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California Wine Exports Set Record in 2015: Worldwide Demand Grows, Despite Strong Dollar

Feb 25, 2016

Screen Shot 2016-02-25 at 11.43.28 AMSAN FRANCISCO — U.S. wine exports, 90% from California, reached $1.61 billion in winery revenues in 2015, an all-time record and a 7.6% increase from 2014. Volume was up 4.1% from the previous year to 461 million liters or 51.2 million cases.

“California wines appeal to consumers across the globe who recognize the unique quality and excellent value of our wines. Consumers are also attracted to California’s trend-setting lifestyle, innovative cuisine, beautiful wine country destinations and emphasis on environmental responsibility—all of which are reflected in our wines,” said Robert P. (Bobby) Koch, Wine Institute President and CEO.

Of the top 10 export markets for California wines, the European Union’s 28-member countries were the largest, accounting for $622 million, followed by Canada, $461 million; Hong Kong, $97 million; Japan, $96 million; China, $56 million; Nigeria, $29 million; Mexico, $26 million; South Korea, $23 million; Switzerland, $21 million; and Singapore, $15 million.

“More than 170 California wineries participate in Wine Institute’s California Wine Export Program and export to 138 countries supported by 15 representative offices around the world which develop markets in 25 countries,” said Wine Institute Vice President International Marketing Linsey Gallagher. California wine exports have increased 91% by value in the last decade and we’re seeing a “premiumization” trend with dollar sales outpacing volume growth. This growth is occurring despite heavily-subsidized foreign competitors, high tariffs and strong dollar.”

“Removing obstacles to trade and ensuring that California wines have fair and equal access to international sales channels remain our top focus,” said Tom LaFaille, Wine Institute Vice President and International Trade Counsel. “Unfortunately, more and more countries and provinces are “modernizing” their laws to benefit only local wine producers. Wine Institute works closely with the U.S. government to continue to lead initiatives against discriminatory trade barriers which violate international agreements.”

Wine Institute’s Export Program offers many tools to support California Wines category building efforts around the world, including a consumer website discovercaliforniawines.com in eight languages, social media campaigns in 16 countries, an educational California Wines PowerPoint tool, educational and entertaining video assets, and a strong partnership with Visit California to increase tourism to California wine regions. The program organizes California’s participation in international trade shows and trade missions, hosts master classes and seminars as well as tastings for trade, media and consumers worldwide. Last year’s active schedule of California wine country visits brought in 150 international media and wine buyers from 15 countries.

Wine Institute’s six Regional Trade Directors in key export markets reported on 2015 exports:

Canada
“California wine sales continued to be strong in Canada last year despite unfavorable exchange rates. In 2015, U.S. wine sales surpassed wines from France and Italy for the first time to claim the largest share of import table wines in the Canadian market,” said Rick Slomka, Canadian Trade Director for the Wine Institute. “California wines have built a solid consumer base and enjoy substantial momentum in this market. California wineries have invested significantly to develop their business in Canada and anticipate continued growth, although at a slower pace.”

Continental Europe
“Despite a strong U.S. dollar and fierce competition from Old and New World wine countries, nearly all export markets in Continental Europe showed an increase. It is especially encouraging to see that our educational and promotional efforts in Germany, our largest market on the continent, are paying off with an increase of 32% in revenues,” said Paul Molleman, Wine Institute Trade Director for Continental Europe. “The 28-member European Union countries accounted for nearly 40% share of total U.S. wine exports in 2015.”

United Kingdom
“The United Kingdom has always been a receptive market for California wines, and a quarter of all U.S. wine exports by volume come to this country. Value increases are now out-stripping volume growth, with U.S. wine export value to the UK rising by 28% last year. The wine trade here has shifted emphasis to restaurants and casual dining, and a burgeoning independent retail sector, leading to increased interest in premium wines from the Golden State. California is better placed here than it has ever been before, and we expect further growth in 2016 and beyond,” said Wine Institute United Kingdom Trade Director John McLaren.

Japan
“California wine has been selling well in Japan but supply was a major challenge in the first quarter of 2015 due to the slowdown at the ports along the U.S. west coast. Japan’s California wine imports in January 2015 were down 40.5% by volume from the previous year, and the situation prevented Japanese importers from promoting our wines. After April 2015, the port issue was resolved and supply was back in line with growing demand,” said Ken-ichi Hori, Wine Institute Japan Trade Director.

“Once the Trans-Pacific Partnership free trade agreement goes into force, the import duty on U.S. wines will be completely abolished in eight years which will help the entire California category grow in Japan. This is critical for the California wine industry, since our competitors, Chile and Australia, already have free trade agreements with Japan, and benefit from a duty advantage over California wines.”

China
“With no reliable country-wide sales data, the 2015 numbers based on import/export data for China don’t tell the whole story on California wine performance, and, in fact, are misleading. Looking at consumption of California wines in the premium and super premium categories, the price range for most California wines, sales were up last year. The export decline was due to a drop in less expensive wines being imported following excessive importation in 2013-2014. Sales of higher-priced wines are quite healthy, while even lower-priced wines are selling through as depletions continue. The export data to Hong Kong shows a healthy 41% increase by value in exports, and we know that a portion of volume shipped to Hong Kong is destined for China. The market for California wines in China remains healthy and more consumer driven than in years past when gifting and group purchasing were significant drivers of sales,” said Christopher Beros, Wine Institute Trade Director for China.

Emerging Markets
“The strong dollar and difficult trading conditions affected California wine’s performance in emerging markets. However, the region produced clear success stories in 2015, such as Hong Kong, Mexico and South Korea where export value grew 41%, 7% and 5% respectively,” said Eric Pope, Wine Institute Regional Director for Emerging Markets.

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