INDUSTRY SUMMARY

In 2002, the estimated value of industry shipments of the U.S. wine and brandy industry (NAICS 31213) reached an estimated $7.5 billion. Of this total, about $6 billion were products covered in a mutual acceptance agreement on wine making practices signed by five members of the World Wine Trade Group (WWTG) December 2001, ratified by Canada and the United States on 27 November 2002, and went into force on December 1, 2002. Total wine exports were $519.3 million, while imports were $2.6 billion.

According to the 1999 Annual Survey of Manufactures, there were 788 establishments classified under NAICS 31213 in 1999, employing more than 22,200 employees with a payroll of more than $812 million. Five hundred seventy (570) of these establishments had fewer than 20 employees. ⁽¹⁾ Between 1997 and 1999, the number of establishments grew almost 15 percent, and total employment grew more than 23 percent.

U.S. WINE MARKET

According Wine Institute's March 25, 2003 news release, total shipments to the United States in 2002 from all production sources-California, other states and foreign countries-increased 6 percent over the previous year to 595 million gallons. About two out of three bottles sold were from California, as the state's wineries accounted for a 67 percent share of the U.S. market. Foreign wines now account for 25 percent of U.S. wine consumption, and other states 8 percent. ⁽²⁾

Of the U.S. total, the table wine category represents 532 million gallons; dessert wine was 37 million gallons; and sparkling wine accounted for 27 million gallons. The Wine Institute estimates that the retail value of all wine sold in the United States has increased nearly 7 percent to $21.1 billion.

U.S. HARVEST/PRODUCTION

In 2002, while total U.S. grape bearing area increased just 2.5 percent more than 2001 to 386.017 hectares, total grape production rose more than 8 percent to 7,144 million short tons, ⁽³⁾ due to an increase in yields of more than 6 percent. In 2002, wine grape production, which accounted for 55 percent of total grape production, rose 10.6 to 3.945 million tons.

California, the largest wine producing state in the United States, accounted for about 90 percent of total U.S. wine grape production. In 2002, there were more than 847 wineries.

According to USDA, California grape production, which accounts for 91 percent of the U.S. grape production, rose 8.7 percent from last year. Wine type production grew 1.6 percent from 2001, raisin type production grew almost 20 percent and table type production was 5 percent higher. Of total grapes crushed, it is estimated 20 percent or 752,295 tons will be marketed as grape concentrate.

According to California Agricultural Statistics Service, California grape growers received prices in 2002 for raisins, table, white and red grapes were, on average, less than the 2001 prices. The average price per ton for all varieties was down 17 percent to $461.82.

- Red wine grapes at $613.33 per ton, down 10 percent

-White wine grapes at $431.43 per ton, down 12 percent

- Raisin grapes at $75.51per ton, down 12 percent

- Table grapes at $80.49 per ton, down 8 percent

Production of red wine varieties, which accounted for the largest share of all grapes crushed at 1.8 million tons, rose 6 percent from 2001.

- Cabernet Sauvignon at 289,897 tons, down 7 percent

- Zinfandel at 318,240 tons, up 2 percent

- Merlot at 231,740 tons, up 8 percent

- Rubired at 153,630 tons, up 22 percent

- Grenache at 84,945 tons, down 6 percent

Production of white wine varieties at 1.3 million tons, fell 1 percent from 2001.

- Chardonnay at 428,970 tons, up 4 percent

- French Colombard at 271,158 tons, down 12 percent

- Chenin Blanc at 107,139 tons, down 10 percent

- Sauvignon Blanc at 60,670 tons, up 0.6 percent

- Burger at 47,129 tons, up 15 percent.

According to the Wine Institute of California, total California wine shipments grew almost 3 percent in 2002. The value was about $14 billion at the retail level, and the volume reached 463 million gallons.

Reports indicated that the U.S. wine consumer was trading up. According to a Frederikson report, premium wine $7 and over per 750 ml bottle increased 8 percent. Although accounting for only 30 percent of the volume, it accounts for 62 percent of winery revenues. Everyday wines, less than $7 per bottle, grew about 1.5 percent.

Washington, the 2^nd largest wine grape producing state, accounted for more than 2 percent of total U.S. wine grape production. In 2002, there were more than 210 wineries, up from 190 in 2000.

In 2002, total grape bearing area increased almost 4 percent to 20,154 hectares. In 2002, Washington's total grape production increased 17.3 percent to 332,000 tons. Total wine grape production rose 15 percent to 115,000 tons. Red wine varieties now account for 46 percent of total, up from 38 percent in 1998. The top three red wine varieties were Merlot with 41 percent, followed by Cabernet Sauvignon with 35 percent, and Syrah with12 percent. The three top white wine varieties were Chardonnay with 57 percent of the total white wine varieties, followed by White Riesling with 21 percent, and Sauvignon Blanc with 6 percent.

