The Grapes of Math: Adding Up Profits of Domestic Wine Sales
While most people probably think of France, Italy and Spain when it comes to wine, the United States is not far behind, ranking fourth globally. Wine-making is not a new practice in America. In fact, wine has been made in America for over 300 years. Today, wine production is undertaken in all fifty states, with California producing 89 percent of it.1 All told, there are over 8,000 wineries in the US, as the domestic wine industry has continued to grow for the past quarter-century.
Just how much money is involved in all this American wine? According to Wines & Vines, lots! US wine sales revenues in 2016 were up 5% from the previous year with sales estimated at $39.8 billion. Factoring imported wines into the equation, Americans are thirsty indeed, consuming an estimated $60 billion of wine last year alone. Is it any wonder that the outlook for 2017 is resoundingly optimistic?
If one was asked to name the five top wine-producing states in the country, number one is not hard to guess … California. The Golden Bear State is far and away the biggest producer of domestic wines, nearly six times more than its closest competitor, Washington-state. Next in line are Oregon, New York, and Texas, respectively. Nascent wineries are everywhere to be found in the US today, offering up wines with an interesting diversity of flavor and character.
Our love affair with the grape goes back thousands of years, as early as 7000 BC in China. The Persians and Greeks were soon to follow. “From the beginning, wine has been an important component of many religious practices. Consumption of ritual wine was part of Jewish practice since Biblical times and, as part of the Eucharist commemorating Jesus‘ Last Supper, became even more essential to the Christian Church. Although Islam nominally forbade the production or consumption of wine, during its Golden Age, alchemists such as Geber pioneered wine’s distillation for medicinal and industrial purposes such as the production of perfume.”2
Throughout the ongoing civilization of Europe, wine’s popularity only increased (as it has to this very day). Science and technological advancements have helped wine survive pestilence and adverse climatological conditions, to survive and thrive in the modern age.
Message In A Bottle
In the United States, not only are wine growers enjoying robust sales domestically, they are exporting to a world increasingly receptive of their products. According to the Wine Institute, The US exported 412.7 million liters or 45.9 million cases of wine in 2016. Some countries are geographically situated in areas not capable of growing good grapes. Take England, for example. Though it is a small country, they are definitely enthusiasts of American wines, drinking almost one-third of the product we produce. Canada, Italy, Germany, and Japan are not far behind. 1
According to Linsey Gallagher, Vice President of International Marketing at the Wine Institute, “California wine exports have grown by an impressive 78% by value in the last decade, despite the challenges of heavily-subsidised foreign competitors and high export tariffs.” Silicon Valley Bank of California prognosticates premium US wine sales ($12 to $25) to experience a 10% to 14% growth in 2017. 2
Closer To Home
According to Nielsen (2017), 120 million Americans drink wine. That’s roughly one-third of the US population. Of these people, 38% of them consume wine at least once weekly. While that number might seem high, globally Americans rank 42nd in per capita wine consumption. The Wine Market Council reports that generationally, Millennials and Baby Boomers consume the lion’s share of it. Despite the increasing popularity of craft beers, Americans still by and large prefer wine. 3
Exactly how much wine is the average American sending down the hatch these days? Not enough to float the proverbial battleship, but more than one might imagine. Statista.com reports that U.S. consumers individually drank 2.8 gallons of wine in 2014, an uptick of almost half-a-gallon from the previous year. Americans are drinking lots of wine at home, too, outpacing consumption in bars and restaurants by a ratio of nearly 3 to 1. 4
By and large, when it comes to wine, Americans are drinking American. Is it a nationalistic thing? A price-point thing? Whatever the case, domestic wines accounted for 71% of US wine sales last year. “Domestic wines accounted for 71 percent of consumption last year. Of imports, France tied Italy with respondents in their 20s and finished first with those age 30–39, but ranked second to Italy for consumers in their 40s. Spain was third among all three age groups. Nielsen’s research shows that New Zealand, France and Italy all lead in growth, while Argentina, Chile, Germany, Australia and South Africa are down.” 5
On The Ascent!
Rose wines continued their hot streak again in 2016, and in this category, French roses accounted for an impressive 62% in the category. American roses followed with a respectable 30 percent of international sales. Prosecco sales were sparkling, as well, with sales up a sizeable 25 percent from the previous year. 6