Solid Performance Amid Tariffs and Exchange Rate Challenges
-April 10,2019-
SAN FRANCISCO — U.S. wine exports, over 90% from California, reached $1.47 billion in winery revenues and 375 million liters (41.7 million cases) in 2018. Total exports were down 4.8% in value and 1.2% in volume because of the strong dollar, retaliatory tariffs, competition from foreign wine producers who are heavily subsidized by their governments and benefiting from free trade agreements in key markets.
“California wines performed well under very challenging circumstances as top markets continued to embrace our reputation for premium quality, leadership in sustainable winegrowing and diverse offerings,” said Robert P. Koch, President and CEO of Wine Institute. “Strong marketing programs that invite international consumers to connect with California as a world-class destination and wine producing region continued to generate new fans among media, trade and consumers.”
California wine exports have grown nearly 60% by value in the past decade. Wine Institute’s California Wine Export Program includes more than 170 wineries that export to 142 countries. Thirteen global representative offices conduct marketing and promotional programs in 25 countries across the globe.
A full slate of promotional activities in China and other Asian markets was held in 2018 including a new round of Master Class seminars (above) and California wine tasting events.
The top 10 export markets for California wines are: the European Union’s 28-member countries, $469 million, 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 million; and Singapore, $14 million.
“We have made critical progress on trade agreements with the UK, Mexico and Canada, and we continue to advocate for wine tariff elimination in key markets including China and Japan,” said Charles Jefferson, Wine Institute Vice President of Federal and International Public Policy. “Wine Institute will continue fighting for a level playing field and the removal of trade barriers in markets around the world.”
Wine Institute’s Regional Trade Directors in key export markets reported on 2018 exports:
CANADA
“U.S. wines continued to experience modest growth in value in the Canadian market during 2018 despite a decrease in volume. Although a weak Canadian dollar has led to rising retail prices, Canadian consumers continue to buy premium and super-premium priced California wines,” according to Rick Slomka, Wine Institute Trade Director for Canada. “California continues to enjoy a reputation for producing high quality wines at affordable prices. With ongoing liquor board promotions and new product introductions, this momentum is expected to continue. As the retail landscape for wine sales in Canada evolves, we look forward to continued growth in government liquor stores but also anticipate greater access to new grocery distribution channels.”
CONTINENTAL EUROPE
“Despite strong competition from the “old world” and a strong dollar, Continental Europe continues to be a key market for California wines. In some of the larger export markets, such as Germany and Sweden, retail sales by volume were stable but revenues increased due to higher average pricing. Not only are more and more discerning European consumers discovering the premium wines of California, but more and more California wineries are looking to export to Europe. At Prowein, the world’s largest wine trade show recently held in Germany in March, well over 200 California winemakers presented a diverse selection of outstanding wines to an audience of 60,000 trade and media,” said Paul Molleman, Wine Institute Trade Director for Continental Europe.