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World Wine Update
| Total U.S. wine exports are beginning to level off after years of large increases. Competition for market share heats up on a global scale with new world wine producers expanding wine production and aggressively marketing their products. The more traditional wine-producing countries of the European Union strive to cut production, improve quality, and struggle to maintain market share. |
On January 25, 2002,
NASS release the Non-citrus Fruits and Nuts Preliminary Summary.
According to the report, utilized grape production for 2001 totaled
6.52 million tons, down 15 percent from the 2000 crop.
The California crop, which accounts for 91 percent of the U.S. grape
production, was down 16 percent from last year.
California wine type production also decreased 8 percent from 2000, while
raisin type production fell 27 percent, and table type production fell 10
percent. Utilized production
decreased from the previous year in almost all states, with California leading
the way. The only states increasing
from 2000 were Washington and Oregon, while Georgia was unchanged.
According to the
February 8, 2002 California Grape Crush Report, the 2001 crush totaled
3,006,550 metric tons, down from the record 2000 crush of 3,527,844 tons.
The 2001 white wine variety crush totaled 1,163,186 tons, down 13 percent
from 2000 while the 2001 red wine variety crush totaled 1,533,036, down about 5
percent from the previous year. Chardonnay
accounted for the largest percentage of crush volume, with 17 percent.
Cabernet Sauvignon accounted for the second leading percentage of crush,
with 12 percent of the total crush.
California grape growers
received prices in 2001 for raisin, table, and white wine grapes that were, on
average, less than the 2000 prices, while the price received for red were, on
average, above the 2000 prices.
During 2001, exports of
U.S. wine and wine products (including cider, fermented beverages, and must)
increased 3 percent from 2000 to 2.98 million hectoliters (hl).
This is up from 2.86 million hl during 1999. During 2001, the top export markets continued to be the
United Kingdom, Canada, and the Netherlands.
Wine imports increased 8
percent from 4.87 million hl to 5.27 million hl.
Imports from Italy and Australia increased 7 and 30 percent respectively.
Largest U.S. Wine Export
Markets
United Kingdom (UK)
The UK is the world=s
second largest
importer of wine and the largest market for U.S. wines.
During 2001, U.S. exports of wine to the UK increased 31 percent in
quantity at a value of $28 million. Exports
of still wine in containers of less than 2 liters make up over 90 percent of
shipments to the UK and posted about a 20-percent increase over 2000.
Effervescent wines showed some promise at more than a 77- percent
increase over last year. Less than
3 percent of exports to the UK go in bulk form.
The total value of U.S. wine exports to the UK
reached over $169 million during 2001. France
has begun to lose some of its market share due to competition from the
United States and Australia in products with consistent quality and more
affordable prices. Nearly one third
of the wine consumed in the UK is from new world (non-European) producers.
This trend is also causing some steep competition for smaller producers
such as Bulgaria, Hungary (despite their reduced rate of duty) and Portugal.
Despite the brand and price sensitivity of the UK market, there is
potential for niche markets where wines from the Pacific Northwest, New York,
Virginia, and Texas could do very well.
The UK does produce a very small
quantity of mostly white wine. UK
consumers are buying more wine, often at the expense of beer. This trend is expected to grow with consumers learning more
about wine and Atrading
up@
to more expensive wines. The
largest consumer group for wine consists of those 35-49 years of age in the
middle and upper-middle class.
Red wine is showing the
most growth, boosted by continued news reports of health benefits.
Continuous circulation of positive reports on wine and health is a
benefit to the wine industry.
Canada
Canada is the number two
export market for U.S. wine. During
2001, the United States exported about $94 million of
wine to Canada. Actual quantities
shipped show a 5-percent decline for the first 10 months of 2001.
Canadians are developing an increasing
taste for imported wines and currently 62 percent of purchases are of
imported wines. Sales of U.S. wines
are facing increasing marketing challenges due to growing competition,
particularly from Italy, Australia, and Chile.
Despite the growing volume of wine available on the Canadian market,
Canada=s
domestic wine sector continues to expand. Vineyard
plantings, now almost exclusively vitis vinifera, have increased about 50
percent over the past three years to approximately 6,000 hectares and this is
expected to double in the next 8 to 10 years.
The industry is building a strong partnership with the tourism sector,
which is facilitating the marketing of Canadian wine. The United States is Canada=s largest export market and U.S.
imports of Canadian wine have been posting increases of about 20 percent for the
last 2 years. Taiwan, Japan, and
Hong Kong are also important markets for Canada.
On December 18, 2001, the Canadian
Government, along with the United States, Australia, New Zealand, and Chile,
signed a Mutual Acceptance Agreement of Oenological Practices. Signatories accept the principle that, for countries with
mechanisms in place to regulate winemaking, the mutual acceptance of each
country=s
winemaking regulations will facilitate international trade in wine.
