NoBullGrape

US wine market: Big and soon to be the biggest

In a statement similar to those of my child (he is all about what is big, bigger and biggest), Jon Fredrikson proclaims that the US wine market is in very good shape and predicts it will be the biggest wine market in the world soon.  Speaking at the Unified Grape and Wine Symposium yesterday, Fredrikson said "From the perspective of 3½ decades in the wine industry, I can assure you right now that things have never been better in this market and the future looks outstanding." 
Here are some key points from his speech (as reported here):

• Americans purchased an estimated 300 million cases of wine last year, worth more than $25 billion (both records). 
• Census numbers show drinking age adults in the United States is growing as well, from 164 million in 2000 to an estimated 184 million in 2010.
• If per capita consumption continues to go up 3% every year, the US will be the largest wine consumer in the world by 2010.
• Wine drinkers bought an estimated 187 million cases of California wine last year, 6.5 million more than 2004 and a 4 percent increase.  At the same time they bought 8.4 million more cases of imported wine than in 2004, soaring to 81.5 million cases, an 11 percent increase. 
• sales as Baby Boomers and 20-somethings bought more - and more expensive - wine.

Thoughts on this:
I am particularly struck by the fact that this report shows such broad based expansion.   Fredrikson is saying is that the US wine market is not just growing in volume, but also in price (a weak, but useful indicator of quality).  The price increases are being fueled by a. Baby Boomers and, most interestingly, by 20-somethings who are paying more for bottles than previous generations.  This is most pleasing as it shows that the growth is not just targeted on those who are greying, but also on those who will be drinking wine for the next 60, 70 or 80 years. 

Would think that this kind of data would keep investment in the US and those who import to the US up and support more pushes to improve the quality of the wines produced for consumption in the US.

Also very interested in the faster growth rate among non-US wines.  Past years this kind of stat would be attributed to Australian wine, yet the growth over past years seems to indicate an even broader growth in who is successfully importing wine.  Doubt you will see brilliant numbers from France as they announce annual industry wide results over the next few months, but quality players in France, Italy, Portugal and Spain clearly are improving their ability to pierce the US market.  These import numbers may also be boosted by other countries such as South Africa, New Zealand and Argentina whose wines seem (anecdotally) to be getting more shelf space each year.

Please note: some of this comes from personal notes, but the majority of the info here comes from a very comprehensive article in today's Press Democrat titled "US Forecast to become world's #1 wine market."

Napa and the Supremes

After being forced to fight a far too long battle by the makers of "Two Buck Chuck," the Napa Valley Vintners have finally secured protection of the name Napa Valley for wines only from Napa.  As Dr. Vino describes here wine with a brand name "Napa Ridge" can no longer be sold if it does not contain at least 75% grapes from Napa.  This is a huge victory for all who believe that location matters and that consumers should be told exactly where their wines come from.  Luckily for us, there are many great winemakers that fall into this category.  More importantly, it is a big set back for those who seek to use loopholes to hide the true source of the grapes that are used for their wine.  While there are only a few of these characters... they are very, very big.

Non-EU products to gain EU GI protection

We always talk about the failure of the US and other countries to protect the names of distinct locations.  At the very least they do so in a manner that -- when it comes to wine -- is weaker than the protections that the EU provides.  However, there has long been a problem with EU regulations.  They are not available to non-EU countries.  Places like Napa, Santa Barbara, Willamette Valley and the Finger Lakes could not be assured that their names were protected in the EU.  This is because the EU regulations required non-EU countries to also protect EU products (e.g. Chianti, Chablis, Champagne and a number of non-C places).  As the US and others did no such thing, their products did not qualify for EU protection.  Now the EU is being forced (due to a WTO ruling forced on them by Australia and the US) to open the protection they already offer to 720 of their own products to outsiders as well. 
I am surprised that the EU had to be forced to open their system.  One would think that it would be in their best interest to export the system as much as possible.  Yet, whatever the reason, I hope that the opening of the GI system (expected to be approved later this year) provides opportunities for US wine growing regions to gain protection in the EU.  At the very least, it would assure that no Sonoma's from Austria would pop up.  In the best case scenario, there would be increased pressure on the US government to better protect its own regions (and not force the growers of Napa Valley to go to court to protect their name against wine labeled "Napa Ridge" when it is from some other place).  In either case, the consumer who wants to know where their wine comes from wins.

