Last year, California wine shipments to the U.S. market reached an all-time high of 449 million gallons, representing a volume growth of 2 percent with a retail value increase of 8 percent.
This should be cause for celebration. However, it is not because at the same time, imported wine also set a record, capturing almost 30 percent of the U.S. market, sales California wine grape growers believe they should be ringing up.
Adding insult to injury, some of this was cheap imported bulk wine blended with California wine, and sold under a legal, but disheartening “American” appellation. This imported bulk wine replaced California wine grapes at a time when growers are struggling economically. For the past two seasons, grapes have been left unharvested, hanging on vines because no California winery would buy them, even as demand for wine goes up. Last year’s imports to replace California wine were demoralizing to the industry.
The California wine grape market continues to be in the doldrums, even after 100,000 acres of grapes have been removed over the past five years and new plantings have virtually stopped.
Leaders in the California Association of Winegrape Growers (CAWG) want to change that and have resurrected the concept of grower-funded promotion of California wine. In May, with a modest $250,000 voluntarily funded budget, CAWG launched its “One Nation Under Vines” California wine promotion campaign.
CAWG leaders hope the modest effort will be successful and lead to a grower-funded state commission to promote wine and perhaps fund research. It is the resurrection of an idea that spawned the California Wine Commission 25 years ago, an ill-fated, mandatory grower/vintner-funded California wine promotion program that quickly collapsed due to an acrimonious relationship between wineries and growers.
This time growers are going it alone, and leaving wineries to invest in their brand promotions as they always have done.
“The wine world is rapidly changing and we need to do more on the promotion side of the business,” said Madera, Calif., grape grower Steve Schafer and former CAWG chairman.
California grape growers believe they have their own “brand.” It’s wine from California grapes produced by growers devoted to sustainable viticultural practices, food safety, environmental stewardship, and respect for vineyard workers.
“Industry consolidation has resulted in fewer buyers for our grapes and several of those buyers have international footprints so they are balancing production here with production from others parts of the world,” he said.
Within three years, the U.S. is projected to be the world’s largest wine market. It is already the most profitable. “With this kind of growth, you can bet that outsourcing by wineries will continue as long as there is a plentiful supply of cheap wine available around the world.”
Old world (France, Italy and Spain) and new world (Australia, South Africa and South America) wines are expected to continue aggressively going after the U.S. market.
To give Allied growers an idea of the kind of pressure to come, Schafer noted that French wine grape growers rioted and burned trucks recently, protesting the UK’s announced intention to reduce the $700 million a year they spend subsidizing the European wine industry. They are asking growers to take out vineyards rather than the government continuing to buy surplus grapes to make ethanol. “Two bombs went off right after the government’s announcement,” said Schafer.
France already has a wine consumption promotion organization. Rather than pulling out vineyards, it is a safe bet that growers will demand that the government promote more French wine consumption in the U.S.
Of the world’s major wine producing regions, only California — the fourth largest wine producer in the world — does not have a wine marketing association to get the California message to consumers. Schafer said the fledgling CAWG effort will correct that.
The closest thing to a promotional effort is the Wine Institute’s designation of September as wine month.
What is even more astounding is that among the top wine producing regions in the U.S., California is the only state without a wine marketing association, and it produces more than 90 percent of the wine in the U.S.
With its budget, CAWG’s campaign will work to inform wine consumers about the attributes of California wine through the wine and consumer media.
“Our campaign invites consumers to explore the diverse, unique growing regions in California and the wide variety of wines available” from 107 American Viticultural Areas (appellations) and more than 50 grape varieties.
The focus is outside of California where wine consumption if far lower than within in the state.
Schafer said the plan is to re-solicit voluntary contributions for 2008, and begin a series of meetings around the state to explore the support for a statewide, mandatory assessment.
“The time for growers to step up and tell their story about the care they take with their practices and commitment to the environment and their communities is now,” said Schafer.
“The audacity of declaring California its own nation where the pursuit of great wine is a cornerstone of our society is fun. But our commitment to stopping the loss of the California wine market share is very serious.”
CAWG’s efforts are late in coming among grower groups. Sonoma County, Lake County, the Lodi-Woodbridge area in Northern San Joaquin Valley, and Mendocino County all have mandatory-assessment commissions to fund promotion of wines produced from their specific area grapes. Growers and vintners in the Paso Robles area of Southern San Luis Obispo County have a voluntarily-funded wine grape promotion effort. There is also a strong voluntary vintner group in Napa Valley.
Together these commissions or voluntary groups will likely spend about $4 million annually to promote the wine produced from grapes produced by a combined total of about 2,500 grape growers. Some of the monies collected also will fund research and education programs. Some of these groups are jointly supported by growers and vintners. Others are grower-only groups.
The same legislation that allowed growers and vintners to join on a statewide basis in the 1980s also allows for county or regional commissions. That was what growers used to form these four regional commissions, which assess growers on tonnage delivered to wineries to conduct the commission's business.
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