2011 U.S. wine shipments rose 4.5 percent

When the wine industry gathered Tuesday for the annual Unified Wine and Grape Symposium, the atmosphere was decidedly upbeat.

After years of grape gluts, growers welcomed rising demand and prices amid short crops. Wineries are also looking at stronger markets as the economy rebounds and the ocean of surplus wine dries up.

About 12,000 owners, managers and workers attend the yearly trade show to learn the latest about grape growing, wine making and marketing as well as kick the tires on new products, services and equipment for the wine and grape businesses.

Jon Fredrikson, of market research firm Gomberg, Fredrikson & Associates, noted that the U.S. became the world’s largest wine consumer last year. While per capita consumption — still low — is rising, the wine business can anticipate heady growth ahead, if it can get the grapes.

Fredrikson said  U.S. wine shipments were 345 million cases in 2011, up 4.5 percent over 2011. Of that, 210 million cases came from California (89 percent of U.S. production), 26 million from other states (11 percent of U.S. production) and 110 million cases were imports.

In total, imports represented 32 percent of wine shipped to customers in the U.S. in 2011.

Wines that cost less than $7 represent 61 percent of the volume; those from $7 to $10 are 19 percent and  those selling for more than $10 are 20 percent of the market. The revenue totals, however, favor more expensive wines.

He said the hottest categories were sweet red wines, with sales up 202 percent since 2010; unoaked chardonnay up 101 percent; muscats up 64 percent, and malbec up 40 percent.

Fredrikson always picks wine stars of the year, and this year it was mostly big companies that are doing well by selling inexpensive wines, supplying consumer demand for sweet wines and muscats and using clever marketing.

Among the stars he chose from Napa Valley were:

? Trinchero, a perennial winner,  riding the sweet red and muscat boom;

? Duckhorn, and two diversified wine companies with strong presence in the Napa Valley:

? Crimson Wine Group, which owns Pine Ridge,

? Vintage Wine Estate, which owns Cosentino, Girard, Cartlidge & Brown.

His overall winner was DFV Wines owned by the Indelicato family, which bought Black Stallion Winery last year.

The show, sponsored by the California Association of Winegrape Growers and the American Society of Enology and Viticulture, boasts two parts: educational sessions and seminars, and a trade show that burst out of the spacious Sacramento Convention Center into tented areas and, for the first time, part of the lobby.

While gawking at the enormous harvesters used in Central Valley vineyards and tasting wines made in different ways attracted most attendees, the most popular event was the state-of-the-industry session Wednesday morning.

Nat DiBuduo, president of Allied Grape Growers, a large grape marketing organization, was ebullient over the way the market for grapes has firmed.

For a decade and more, attendees at the show had heard DiBuduo complain of unfavorable conditions for growers and warned them not to plant new vines due to the excess. But this year, he said, “I feel like I’m on a Harley.”

Part of the reason is that almost no new acres are being added to the roughly 500,000 in California, and the estimated 3.25 million tons harvested last fall won’t meet demand. Shortages should continue as few new grapes have been planted in years.

Napa County represents 10 percent of the state’s acreage, only 5 percent of its crop due to lower yields but 30 percent of state-wide revenue from wine sales.

Because of pressure from other crops, impending water shortages and economic reality, DiBuduo said higher yields rather than vast new plantings provide a realistic answer to increasing demand.

The state average yield is 6.95 tons per acre (in Napa County, it’s 3.5), and he said that will rise to 7.10 tons per acre in a few years, with additional demand satisfied by “borrowing” wine from years when there’s a bounty, blending in other varieties and wines from other regions, varying release dates, and, his worse choice, using imported grapes.

Present exchange rates favor domestic suppliers, but big wineries are having to buy some wine in bulk overseas to ensure supplies of popular varieties like muscat and pinot grigio. he said.

DilBuduo has just conducted a survey to see what growers are buying to plant from nurseries, and finds that for the first time in years, whites are more popular than reds. He said

25 percent of vines going in are muscat, while 10 percent are French colombard, a bland white used in blends including sweet wines. In Napa Valley, cabernet, chardonnay and pinot noir remain preeminent, but malbec is gaining in popularity.

The second industry speaker was Steve Fredricks of Turrentine Brokerage, one of the two big brokers in bulk wine. Overall, he suggested that there aren’t many promising scenarios to replace short crops here.

He noted that the brokerage sees only about five million gallons of wine available, down from more than 20 millions gallons at times in past years.