Growth Trend for California Wine Continues: Mainstream Wine Culture Emerges in the U.S.
- By CWF Sources
- Published 06/7/2007
- News
SAN FRANCISCO – California wines sales in the U.S. reached another all-time high of 449 million gallons (188.9 million nine-liter cases) in 2006 with a retail value of $17.8 billion, according to wine industry consultant Jon Fredrikson, publisher of the Gomberg-Fredrikson Report. On volume growth of 2 percent, the retail value of California wine sales increased by nearly 8 percent in a highly competitive U.S. market driven by the upward trend in the sales of premium wines, priced $7 and up, where California dominates. Total California winery shipments to all markets in both the U.S. and abroad increased 2 percent to 541 million gallons (227.6 million nine-liter cases) last year.
Jon Fredrikson
Accounting for two-thirds of all wine sold in the U.S., California wines are benefiting from several trends which are contributing to the emergence of a wine culture in the U.S.
“Fueling the American consumer’s interest in wine is the increased tourism to outstanding wine regions throughout the state of California. The rise of vibrant wine communities all over the U.S. and the availability of a greater selection of wines in retail outlets, restaurants and through direct-to-consumer sales are also adding to greater consumer awareness,” said Robert P. (Bobby) Koch, President and CEO of Wine Institute. “Since the May 2005 Supreme Court decision that helped to increase the number of states which allow direct sales, the percentage of adults who can access their wines of choice in this manner has grown from just over 50 percent to 80 percent of the U.S. population.”
“Wine consumption in America reached new heights in 2006 as a growing number of adult consumers drank more wine than ever before,” noted Fredrikson. “Wine’s positive image, its extensive media exposure with scores of stories about the potential health benefits of moderate wine consumption, and the widening distribution of a vast range of appealing wines broadened the consumer base. Wine gained share of mind with mainstream media exposure.”
“Not only are more Americans enjoying wine than ever before but they are enjoying higher-priced wine, “said Barbara Insel, Managing Director of MKF Research in St. Helena. “Currently, the heart of the U.S. wine market is wine priced between $8 and $15, with rapidly growing sales of wine above $15. Restaurants and retailers have found that wine is a magnet for consumers, signaling a quality experience.”
Sales by Price Tier Reflect “Affordable Luxury” Uptrend Purchases
Premium California table wines, priced $7 and over, increased 10 percent by volume in 2006 for a 38 percent share of case shipments and 67 percent of winery revenues, according to the Gomberg Fredrikson Report. This positive uptrend reflected consumers continuing to use their discretionary income to trade up to more expensive products and affordable luxuries such as wine. The price segment of everyday wines up to $7 were flat in volume sales, accounting for 62 percent of the shipments and 33 percent of the revenues.
Thirteen Consecutive Years of Growth in U.S. Wine Market
For 13 consecutive years, sales in the U.S. of wine from California, other states and foreign producers have increased. In 2006, sales rose 3 percent compared to the previous year to 716 million gallons (301 million cases) for a total retail value of $27.8 billion. Of the total volume, table wine sales were 624 million gallons; dessert wine 57 million gallons; and sparkling wine 35 million gallons. California wine’s 449 million gallons to the U.S. accounted for a 63 percent market share of the volume sold.
Selection Dramatically Expands in U.S. Food Stores
U.S. food stores continued to broaden their selection of wine brands to meet consumer demand for wider variety and higher-end products. Some 423 new wine brands were introduced in 2006 to the existing 4,658 wine brands sold in U.S. grocery stores, according to The Nielsen Company, which tracks product sales to consumers, based on information gathered at the retail point-of-sale. By volume, Chardonnay (21 percent), Merlot (12 percent), Cabernet Sauvignon (10 percent) and White Zinfandel (9 percent) accounted for 52 percent share of market in food stores. White varietals Pinot Grigio, up 28 percent by volume, and Riesling, up 24 percent, jumped at high rates, but it was Chardonnay that was the leading volume growth leader, expanding by 844,000 cases, followed by Pinot Grigio, up 815,000 cases, and Cabernet Sauvignon, up 782,000 cases.
