Wine economics and policy comments

Cal-Med Consortium Dan Sumner

U.S. Wine Industry

• Wine: Highest-valued finished agricultural product (for CA).

• Wine in US: $16.5 billion – 2005 retail value of US wine market: $26 billion • Premium wine (>$7) : – Shipments increased by 13% – Accounts for 35% of case volume – 66% of winery sales revenue

U.S. Wine Industry (cont)

• Everyday wine (<$7): – Shipments decreased by 2% – Account for 65% of volume – 34% of winery sales revenue • 4 th largest wine-producing nation.

Bonded Wineries

6000 5000 4000 3000 2000 1000 0 19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 Data source: http://www.wineinstitute.org/industry/keyfacts/ca_wineries.php US CA

Winery Size Categories (By Case)

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% < 1K 1K - 4K 4K - 10K 10K - 25K 25K - 42K 42K - 105K 105K - 370K > 370K Data source: http://www.wineamerica.org/newsroom/sizedistribution.htm

% of Wineries % of Gallons

US Wine Sales Retail Value

30 15 10 25 20 5 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Data source: http://www.wineinstitute.org/industry/statistics/2006/wine_sales.php

Retail Value

Wine & Winegrape Producer Organizations

• WineAmerica: Wine producer organization representing more than 800 members in 48 states.

• Winegrape Growers of America (WGA): Lobbying arm of the national winegrape industry.

• The Wine Institute: Represents 975 California wine producers and affiliated businesses.

• California Association of Winegrape Growers (CAWG): Represents California winegrape growers.

WineAmerica’s Priorities

A national vintners association focusing on – Immigration Reform (AgJOBS) – Specialty Crop Grants – EAT Healthy Specialty Crop Bill – Small Producer Credit – Value-Added Grant Program

Winegrape Growers of America’s (WGA) Priorities

• AgJOBS • Relief for growers hit by Pierce’s Disease • Funding for research into pest & disease prevention • Winegrape Research programs • International Trade Issues • Farm Bill Priorities • Repeal of Estate Tax • 2007 Agricultural Appropriations Bill

The Wine Institute’s Priorities

• Interstate Shipping Laws • Labeling • Advertising Standards • International Trade • Sustainable Winegrowing Practices • Reduction of EU subsidies • Immigration reform (AgJOBS)

California Association of Winegrape Growers’ (CAWG) Priorities

• Funding for Viticultural Research • Reform of estate tax laws • Prevent misleading grape origin and varietal information on wine labels • Opposed Global Warming Solutions Act • Opposed bill requiring Farm Labor Contractors to disclose to employees the names and addresses of legal entities securing the services of the FLC.

• Support immigration reform (AgJOBS)

International Trade Issues

• Promote multi-country, trade-facilitating pact to recognize winemaking practices authorized by a winery’s government • Recognize place names of origin • Simplify certification process for wines traded internationally • Push for reduction in EU wine subsidies