Ontario=s winters enable wine-makers to produce
an abundant Ice wine crop each year of high quality and consistency.
Ice wine is currently produced by more that 45 wineries in Ontario.
The annual production for 1999 was over 300,000 liters; the production
for 2000 was 328,000 liters.
Netherlands
U.S. wine shipments to
the Netherlands increased nearly 9-fold from 1996 to 2000.
Exports during 2001 were not as strong as the previous year in dollar
terms in the face of growing competition from other
new world wine producing countries. Per capita consumption for lighter alcoholic drinks continues
to increase and red wine is said to be the most popular style.
The Dutch meals frequently feature meat (or cheese and sausage) and this
combined with the cold climate support consumer preferences for a more hearty
wine type. Younger wine drinkers
are more willing to experiment with different beverages, particularly new world
wines. However, the general
perception is that new world wines may be inferior to wines from France, Italy,
Spain, or Germany. One new world
wine producer, South Africa, has a unique advantage when marketing wines.
South African wines often have Dutch names, which helps the Dutch
consumer to identify with the product. Supermarkets
make up about 68 percent of all wine retail sales, but do not sell the
higher-end wines. Liquor stores
generally sell more expensive wines than supermarkets.
There is some concern
that the conversion to the Euro will hurt U.S. wine sales in the short term. As European consumers are sensitized to the changes in
currency values, they may be less inclined to spend money on non-basic items
such as wine. Given the strong U.S.
dollar, other competing countries such as Australia, New Zealand, and South
Africa are not so adversely affected by the change.
The Netherlands produces
very little wine of its own. French
wine continues to dominate the Dutch market in terms of availability.
The Netherlands has become a transshipping point for large U.S. companies
eager to expand market share in Western Europe.
A large volume of imported U.S. wine is re-exported to Germany, Belgium,
Luxembourg, Denmark, Finland and Sweden.
California wine promotions are said to
have done a very good job associating wine with Asun and success.@
More room exists in the Netherlands for wine market development, despite
a current stabilization in consumption growth.
Some exporting countries continue efforts to provide a consistent supply
of their product. Large U.S. wine
exporters, when faced with shortages in a developing market often seek to avoid
price increases by cutting sales to domestic market outlets to protect their
market share.
Japan
Despite recent declines
in value and volume of wine shipped, Japan continues to rank third in volume as
a U.S. export market. A total of
417,341 hectoliters were shipped during 2000.
About 27 percent of the wine shipped to
Japan during 2001 was in bulk form (containers holding over 2 liters).
Much of this is bottled in country and marketed under a Japanese domestic brand
name. Because of the import tariff
level on bottled wine, Japanese manufacturers have a significant price advantage
in re-bottling the bulk wine that is assessed at a lower tariff level.
During 2000, the U.S. ranked fourth in
Japan=s
list of bulk wine suppliers in value but about eleventh in volume.
U.S. wine shipments to Japan during 2001
declined $10 million from the previous year due to domestic oversupply
over the last 2 years combined with the lost market share due to various pricing
disadvantages. The over-supply situation is expected to turn around in the
short term, but U.S. wines will continue to experience competition from France,
Italy, Spain, Germany and other new world wine producers.
The Market Access Program (MAP),
administered by the USDA=s
Foreign Agricultural Service, has allocated funding during the 2001/02 marketing
year to improve U.S. market share in Japan.
Activities include retail display program, a newsletter, trade relations,
regional programs, trade missions, and trade shows.
There is optimism that
wine will become more appealing to the younger generations as the spirits
beverage sector loses market share. The
Japanese are showing an inclination towards drinking beverages that are lower in
alcohol content due to greater awareness of health issues.
Beer continues to be the most consumed alcoholic beverage.
Because per capita wine consumption is well below that of Europe or the
United States, substantial growth potential exists in the wine sector.
Greatest Northern
Hemisphere Competition for U.S. Wine
The new EU wine
regime, begun during Marketing Year 2000/01 seeks the enhancement of quality, a
greater market orientation, and the renewal of old vineyards.
The new EU Budget for the wine sector is being increased 3.3 percent,
from 1.292 billion euros in 2001 to 1.335 billion euros ($1.178 billion) by
2003.
The French Ministry
of Agriculture reports the 2001 wine crop at 56.2 million hectoliters, down
about 6 percent from the previous level. French
exports during the first half of 2001 posted some strong increases to two
primary markets: Japan (ranked eighth during 2000) up 28 percent, and the UK
(ranked second during 2000), up 39 percent.
Other major markets for French wine include Germany, Luxemburg, the
Netherlands and the United States.