Couldn't have said it anywhere near as well

Guest columnist Richard Olsen-Harbich of Long Island's North Fork winery Raphael has a great piece on the importance of location -- everywhere around the world -- at the always interesting Lenndevours.

As he says:

Remember a merlot grape -- the same merlot grape -- grown in upstate New York or Sonoma or Bordeaux will not taste the same even if we used exactly the same processing techniques. It's the terroir stupid!
In our arrogance, we sometimes forget how little influence we have over the natural world. I want to know what goes into my wine if that’s not too much trouble. (And please don’t bother to tell me its organic -- that’s a topic for another post.) But when I’m enjoying wine from another region, I want to imagine what that part of the world smells like, tastes like and what the people drink. Maybe its because I can’t afford to travel there myself so enjoying the wine is the next best thing to being there.

As you think about going to pick up your turkey, take a read here.

Governor goes to bat for Napa and place names

So the Governor of California is in China and -- apparently -- is demanding that the Chinese stop misusing the name "Napa" on wine produced in China.  You go Terminator!

The contrast between the importance placed on protecting place names from the Governor of the largest wine producing state (and the clear position that the Napa Vintners are taking in this piece) and the stance taken by the US government in the recently initialed Wine Accords is quite stark.  Read more from Tuesday's San Francisco Examiner. 

        

Governor working to keep Napa wine designation pure By Albert C. Pacciorini Staff Writer Working to keep wines labeled “Napa” made only with grapes from Napa is on Gov. Arnold Schwarzenegger’s list of things to do as he begins a six-day mission in China. The focus of Schwarzenegger’s trip is to promote California products and encourage Chinese officials to crack down on the piracy of copyrighted music, movies and software. He’s also promised to ask about three Chinese companies that may be selling “pirated” wine. California law requires wines with “Napa” on the label be made with Napa grapes. It isn’t just Napa fighting to protect its reputation. The Champagne region of France, Sherry in Spain, Porto in Portugal and the states of Oregon and Washington all have a similar problem. All are working together for a “commitment to the importance of place and place names to wine growing,” said Linda Reiff, executive director of the Napa Valley Vintners trade group. Reiff spoke Monday morning at the beginning of a four-day annual meeting of the Great Wine Capitals Global Network trade group at the Metreon in San Francisco. Tuesday and Wednesday the meeting will move to St. Helena. The network includes Melbourne, Australia; Bordeaux, France; Porto, Portugal; Cape Town, South Africa; Bilbao-Rioja, Spain; Florence, Italy; and Mendoza, Argentina; and works to promote international winery tourism. Reiff gave an outline of the Napa Valley wine industry, followed by representatives of the other international regions, who discussed their locations. At a time with so much friction over differences, wine can provide a chance for people to come together, said event emcee Barry Martin. Napa got its own legal agricultural area in 1981, Reiff said. Today there are 14 subappellations. The Napa vintners, just like their colleagues in Champagne or Sherry, are working hard to protect the use of their regional names, which each feels imparts a level of quality and significance, from wineries in other locals. The trade name Napa is being used illegally in 10 countries, she said, urging those in the industry to join many regions that have signed a joint declaration promoting the importance of place to wine.

Names, location talked about everywhere!

Tom over at  Fermentations makes some very good points about the previously mentioned Center for Wine Origins.  By the way, they seem to have launched a very nice web site since we last spoke about them.

I highly recommend reading Tom's piece.

In addition, Daniel Sogg of the Wine Spectator does a great job outlining how the California Supreme Court (protecting the name Napa against the Fred Franzia's of the world who want to use the words on bottles that do not include grapes from Napa) are in direct opposition to the position of the US Government (read Wine Institute) in the Wine Accords.

In the end, all 3 -- Sogg, Fermentations and the Center for Wine Origins -- come to a similar conclusion.  Place names matter and semi-generics should cease being used.  As Fermentations makes clear, these names do not inherently guarantee quality, but -- whether it is a truth-in-labeling issue or time for everyone to stand on their own two feet -- they certainly should only be used by these particular regions. 

