Exports are down, boost for direct sales coming?
SAN FRANCISCO — California wine shipments in the U.S. reached an estimated retail value of $40.2 billion in 2018, up 3% from the previous year. The state shipped 248 million nine-liter cases to the U.S. in 2018, up 3%.
California wine sales to all markets, including shipments to the U.S. and export markets, were 285 million cases in 2018.
“Consumer interest in premium wines continues to be the dominant trend,” said Robert P. (Bobby) Koch, Wine Institute President and CEO. “As consumers trade up, our California wines are emphasizing high quality, value and sustainable wine growing.”
China tariffs impact
The good news on the domestic front contrasts with the bad news on exports as Chinese tariffs on US wine essentially leaves California wines out of reach for many Chinese consumers.
The US China trade war has ratcheted up as China imposed a 15 percent tariff on US shipped wine in April, a 10 percent in September and a 15 percent increase on June 1 pushing total tariffs and taxes on US wine to 93 percent.
Still,U.S. wine exports, 95% from California, reached $1.46 billion in winery revenues in 2018 – down from $1.53 billion in 2017
The 2018 volume shipments were 375 million liters or 41.7 million cases. The European Union’s 28-member countries were the top market for U.S. wine exports, accounting for $469 million; followed by Canada, $449 million; Hong Kong, $130 million; Japan, $93 million; China, $59 million; Mexico, $27 million; South Korea, $25 million; Nigeria, $15 million; Dominican Republic, $14.4 million, and Singapore, $14 million.
Boost for US direct sales?
Back on the domestic scene, direct-to-consumer wine sales continue to grow as important channel with over 6 million cases sold with a retail value of $3 billion in 2018, an increase of 9% in volume and 12% in value over the previous year.
“Consumers are drinking better but not a lot more, as overall alcohol per capita consumption has changed very little,” said Danny Brager, Senior Vice President of Nielsen’s Beverage Alcohol Practice Area. “They are being more mindful of drinking in moderation, thus underlining a trend to smaller serve packaging, and seeking ‘experiences’ in a wide variety of eating and drinking venues such as theaters, museums, concerts, festivals, sports/activity venues, ‘groceraunts’ and other premises offering combined experiential and food/drink occasions. This diverse landscape has resulted in wine selling locations in the U.S. being up 8.5% from five years ago to 567,000 off- and on-premise locations.”
On direct to consumer wine sales a decision by the US Supreme Court recently could boost digital wine sales .The decision was hailed by the the National Association of Wine Retailers as an “historic win for both free trade and wine consumers across the country” “We are equally confident that this Supreme Court decision will lead to greater access to the hundreds of thousands of wines many consumers do not currently have access to due to protectionist wine shipping laws.”
The Court’s decision creates the potential for digital wine sales directly to consumers and presents states with constitutional issues to address. There are at least 16 states which currently prohibit out-of-state retailers to ship directly to consumers and only about a dozen states currently allow out-of-state wine retailers to ship directly. Many states will need to evaluate their laws pertaining to alcohol or risk being taken to court says the group.