Bulk-wine inventory hits 12-year low(2)
This is reflected in average spot-market pinot noir grape prices rebounding to $2,238 a ton last year from $1,863 in 2010 but still below $2,882 in 2008.
Consumer spending improves
On the wine demand side, consumers were getting more comfortable about discretionary spending at the end of last year, even though 84 percent think the U.S. economy is still in recession and not likely to recover within a year, according to Nielsen beverage alcohol market analyst Mike Colicchio, another seminar speaker. Consumer confidence measures were heading back upward late last year after six months of declines, and spending on entertainment outside the home and travel is improving, he added.
Though dollar sales for half the product categories in grocery stores are growing because of inflating prices, particularly in the past two years, wine is among the 20 percent of categories with growing unit sales and is the No. 5 fastest-growing category, Mr. Colicchio said.
Grocery stores account for nearly 68 percent of California table wine sales nationwide, according to Nielsen’s data from store scanners and consumer panels. Wine sales in restaurants and other on-premise channels have been growing but remains below what they were in 2008, Mr. Colicchio said.
“In these tough times, we want to feel good or look good,” he said.
North Coast wines continue to enjoy the strong low double-digit store unit sales growth along with the over $15 a bottle segment in general, Mr. Colicchio noted.
Three-quarters of Sonoma County wines retail in for less than $20, with many in the $9 to $15 tier, and top-selling varieties cabernet sauvignon, chardonnay and merlot are top county wines, he noted. Forty percent of Napa County wines retail in stores for more than $25.
Yet this growth continues to be fueled by winery incentives to distributors and retailers to propel bottle sales, Mr. Colicchio said. Fierce competition on store shelves behind may not change this year, he added.
Coastal high-end wines face competition from imports
And now higher-end wines from the California’s North Coast and Central Coast face increasing competition from European wines retailing for more than $20 a bottle because of dwindling disposable incomes on the continent, decreasing value of the euro and marketing subsidies from governments, according to Steven Rannekleiv and Vernon Crowder of Rabobank’s Food and Agriculture Research. They presented an industry outlook to a few dozen professionals at a bank-sponsored briefing held at the Vintners Inn in Santa Rosa on Wednesday evening.
“When consumers want to spend $50 on wine, they may be willing to take a risk on French wine but not on wine from Chile,” Mr. Rannekleiv said. He called it a “perfect storm” for European exports, particularly from France, Italy and Spain.
For example, a 2 percent to 3 percent decline in Spain’s domestic wine consumption, most pronounced for on-premise sales of high-end wines, has led to a 7 percent to 8 percent increase in exports for wines from the country’s premium Rioja region.
“It’s certainly not doom and gloom for Sonoma and Napa, but it is an added level of competition,” he said.
Moscato, red blends, ‘unoaked’ chardonnay top emerging wine trends
Emerging trends in store wine sales, tracked by label descriptions, are moscato and other sweet wines, which make up 0.5 percent of total wine sales; red wine blends, 4 percent; and “unoaked” chardonnay, o.5 percent, Mr. Colicchio told the Dollars & Sense audience.
Sales of moscato or muscat wine soared 213.4 percent in the last months of 2011, though the category has only a half-percent of U.S. wine sales. The growth trend over the past three years toward sweet wines is expected to continue, Mr. Colicchio said.
The core buyers for the variety are African American and have lower to middle household income, he said. A possible reason for that popularity is the variety has been mentioned in rap music.