The United States
imported about the same amount of wine from France during 2000 as in 1999. Wine imports during 2001 were down
4 percent from the previous year. The
value of the wine imported over the last 2 years has declined 11 percent.
Value declines can be attributed to less quantity of champagne (post
millennium) and smaller shipments of higher-value red wine.
During 2000, demand from French
consumers for new world wines was reported to have increased 45 percent.
In 2001, the Government of France raised ONIVINS=
(French Office for Wines and Vines) promotional budget 21 percent to $10.5
million to improve the promotion of French wines in foreign markets.
Export
data during 2001 indicated a historical change of direction, with more bottled
wine being exported than bulk product. Italy=s
top export market in 2000 was Germany, followed by France, the United States and
the United Kingdom. The largest
increases in terms of higher-value wine have been going to the UK, Switzerland,
and the United States.
Imports
into the United States from Italy showed a 7-percent increase during 2001
compared to the same period the previous year.
Exports of U.S. wine to Italy increased only 2 percent during 2001.
However, wine that is transshipped via other EU countries is not captured
in U.S. trade statistics. Actual
trade levels may be higher than reported. Competition
from growing domestic quality and new world wines does put pressure on efforts
to expand the Italian market for U.S. wines.
Spain
continues to have the most area under vines in the world.
Spain continues to have large inventories of wine despite a 14-percent
decline from last year=s
large production levels, which is expected to contribute to increased exports
during 2001/02. In November 2001,
according to El Mundo, Spain requested from the EU that 7.8 million
hectoliters be distilled under the crisis distillation program. During January
through October 2001, Spain supplied approximately 4 percent of total imported
wine to the United States.
Australian wine
production during 2001/02 is expected to increase 6 percent to 9.6 million
hectoliters. This production is
estimated to be about 34 percent white wine, 53 percent red, and 2 percent
miscellaneous wines.
According
to Australian Wine and Bandy Corporation (AWEC) figures:
Australian wine exports reached new value and volume records in calendar
2001. The UK and United States
continue to be the principal markets, accounting for more than 80 percent of the
increase and 70 percent of the total volume and value of overseas sales.
AWEC is a committee of
the export promotion arm of the Australian Wine and Brandy Corporation, which
was formed in 1991 and conducts generic promotional programs in key overseas
markets. This includes the UK,
Ireland, Netherlands, Germany, Switzerland, Sweden, Denmark, Norway, Finland,
the United States, and Canada. AWEC
also provides export advice, statistical information and promotion material.
Large companies dominate the Australian
wine export industry. It is widely
reported that the ten leading exporters account for over 85 percent of the value
of all exports. Australian
companies are buying wineries and seeking acquisitions and partnerships abroad
to take advantage of growth projected for markets overseas. For example, The Foster=s Brewing Group (Foster=s
Group), Australia=s
dominant beer maker, bought Bering Estates of California last year and is
investing heavily in the wine sector. During
January - October of 2001, Australia maintained about 15 percent of the total
U.S. import market.
The Chileans are
keeping production stable at the moment and are focusing on improving the
quality of their wine. Chile has
large plantings of quality vines from strains introduced to the country in the
1900s from pre-phylloxeric seed plants. Recent
advances in grape and wine growing technology and the modernization of equipment
and facilities have helped to put Chile on a par with countries that have a more
developed potential for production and exportation of fine wines.
During 2001, Chile exported 27.4 percent of its wine to the United
States, Canada, and Mexico. The largest destination was the EU with 54 percent.
Only 9.4 percent and 8.8 percent of wine exports went to other Latin
American countries and Asia, respectively.
Chile ranks fourth in terms of wine suppliers
to the U.S. market, supplying about 10 percent of U.S. imports during 2001.
Chile has projected an image of economic and political stability, keeping it attractive for both domestic and foreign investments in grape and wine growing. The government provides no funds to support wine production or subsidize exports. On December 18, 2001, the Chilean Government, along with the United States, Australia, New Zealand, and Canada, signed a Mutual Acceptance Agreement of Oenological Practices (as explained above).
For
a complete selection on FAS worldwide reporting visit http://www.fas.usda.gov.
Regular wine reports are published on Argentina, Australia, Chile, South Africa,
France, Germany, Italy, Japan, Mexico, Spain, Sweden, and the United Kingdom.
Periodic worldwide voluntary reports are also available.
Also, please visit our new trade database on line at http://www.fas.usda.gov/ustrade.
Check
out the wine webpage at http://www.fas.usda.gov/htp/horticulture/wine.html. For information on production and trade, contact Heather Page
Velthuis at 202-720-9792. For
information on marketing contact Yvette Wedderburn Bomersheim at 202-720-0911.
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