US-EU Wine Agreement: What Does It Do for Consumers?

The US and EU seem to have signed a wine agreement, yet there are differing interpretations of what they signed.
The Wine Institute is claiming a huge victory saying that US wines get greater access to Europe and that all of the semi-generics (e.g. Champagne, Burgundy, Sherry, Port, etc.) can still be used in the US.

Reports from European based reporters claim "EU, US Agree to Protect French Champagne, Other Names"

"EU, US Agree to Protect French Champagne, Other Names"

By REUTERS
Filed at 8:33 a.m. ET

BRUSSELS (Reuters) - The European Union and the United States have reached the first phase of an agreement on the wine trade that will help protect some of the most famous European names like champagne, chianti, madeira and sherry.

Under the agreement, the use of the names by producers in the United States -- where they are currently considered semi-generic -- will be limited, the European Commission said in a statement on Thursday.

Furthermore, U.S. authorities will exempt EU exports from new certification requirements among other measures to smooth trade, the statement said.

The EU and the United States have been at loggerheads over the wine trade for 20 years.

Top EU trade officials held talks with their U.S. counterparts in Washington on Wednesday.

The French Wine Exporters Federation welcomed the deal, saying it would secure the country's wine exports to the United States which it said were worth 1.6 billion euros.

Everyone seems to talk about the producers and trade.  Not one word about consumers.

What do we get out of this agreement?

Big wine working hard to lower vintage standards

TTB comments to the proposed watering down of the vintage date requirements have been posted and it is pretty clear that the majority of the big US wine interests are pushing for a lowering of US vintage standards while little guys are opposed.  I, personally, am always suspicious when big companies from any industry get together and am betting the little guys are closer to having the consumers best interests at heart.

Here's how they break down:
For weakening the vintage requirements --

• Eric Wente (President of the Wine Institute)
• All the comments submitted from Gallo
• All comments submitted from Constellation
• Gary Heck of Korbel
• Ted Baseler from Stimson Lane
• Diageo
• The Wine Group

Against weakening the vintage requirements --

• California Association of Wine Grape Growers
• Napa Valley Vintners
• Terlato Wine Group -- also sending lots of letters around to key wine publications
• F. Paul Pacult from the Spirits Journal
• Every consumer who wrote in!

Of particular note (and deserving of real congratulations for sticking to the stronger position despite their size): Kendall Jackson and Wine America (another trade group that often is in lock step with the Wine Institute).

Should be interesting to keep watching this... Unfortunately, my guess is that big business will win...

Terroir, Napa Declaration and Terry Theise

Great entry on the Dr. Vino blog that ties together past events that we have discussed here, future conferences and the excitement that one of the better importers of quality wines finds from the impact that unique places have on wine.

Time to weigh in on vintage dating

As many blogs have written, the Wine Institute has gotten TTB to consider lowering the percentage of wine from a particular year in wines labeled "vintage."  At the present time, all US vintage wine must contain 95% wine from the year claimed on the label.  The Wine Institite (a group we have discussed before that seems to have become more powerful the more it focuses on the wants and desires of big players like Gallo and Constellation as opposed to AVAs and smaller quality focused growers) is pushing (and will probably get) the federal government to lower their requirement to 85%. That sounds like plenty, yet when you think that 15% of the wine in a Cabernet Sauvignon from California labeled 2002 could have come from the 2004 harvest, the proposal loses some of its appeal.
However, I think there is a larger problem here.  The Wine Institute and US industry should be urging an increase, not a decrease in the percentage.  There may be winemaking claims that justify a lower number, yet they are making a horrible PR mistake.  In a world that is embracing quality, the US should be urging other countries to join their HIGHER levels,not lowering them.  It is a shame as this is an opportunity missed to highlight quality US wines.
I know some other bloggers whom I respect disagree, yet I think they are forgetting who is calling the shots (big companies) and who loses (the customer) in this case.
I urge you to join me in reviewing the proposed rule and voicing your opposition to the proposed ruling here.
Move fast as today is the dealine for comments!