Sparkling Wines/Champagnes Rebound in Popularity
Sparkling wines/champagnes grew by one million cases in 2006 to a total of 35 million gallons (14.6 million cases), up 7 percent from the previous year. California accounted for 59 percent of the total volume. The sparkling wines/champagnes category represents 5 percent of all wine sales in the U.S.
U.S. Wine Exports Jumped to Record High
U.S. wine exports, 95 percent from California, totaled $876 million and 404.5 million liters (106.9 million gallons) in 2006, an increase of 30 percent in value and 4.0 percent in volume, compared to 2005. In Europe, where the U.S. ships more than half of its sales abroad, exports surged 48 percent by value. Wine exports to Canada grew 29 percent by value. The long-term trend of California wine exports shows steady expansion, with the 2006 number representing a 106 percent increase in exports by value in the last decade.
California Winery Shipments 1
(In millions of gallons)
Year
California Winery Shipments to All Markets in the U.S. and Abroad
California Winery Shipments to the U.S. Market
2006
541.1
449.2
2005
532.8
441.2
2004
521.7
428.2
2003
493.5
417.0
2002
464.3
401.0
2001
449.1
387.0
2000
445.9
392.0
1999
443.1
397.0
1998
432.5
385.0
1 Includes table, champagne/sparkling, dessert, vermouth, other special natural, sake and others. Includes foreign bulk shipped by California wineries. Source: Wine Institute and Gomberg-Fredrikson & Associates. History revised.
TABLE WINE VOLUME SHARE BY COLOR
In U.S. Supermarkets
COLOR
1991
1995
2004
2005
2006
Red
17%
25%
41%
42%
42%
White
49%
41%
40%
41%
42%
Blush
34%
34%
19%
17%
16%
TOTAL
100%
100%
100%
100%
100%
Source: Based on U.S. supermarket data from The Nielsen Company.
WINE SALES IN THE U.S.—1991 to 2006 in millions of gallons
(Wine shipments from California, other states and foreign producers entering U.S. distribution)
Year
Table Wine1
Dessert Wine2
Champagne/
Sparkling Wine
Total Wine
Total Retail Value
2006
Estimates
624
57
35
716
$27.8 billion
2005
608
51
32
692
$25.8 billion
2004
589
45
31
665
$24.0 billion
2003
570
40
29
639
$22.3 billion
2002
552
37
28
617
$21.8 billion
2001
512
34
27
574
$20.3 billion
2000
507
33
28
568
$19.2 billion
1999
475
31
37
543
$18.1 billion
1998
466
31
29
526
$17.0 billion
1997
461
29
29
519
$16.1 billion
1996
439
31
29
500
$14.3 billion
1995
404
30
30
464
$12.2 billion
1994
394
33
31
458
$11.5 billion
1993
381
35
33
449
$11.0 billion
1992
405
37
33
476
$11.4 billion
1991
394
39
33
466
$10.9 billion
Sources: Volume—Wine Institute, Department of Commerce, Estimates by Gomberg, Fredrikson & Associates. Preliminary.
Totals may not add due to rounding. Excludes exports. History revised because of updated TTB reports.
1 Includes all still wines not over 14 percent alcohol; excludes Canadian coolers (made from malt).
2 Includes all still wines over 14 percent alcohol and sake on new TTB releases.
estimated 2006 California Table Wine Shipments
By Price Segment
Retail Price
Price Segment
Nine-Liter Cases Sold (Millions)
Percent of Total
Winery Sales Revenues
(Millions)
Percent of Total
Over $14
Ultra-premium
22
13%
$2,930
35%
$7 up to $14
Super-premium
42
25%
$2,640
32%
$7 and Over
Subtotal Premium
64
38%
$5,570
67%
$3 up to $7
Popular Premium
56.6
33%
$1,830
22%
$2 to $3
Extreme Value Wines
6.9
4%
$130
2%
Below $3
Economy Wine
43.3
25%
$720
9%
Up to $7
Subtotal Everyday Wine
106.8
62%
$2,680
33%
TOTAL TABLE WINE
170.8
100%
$8,250
100%
Source: The Gomberg-Fredrikson Report. Traditional table wines include an estimated volume of still wines over 14% alcohol which are sold as table wines. Excludes coolers and cider.
