Value of US wine exports falls for first time in seven years

The value of US wine exports fell by 5.5% in 2017 to $5.53 billion, drawing a line under seven years of consecutive growth, with the biggest decline seen in exports to the European Union, while volumes have soared in both Singapore and Hong Kong.

Overall, US wine exports reached $1.53 billion in value and 380 million litres (42.2 million cases) in 2017, representing a decline of 5.5% and 7.9% respectively. Of those exports, 97% were from California, which saw exports decrease 5.5% in value and 7.9% in volume.

It is the first decline in growth reported by the country following seven years of consecutive growth, having reached a record high of $1.62 billion in 2016. 

Wine institute California attributed the drop in part to challenges posed by a “strong dollar, heavily-subsidized foreign wine producers and competitors forging free trade agreements in key markets”.

Specifically, the European Union saw the biggest drop overall for US exports, which fell by 19% in value and 10% by volume. For the UK’s part – which is in the midst of negotiating its exit from the EU – Justin Knock MW, Wine Institute California’s UK trade director, said that the pound had “strengthened in the past six months” resulting in a positive start to 2018.

It follows a report by Rabobank released last year that also reported on falling sales of US wine to the EU, which it said had dropped 15% by volume and 8% by value, with both bottled wine and bulk shipments down by around 15%, analysts said.

Despite fluctuation, the European Union’s 28-member countries remain the biggest market for US wine exports, accounting for $553 million and 198.7m litres, followed by Canada ($444m), Hong Kong ($119m), Japan ($94m),  China ($79m), South Korea ($25m), Mexico ($23m), Singapore ($17m), Philippines ($14m), and the Dominican Republic ($13m).

Singapore saw the biggest uplift of US wine imports, rising 22% in value and 1.6% in volume, followed by Hong Kong, which saw value rise by 21%, but volumes decline by 25% – the biggest drop of any market by volume – highlighting a readjustment of the market toward more premium offerings.

“California wine exports have grown nearly 70% by value in the past decade,” said Wine Institute vice president of international marketing Linsey Gallagher. “Our global marketing efforts focusing on the quality and diversity of California wine continue to gain traction with our trading partners throughout the world.”

Looking ahead, the California Wine Institute said that securing effective trade agreements would be “essential” to growing US wine exports.

“Free trade agreements that place the US on equal footing with other wine producing countries are absolutely essential to growing U.S. wine exports,” said Charles Jefferson, Wine Institute Vice President of Federal Relations and International Public Policy.

This decline in US wine exports mirrors a tailing off in growth of wine sales more generally in the US market. Earlier this year, Silicon Valley Bank’s (SVB) 2018 State of the Wine Industry Report said that US, specifically, had experienced a boom in wine sales over the past two decades, that growth was now levelling off and reaching the end of a 20-year growth period.

Click through for a closer look at the performance of US wine exports in specific markets around the world… 

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