A strong US dollar is currently the biggest challenge for the sector, the industry body for the state’s wineries and affiliated businesses, Wine Institute, told BeverageDaily.
California is the fourth leading wine producing region in the world, coming after Italy, Spain and France.
US wine exports – of which 90% come from California – were the second highest on record in 2014, growing 122% in value from 2005. For California, this means 49.2m cases to 125 countries.
“The largest single market is Canada: that’s about 30-35%. Then there’s another 30-35% going to the EU,” said Linsey Gallagher, vice president of international marketing for the Wine Institute. Within Europe, the UK, Germany and Nordic countries are the main markets.
The other top markets are Japan, Hong Kong and China, and Gallagher expects to see further growth from Asian markets. “Our vintners are really interested in understanding the Chinese market right now, in the sheer potential and population numbers. Consumers really have a fascination with Western goods,”
But while China is a big opportunity, it’s also a long term one – only 5% of exports currently go to the country.
A strong US dollar presents a challenge to the industry, as it makes Californian products more expensive abroad. “Our producers are trying really hard to share that burden, but realistically it’s tough,” Gallagher said.
However, she hopes the work California has done to strengthen and maintain brand loyalty in recent years will see the industry through this situation.
What makes you proud of California wine?
California wine profile 2014
- $24.6bn retail value of California wine sales in the US
- $1.5bn in export revenue
- $61.5bn in state economic impact
- $121.8bn in national economic impact
- 330,000 jobs in California
- 615,000 acres of winegrapes
- 5,900 winegrape growers
California boasts 4,400 bonded wineries: up 93% from 2,275 in 2005. Nearly all of these are family owned businesses – and that’s something that makes the region special, said Gallagher.
“I’ve got to know so many people behind the labels. The people are the fabric behind the industry, pioneers, and rebels, incredibly passionate about making the industry the best in the world. We’re also really blessed to have a really fun blend of new world and old world.”
Wine producers are eager to challenge themselves, and enjoy freedom to innovate. However, they also have an affinity for tradition. This all leads to a certain character, she added.
It also has a diverse industry: with more than 110 winegrape varieties. Abundant sunshine makes for a consistent and long grape growing season, and the diversity of terroir supports different grape varieties including Chardonnay, Pinot Noir, Cabernet Sauvignon, Merlot, Reisling, and Moscato/Muscat.
Gallagher also highlights the sector's attention to sustainability: championing its comprehensive and forward-thinking approach. Family wineries have been focusing on sustainability for generations, but developing programs and certification helps keep the issue at the forefront, she said.
It can be as simple as using sheep to cut grass rather than using a diesel tractor, or beneficial insects to control destructive species rather than chemicals.
The incentive is to keep the industry healthy for many generations to come, she added.
California, Here I Come…
Activities throughout California Wine Month include live music, food and wine pairings, winemaker tours, harvest parties, entertainment, and more.
“Tourism is a very important part… we have more than 22m visitors each year,” said Gallagher. “They’re coming here for a reason: an amazing food and wine culture. And it’s unbelievably beautiful here right now – breathtaking.”
These tourists spend some $2.1bn a year and while the Napa Valley has drawn in the majority of tourists in the past, other areas are also now welcoming sizable numbers.
Whether at home or abroad, the key to successful promotion is to link the positive Californian image to wine, said Gallagher. Then, there’s the chance to unpick that by looking at different grapes and appellations.
“I travel internationally, wherever I go I say ‘from California,’ and faces light up. It’s a positive, aspirational destination. Our job is to connect that positive energy with a world class wine producing region. That’s a lot of fun for us,” she said.