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World Wine Situation

Northern Hemisphere

France

Over the last 15 years, wine production in France and other European Union (EU) countries has taken on a new direction. The EU has been making efforts to gain better control of the yields by way of better control over crop areas. Since 1987, France has uprooted about 102,000 hectares of vines and replanted about 151,000 hectares. The Government of France has urged European growers to adapt to changing consumer demand in order to better compete with emerging third countries and in new markets.

The French government subsidizes the wine sector. During 1999, EU subsidies allocated to the French wine sector included export refunds and aid earmarked for vineyard restructuring, distillations and grape juice fortification. During 1999, $34 million were allocated to wine growers for restructuring and renovating vineyards.

The French Ministry of Agriculture reports wine production in 2000 at 59 million hectoliters (hl), down 6 percent from 62.8 million hl in 1999 but up 7 percent from levels seen in 1998. French customs officials say that during the period January-July 2000, French wine exports decreased by 9 percent in volume but increased by 7.6 percent in value from the previous year, amounting to approximately $3.1 billion. The United States ranks fifth among France’s clients in terms of volume. Germany, the United Kingdom, Belgium/Luxembourg, the Netherlands, and the United States were France’s top markets in 1999.

Italy

Italy significantly increased its wine exports in 1999 to 18.3 million hl, up 21 percent over 1998 primarily due to expanded shipments of table wines. Germany, France and the United States were the leading destinations but volumes also increased to Switzerland, Japan, Canada and some eastern European countries. Export prospects in 2000, however, are not expected to be as bright, with large supplies of wine in other EU countries. Imports of U.S. wines into the Italian market showed encouraging signs of recovery in both 1999 and during the first half of 2000. Large supplies of U.S. wines helped to soften the effect of the dollar’s high value on the world market. But, prospects still remain somewhat limited, with tough competition and a strong dollar expected.

Italy provides export promotion assistance funds. The Ministry of Agriculture allocated about $6.8 million during March 2000 through February 2001 for Appellation of origin products, of which approximately one third was spent to promote wines.

Spain

Relatively favorable weather conditions have led to a larger 2000 vintage of about 36 million hl in Spain, up 9 percent from last year’s weather-reduced-crop. Despite a recent major reduction in Spanish vineyards, the area planted to vineyards in Spain continues to be the largest in the EU, accounting for about one third of the EU vineyard area. Total Spanish wine production ranks behind Italian and French production, mainly due to limited rainfall, poor soils in certain areas, and restrictive measures on vineyard irrigation.

During the first half of 2000, Spanish wine exports declined in terms of both volume and value due to increasing prices. Wine exports in 1999 declined 2 million hl. About 75 percent of these exports went to other EU countries, consistent with previous years, 3 percent to the United States and 3 percent to Switzerland.

The 2000 harvest was estimated at approximately 11 million hl, down slightly from 1999 bumper crop of 13 million hl. After a second year of surplus production, prices for bulk white wine have reached near record lows. This resulted in wines being distilled to drinking alcohol under the EU drink alcohol program. In addition to this regular program, the German government applied for a crisis distilling program to process the surplus wine.

U.S. exports of wine to Germany are growing steadily, amounting to 140,000 hl in 1999, the majority of which ( 80 percent) were red wines. Helping to bolster this trend are the reports of the health advantages of red wine consumption and the fact that about 75 percent of German-produced wines are white. The German Wine Institute markets wines internationally through contributions paid by the industry and proceeds from its own business. Its annual budget totaled approximately $9 million.

Mexico

Mexico ranked 13^th on the list of top markets for U.S. wine in 2000. The value of U.S. exports of all alcoholic beverages to Mexico increased from $24.9 million in 1996 to $35.2 million in 1998, representing an annual average growth rate of 20.7 percent, or more than twice the growth rate of the total import market. However, per capita wine consumption in Mexico is estimated to be less than one liter, per year. A higher preference for other alcoholic beverages and an underdeveloped consumer awareness of wine reflects this very low per capita consumption.

United States

U.S. wine production is estimated at 24 to 25 million hl for 2000, up significantly from the previous year. In February 2001, the California Department of Food and Agriculture estimated 2000 crush at 3.6 million tons, compared to 2.6 million tons.

In 2000, exports of U.S. wine and wine products (including cider, fermented beverages, and must) increased about 3 percent to 2.9 million hl from 2.8 million hl in 1999. Heavy competition on global markets and the strong U.S. dollar hampered growth during the year. In 2000, the top export markets were the United Kingdom, Canada, and the Netherlands.

Wine imports increased nearly 14 percent with large increases from Italy, Australia and Canada.

(The FAS Attache Report search engine contains reports on the wine industry for more than 13 countries, including France, Italy, and Spain. For information on production and trade, contact Heather Page at 202-720-9792. For information on marketing contact Yvette Wedderburn Bomersheim at 202-720-0911. Also, see our wine webpage at: http://www.fas.usda.gov/htp/horticulture/wine/wine.html.)

Last modified: Wednesday, July 21, 2004