CONVERSION: Nine-liter cases times 2.37753 equals gallons.
Jon Fredrikson
Accounting for two-thirds of all wine sold in the U.S., California wines are benefiting from several trends which are contributing to the emergence of a wine culture in the U.S.
“Fueling the American consumer’s interest in wine is the increased tourism to outstanding wine regions throughout the state of California. The rise of vibrant wine communities all over the U.S. and the availability of a greater selection of wines in retail outlets, restaurants and through direct-to-consumer sales are also adding to greater consumer awareness,” said Robert P. (Bobby) Koch, President and CEO of Wine Institute. “Since the May 2005 Supreme Court decision that helped to increase the number of states which allow direct sales, the percentage of adults who can access their wines of choice in this manner has grown from just over 50 percent to 80 percent of the U.S. population.”
“Wine consumption in America reached new heights in 2006 as a growing number of adult consumers drank more wine than ever before,” noted Fredrikson. “Wine’s positive image, its extensive media exposure with scores of stories about the potential health benefits of moderate wine consumption, and the widening distribution of a vast range of appealing wines broadened the consumer base. Wine gained share of mind with mainstream media exposure.”
“Not only are more Americans enjoying wine than ever before but they are enjoying higher-priced wine, “said Barbara Insel, Managing Director of MKF Research in St. Helena. “Currently, the heart of the U.S. wine market is wine priced between $8 and $15, with rapidly growing sales of wine above $15. Restaurants and retailers have found that wine is a magnet for consumers, signaling a quality experience.”
Sales by Price Tier Reflect “Affordable Luxury” Uptrend Purchases
Premium California table wines, priced $7 and over, increased 10 percent by volume in 2006 for a 38 percent share of case shipments and 67 percent of winery revenues, according to the Gomberg Fredrikson Report. This positive uptrend reflected consumers continuing to use their discretionary income to trade up to more expensive products and affordable luxuries such as wine. The price segment of everyday wines up to $7 were flat in volume sales, accounting for 62 percent of the shipments and 33 percent of the revenues.
Thirteen Consecutive Years of Growth in U.S. Wine Market
For 13 consecutive years, sales in the U.S. of wine from California, other states and foreign producers have increased. In 2006, sales rose 3 percent compared to the previous year to 716 million gallons (301 million cases) for a total retail value of $27.8 billion. Of the total volume, table wine sales were 624 million gallons; dessert wine 57 million gallons; and sparkling wine 35 million gallons. California wine’s 449 million gallons to the U.S. accounted for a 63 percent market share of the volume sold.
Selection Dramatically Expands in U.S. Food Stores
U.S. food stores continued to broaden their selection of wine brands to meet consumer demand for wider variety and higher-end products. Some 423 new wine brands were introduced in 2006 to the existing 4,658 wine brands sold in U.S. grocery stores, according to The Nielsen Company, which tracks product sales to consumers, based on information gathered at the retail point-of-sale. By volume, Chardonnay (21 percent), Merlot (12 percent), Cabernet Sauvignon (10 percent) and White Zinfandel (9 percent) accounted for 52 percent share of market in food stores. White varietals Pinot Grigio, up 28 percent by volume, and Riesling, up 24 percent, jumped at high rates, but it was Chardonnay that was the leading volume growth leader, expanding by 844,000 cases, followed by Pinot Grigio, up 815,000 cases, and Cabernet Sauvignon, up 782,000 cases.
Sparkling Wines/Champagnes Rebound in Popularity
Sparkling wines/champagnes grew by one million cases in 2006 to a total of 35 million gallons (14.6 million cases), up 7 percent from the previous year. California accounted for 59 percent of the total volume. The sparkling wines/champagnes category represents 5 percent of all wine sales in the U.S.
