SAN FRANCISCO – Fueled by strong gains in premium California wine volume, California wines sales to the U.S. continued to increase in 2007 to a record high 457 million gallons (192.1 million nine-liter cases), up 2% over the previous year. The retail value of these shipments increased 6% to $18.9 billion, according to the year-end summary in the Gomberg-Fredrikson Report.

Total California winery shipments to all markets in the U.S. and abroad increased 3% to 554 million gallons (233.2 million nine-liter cases) last year.

"Strong consumer interest, along with growing retailer and restaurant support and more direct-to-consumer sales, is resulting in wider distribution and selection of California wines," said Robert P. (Bobby) Koch, President and CEO of Wine Institute. "The new California tourism TV advertising campaign is also raising consumer awareness of the state’s diverse wine regions, its talented families, and its outstanding wine and food offerings."

"The long-term trend for California wine is favorable with the U.S. wine market growing for 14 consecutive years, increasing 66% by volume from 1993 to 2007," said wine industry consultant Jon Fredrikson. "Wine continues to enjoy a positive standing with the press, government and consumers, and many positive news reports on moderate wine consumption and health have also contributed to its positive image. Though the economy is slowing, wine is gaining traction among American adult consumers, and it is likely that wine consumption will continue to expand over the next decade."

While more than 95% of wine is delivered through the three-tier producer-wholesaler-retailer system, many wineries have focused more on direct-to-consumer sales since the favorable 2005 U.S. Supreme Court decision which helped open nine states to this trade channel, expanding consumer access from 50% to 80% of the U.S. population.

"Direct sales in 2007 increased 7.4% from 2006 while the previous year’s direct sales grew 33%. The effect of the Supreme Court verdict that accelerated 2006 direct sales growth may be settling, and the slowing economy and increased complexity of the direct sales legislation are also factors, but, the industry appears to be cautiously optimistic as wineries continue to invest in direct sales marketing," said Katie Hoertkorn, founder and CEO of New Vine Logistics, a direct sales wine fulfillment company.

Sales in the U.S. of wine from California, other states and foreign producers rose 4% compared to the previous year to 745 million gallons (313 million cases) for a total retail value of $30 billion. This value makes the U.S. the largest retail wine market in the world. Of the total volume, table wine sales were 650 million gallons; dessert wine 62 million gallons; and sparkling wine 33 million gallons. California wine’s 457 million gallons shipped in the U.S. accounted for a 61% market share of the volume sold.

Wine purchased by consumers in U.S. food stores increased by 2.4 million cases, up 4% in 2007, according to The Nielsen Company, which tracks product sales to consumers, based on information gathered at the retail point-of-sale. By volume, Chardonnay (19%), Cabernet Sauvignon (11%), Merlot (10%), and White Zinfandel (8%) accounted for a 48% share of market in U.S. food stores. Cabernet Sauvignon grew the most, expanding by 723,000 cases, up 11%, with notable gains for Pinot Noir, Zinfandel, Sauvignon Blanc, Riesling and Pinot Grigio. Nielson reported that U.S. consumers are making fewer shopping trips as they look for ways to combine errands and save money in an effort to battle rising gas prices and other economic pressures. Retailers increased store openings to respond to the consumer desire for convenience and value.

Consumption in the sparkling wine/champagne category edged up 1% in 2007 to a total of 33 million gallons (13.7 million cases), compared to the previous year. California accounted for 55% of the total volume sold. The sparkling wine/champagne category represents about 4.4% of all wine sales in the U.S.

U.S. wine exports, 95% from California, totaled $951 million and 453 million liters (120 million gallons) in 2007, an increase of 8.6% in value and 12% in volume, compared to 2006. In Europe, where the U.S. ships more than half of its sales abroad, exports totaled $474 million. Wine exports to Canada were $234 million, up 23% , compared to the previous year. The long-term trend of California wine exports shows steady expansion, with the 2007 number representing a 77% increase in exports by value in the last decade.