New York, the 3^rd largest wine grape producing state, accounted for less than 2 percent of total U.S. wine grape production. In 2002, there were 174 wineries, up from 150 in 2000.

Total grape bearing area rose 5 percent to 13,352 hectares in 2002. Total grape production grew 4.7 percent to 156,000 tons.

According to New York Wine and Grape Foundation, New York growers produced more than 30 different varieties of grapes for grape juice, wine and fresh fruit. Approximately 65 percent of New York's total grape production is used for grape juice, 33 percent for wine, and 2 percent as fresh fruit. A total of 200 million bottles are produced annually with $500 million in gross sales

Oregon, although about half the size of New York in wine production, has outpaced the other major wine producing states. There were more than 160 wineries in 2002, more than doubling the number there was a decade ago.

In 2002, harvested acreage increased 6.8 percent to 3,804 hectares, up from 3,561 in 2001. White wine varieties accounted for 35-37 percent of the total, and red wine varieties accounted for 63-67 percent of the total.

In 2002, total wine grape production fell 3.5 percent as yields fell 11 percent. As a result, total value of production fell 4 percent to $32.3 million. Red wines accounted for 56 percent of total wine production, and white wines accounted for 44 percent.

Production of red wine varieties, which accounted for the largest share of all grapes crushed at about 12, 800 tons, grew about 2.6 percent from last year.

- Pinot Noir at 9,312 tons, up 2.6 percent

- Merlot at 992 tons, down 14 percent

- Cabernet Sauvignon at 954 tons, up 1.1 percent

- Syrah at 459 tons, up 27 percent

- Cabernet Franc at 129 tons, down 47 percent

Production of white wine varieties at approximately 9,200 tons, fell 12 percent from 2001.

- Pinot Gris at 3,983 tons, up 1 percent

- Chardonnay at 2,825 tons, down 20 percent

- White Riesling at 1,539 tons, up 24 percent

- Gewurztraminer at 556 tons, up 10 percent

- Pinot Blanc at 401 tons, up 11 percent

Virginia, the 5^th largest wine producing state, has experienced tremendous growth in recent years. The number of wineries continues to increase to about 80 in 2002, up from 60 in 1999.

In 2002, total grape bearing area increased 8.5 percent to 769 hectares of which white grape wine varieties accounted for about 55 percent, and red grape wine varieties accounted for 45 percent. Total 2002 grape production increased an estimated 14 percent to 4,800 tons, of which wine grape production accounted or 92 percent.

U.S. EXPORTS

In 2002, total value of U.S. sparkling and non-sparkling wines exports grew about 3 percent compared with 2001, while quantities fell about 6 percent to 261 million liters.

The top five countries accounted for more than 80 percent of the value of U.S. wine exports. The United Kingdom was the largest export market with 36 percent followed by Canada (16 percent), Japan (15 percent), the Netherlands (10 percent), and Belgium (4 percent). France is our 6^th largest export market with 2 percent. Regionally, the EU accounted for 58 percent of the value of U.S. exports, while WWTG share was 16 percent.

U.S. IMPORTS

U.S. wine consumers still depend on imports to fully satisfy their demand for wines. Imports of table and sparkling wines account for about a quarter of U.S. domestic consumption. Between 2001 and 2002, the value of U.S. wine imports rose almost 19 percent to $2.6 billion (546 million liters).

Although the EU is the largest supplier of imports to the United States, its share has declined in recent years. In 2002, the EU accounted for about 74 percent of the value of all imports, down from 82 percent in 1997.

In 2001, wine imports from the top five countries accounted for 91 percent of the total. In value, France was the largest supplier with 35 percent, followed by Italy (29 percent), Australia (17 percent), Chile (5percent), and Spain (5 percent).

Imports from the World Wine Trade Group (WWTG) have garnered a larger share of the U.S. import market. In 2002, U.S. imports from WWTG increased about 22.5 percent reaching $678 million or 26 percent of imports, compared to 16 percent in 1997.

Prepared by: Donald A. Hodgen/U.S. Department of Commerce/202-482-3346/202-482-3981(fax) Donald_A_Hodgen@ita.doc.gov

March 30, 2003

1. According to state, industry and other sources, it is estimated that there were about 2,100 wineries in the United States. The discrepancy between both sets of data has yet to be reconciled.

2. Estimates by Gomberg, Fredrikson & Associates

3. 1.102 short tons = 1 metric ton.