The Wine Institute

Apr 8, 2009

SAN FRANCISCO – As budget-conscious consumers shifted more of their purchases to value-priced wines, 2008 California wines sales to the U.S. market edged up 2% in volume over the previous year to an estimated 467 million gallons (196.3 million nine-liter cases).  The estimated retail value of these shipments totaled approximately $18.5 billion, down slightly from 2007, according to Gomberg-Fredrikson & Associates.
      Total California winery shipments to both the U.S. and export markets increased 3% in volume to 570 million gallons (239.8 million nine-liter cases) last year.
      “Consumers are enjoying California wines during these challenging economic times,” said Robert P. (Bobby) Koch, President and CEO of Wine Institute.  “However, Wine Institute is currently fighting proposed tax and fee increases across the country at a time the industry is trying to preserve 875,000 wine-related jobs in the U.S., 309,000 of which are right here in California.”
      “Wine continues to move further into mainstream American adult lifestyles, with sales expanding incrementally based on cautious consumer spending,” said consultant Jon Fredrikson of Gomberg-Fredrikson & Associates.  “Consumers are changing their buying patterns by ratcheting down their everyday wine purchases to lower price points, but splurge on higher-priced wines at times because they view wine as an affordable luxury.”
      The impact of the recession on wine sales varied widely nationwide and created complex market conditions, according to Fredrikson.  Restaurant volume declined an estimated 10% as consumers dined out less and purchased lower-priced bottles and wines-by-the glass.  Businesses scaled back on travel and entertainment budgets.  Restaurants adjusted by carrying less inventory and ordering more frequently -- often purchasing less expensive brands.  Some distributors also reduced inventory levels to keep investment to a bare minimum.  As sales to the trade channels declined, small- and mid-sized wineries placed more focus on direct-to-consumer and tasting room sales.  These channels slowed down as well as consumers conserved cash and reduced travel. 
U.S. Food Store Volume Up 1.6%
      As consumers saved funds by enjoying wines at home, U.S. food store wine volume increased by nearly 1.2 million cases, up 1.6% in 2008, according to The Nielsen Company, which tracks product sales based on information gathered at the retail point-of-sale.  These grocery stores account for close to 45% of off-premise volume in the U.S.  Dollar sales rose by 4.7%.  The top varietal wines by market share in U.S. food store volume were: Chardonnay, Cabernet Sauvignon, Merlot, and White Zinfandel, accounting for over half of the sales.  Notable gains by case volume increases in food stores were Cabernet Sauvignon (up 8%), Chardonnay (up 4%), Pinot Noir (up 16%), Pinot Grigio (up 6%), Sauvignon Blanc (up 6%), Riesling (up 10%) and Merlot (up 2%).
Dollar Sales Down Slightly in U.S. Wine Market, as Volume Edged Up Just 1%
      Shipments into U.S. trade channels of wine from California, other states and foreign producers rose 1% to 753 million gallons (317 million cases), compared to the previous year, and the retail value of approximately $30 billion after distributor and retailer/restaurateur mark ups was slightly down.  Of the total volume, table wine sales were 658 million gallons; dessert wine 64 million gallons; and sparkling wine 32 million gallons.  The 467 million gallons shipped by California wineries to the U.S. accounted for a 62% share of the U.S. market.
Sparkling Wine/Champagne Sales
      Overall sparkling wine/champagne consumption declined 3% in 2008 to 32 million gallons (13.4 million cases), compared to the previous year.  California sparklers grew 1%, accounting for 58% of the total volume sold, while foreign sparkling wine declined 8%.  The sparkling wine/champagne category represents about 4.2% of all wine sales in the U.S.
U.S. Wine Exports Hit $1 Billion Mark
      U.S. wine exports reached $1 billion and 55 million cases (130 million gallons) in 2008, an increase of 6% in value and 8% in volume, compared to 2007.  In Europe, where the U.S. ships nearly half of its exports, winery revenues totaled $486 million.  Wine exports to Canada were $260 million, up 11%, compared to the previous year.  U.S./California wine exports have increased 80% by value in the last decade.  California now exports about 18% of its total volume sales and accounts for 90% of U.S. wine exports.

TABLE WINE VOLUME SHARE BY COLOR
In U.S. Supermarkets

Source: Based on U.S. supermarket data from The Nielsen Company.

California Winery Shipments¹
(In millions of gallons)

¹Includes table, champagne/sparkling, dessert, vermouth, other special natural, sake and others. History revised.
Excludes foreign bulk shipped by California wineries.  Source: Gomberg-Fredrikson & Associates and Wine Institute.

WINE SALES IN THE U.S.—1991 to 2008 in millions of gallons

(Wine shipments from California, other states and foreign producers entering U.S. distribution)

Sources: Volume—Wine Institute, Department of Commerce, Estimates by Gomberg, Fredrikson & Associates.  Preliminary. 
Totals may not add up exactly due to rounding.  Excludes exports.  History revised because of updated TTB reports.

¹Includes all still wines not over 14 percent alcohol; excludes Canadian malt coolers.
²Includes all still wines over 14 percent alcohol and sake.