Wine exports set record, led by California labels


U.S. exports of wine — the bulk of it from California — set a record in 2016 despite having to fight a strong dollar, subsidies and barriers in other countries and a tight water and labor supply at home, according to the Wine Institute.

The $1.62 billion in foreign trade revenue for 2016 bested the previous year’s record of $1.49 billion by a slim margin through steadily strong sales in the top market, the European Union, and sharp growth increases in China and Britain.

About 90% of the 49.5 million cases of U.S. wine sold came from California, according to a report released Tuesday by the California-based industry advocacy group.


But it was the price tag of the wines, more than the volume, that drove revenue, continuing a trend of “premiumization” of Golden State labels, said Robert P. Koch, Wine Institute president and chief executive.

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

The 28 countries of the European union — Britain and Germany paramount among them — accounted for $685 million in revenue. But Canada was the top single nation buying U.S. wine, shelling out $431 million, largely for table wines. It was followed by China and Hong Kong, with $181 million; Japan, $87 million; Mexico, $24 million; South Korea, $23 million; Switzerland, $19 million; and Singapore, $14 million.

Overall, California wine exports grew about 78% as the state and its tourism promoters have cemented the Golden State as a chic label unto itself, particularly among the emerging middle class in China, said Linsey Gallagher, the institute’s vice president of international marketing.

Some of that growth may also be due to the emergence of wine regions throughout California, including in the Central Coast and Sierra Foothills.

“This is not just a Napa and Sonoma story — that’s obviously a huge part of the story — but we make and grow wine in 48 of 58 counties of the state,” Gallagher said


A crackdown on luxury items purchased by Chinese government officials had caused pain for other exporters over the last couple of years, including California almond growers.

“California wine wasn’t as entrenched in that government channel, so therefore we weren’t as impacted by it,” Gallagher said. “What I think you’re seeing in the numbers for this year for California wine exports is consumers are connecting with our brand and us becoming a region of choice.”

Canadian sales slowed down from the previous year, though U.S. labels remained the top table wines for our northern neighbor.

The U.S. has lodged a complaint on behalf of California vintners with the World Trade Organization over a policy in the Canadian province of British Columbia that limits sales of wine in grocery stores to locally produced labels.

“We anticipate continued growth and are also hopeful that provincial governments will extend to California wineries equal access to retail distribution channels,” said Rick Slomka, Wine Institute trade director for Canada, a partner in the North American Free Trade Agreement.

California vintners began a trade tour with Mexico on Monday, with stops in the capital and Baja California region, where they hope to calm nerves over talk of a trade war, Gallagher said. Last year, U.S. wine sales reached $25 million with our other NAFTA partner, vaulting it into fifth place.


President Trump had vowed to tear up NAFTA, or at least renegotiate it, and in his first week in office, administration officials dangled the possibility of taxing imports as much as 20% — setting off anxiety among growers in California, who depend heavily on exports.

Previous trade fights have targeted U.S. wine for retaliation.

“We are trying to send a positive message that says we’re still committed to that market,” Gallagher said as she waited to board a plane to Mexico City. “Obviously, the political climate has changed a lot in the last few weeks, to put it mildly.”

The California wine industry is less dependent on exports than other agricultural sectors are, but with Americans still consuming far less wine per capita than their counterparts in many countries, vintners look to foreign markets as a high-growth potential.

Volumes to European Union countries were down, but the dollar value of exports rose 2.7%, an indication that California wines have a foothold in the premium category, the institute said.

Britain bought the highest volume of California wines — 13 million cases — an 18% jump that earned vintners $337 million, according to the institute.

Sales to Japan were mostly in bulk and bottled locally, to avoid high tariffs. U.S. exporters had hoped to address monetary and other barriers against U.S. bottled wines through the Trans-Pacific Partnership trade pact, of which Japan is a signatory. Trump officially withdrew from the deal in January.


Vintners are urging the new administration to negotiate a trade pact with Japan, said Ken-ichi Hori, the institute’s Japan trade director.

“This is critical for the U.S. wine industry, since our competitors, Chile and Australia, already have free-trade agreements with Japan and benefit from a duty advantage over U.S. wines.”

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