U.S. Wine Exports Jumped to Record High
U.S. wine exports, 95 percent from California, totaled $876 million and 404.5 million liters (106.9 million gallons) in 2006, an increase of 30 percent in value and 4.0 percent in volume, compared to 2005. In Europe, where the U.S. ships more than half of its sales abroad, exports surged 48 percent by value. Wine exports to Canada grew 29 percent by value. The long-term trend of California wine exports shows steady expansion, with the 2006 number representing a 106 percent increase in exports by value in the last decade.
California Winery Shipments 1
(In millions of gallons)
Year
California Winery Shipments to All Markets in the U.S. and Abroad
California Winery Shipments to the U.S. Market
2006
541.1
449.2
2005
532.8
441.2
2004
521.7
428.2
2003
493.5
417.0
2002
464.3
401.0
2001
449.1
387.0
2000
445.9
392.0
1999
443.1
397.0
1998
432.5
385.0
1 Includes table, champagne/sparkling, dessert, vermouth, other special natural, sake and others. Includes foreign bulk shipped by California wineries. Source: Wine Institute and Gomberg-Fredrikson & Associates. History revised.
TABLE WINE VOLUME SHARE BY COLOR
In U.S. Supermarkets
COLOR
1991
1995
2004
2005
2006
Red
17%
25%
41%
42%
42%
White
49%
41%
40%
41%
42%
Blush
34%
34%
19%
17%
16%
TOTAL
100%
100%
100%
100%
100%
Source: Based on U.S. supermarket data from The Nielsen Company.
WINE SALES IN THE U.S.—1991 to 2006 in millions of gallons
(Wine shipments from California, other states and foreign producers entering U.S. distribution)
Year
Table Wine1
Dessert Wine2
Champagne/
Sparkling Wine
Total Wine
Total Retail Value
2006
Estimates
624
57
35
716
$27.8 billion
2005
608
51
32
692
$25.8 billion
2004
589
45
31
665
$24.0 billion
2003
570
40
29
639
$22.3 billion
2002
552
37
28
617
$21.8 billion
2001
512
34
27
574
$20.3 billion
2000
507
33
28
568
$19.2 billion
1999
475
31
37
543
$18.1 billion
1998
466
31
29
526
$17.0 billion
1997
461
29
29
519
$16.1 billion
1996
439
31
29
500
$14.3 billion
1995
404
30
30
464
$12.2 billion
1994
394
33
31
458
$11.5 billion
1993
381
35
33
449
$11.0 billion
1992
405
37
33
476
$11.4 billion
1991
394
39
33
466
$10.9 billion
Sources: Volume—Wine Institute, Department of Commerce, Estimates by Gomberg, Fredrikson & Associates. Preliminary.
Totals may not add due to rounding. Excludes exports. History revised because of updated TTB reports.
1 Includes all still wines not over 14 percent alcohol; excludes Canadian coolers (made from malt).
2 Includes all still wines over 14 percent alcohol and sake on new TTB releases.
estimated 2006 California Table Wine Shipments
By Price Segment
Retail Price
Price Segment
Nine-Liter Cases Sold (Millions)
Percent of Total
Winery Sales Revenues
(Millions)
Percent of Total
Over $14
Ultra-premium
22
13%
$2,930
35%
$7 up to $14
Super-premium
42
25%
$2,640
32%
$7 and Over
Subtotal Premium
64
38%
$5,570
67%
$3 up to $7
Popular Premium
56.6
33%
$1,830
22%
$2 to $3
Extreme Value Wines
6.9
4%
$130
2%
Below $3
Economy Wine
43.3
25%
$720
9%
Up to $7
Subtotal Everyday Wine
106.8
62%
$2,680
33%
TOTAL TABLE WINE
170.8
100%
$8,250
100%
Source: The Gomberg-Fredrikson Report. Traditional table wines include an estimated volume of still wines over 14% alcohol which are sold as table wines. Excludes coolers and cider.
CONVERSION: Nine-liter cases times 2.37753 equals gallons.