. makes more than half of its foreign sales, exports surged 48% by value. In Canada, they increased 29%.

“This dramatic sales growth in 2006 must be placed in perspective, as it does follow a decrease in 2005,” says Joseph Rollo, director of the international department at the Wine Institute, which represents more than 1,000 California wineries and related businesses.

“Nonetheless, the long-term trend of California wine exports shows steady expansion in all major markets and growth in new, undeveloped markets. The 2006 number represents a 106% increase in exports by value in the last decade.”

The growth is particularly encouraging because Europe has long had a protected wine industry, with tariffs that can run 2 1/2 times the U.S. rate. “The export growth is impressive considering the trade barriers that California wineries face in markets worldwide,” Rollo said.

It was also good news when a 2006 agreement between the U.S, and the European Union gave California wineries the assurance that the European market would remain open to them and trade rules would be consistent, giving producers in both markets a stable environment. The pact covers winemaking standards, the recognition of U.S. place names by the EU and limiting U.S. use of European names such as Burgundy and Champagne. European tariffs and subsidies were not affected by the pact.

To reduce the freight costs of shipping bottles, a growing number of California producers, such as Blossom Hill, have begun to ship their finished wines to Europe in tanks for bottling and distribution. There’s also a trend toward using special wine names and labels to appeal to European buyers.

In Britain, the value of U.S. wines sold by grocers and other retailers rose 8%, more than any other major wine-producing country. Sales of U.S. wines at restaurants, hotels and pubs grew a whopping 18% by value. Overall, U.S. wines captured 16% of the British market, compared with Australia’s 22.3% and France’s 16.4%.

Until recently, American wines were a tough sell in Canada because of the strong U.S. dollar, but they enjoyed 29% growth in 2006. Increased promotional campaigns by California wineries and a desire by Canadian liquor boards, which control retail sales in most provinces, to add premium wines to their portfolios have helped in that market.

U.S. wines also have huge potential in Asia. Sales to Singapore soared 68% by value last year, Hong Kong rose 19% and China jumped 53%. With the help of the Wine Institute, U.S. trade missions have increasingly been showing off American wines there. Hong Kong holds particular promise because its 80% import tariff has been cut in half.