U.S. wine drinkers continued their shift toward higher-priced bottles from California last year – a trend of interest to Modesto-area producers.
The state sold $24.6 billion worth of wine in the domestic market, up 6.7 percent from 2013, the Wine Institute reported last week. Volume rose just 4.4 percent to 225 million cases, meaning the average price per bottle ticked up.
The trend, underway for several years now, is not lost on industry people in the San Joaquin Valley. They have mainly served the $5-and-under market, but they also are looking at growing their share of the midprice and premium categories.
“The future looks good for grapes and for wine,” said John Monnich, owner of Silkwood Wines, which uses Stanislaus County grapes for bottles priced about $20 and up.
“The millennials are discovering wine,” he added, referring to the generation that started reaching drinking age around 2000. “That’s the key.”
Monnich spoke at a gathering of fellow growers in one of his petite sirah vineyards along Dry Creek, just east of Modesto. It was sponsored by the San Joaquin Valley Winegrowers Association and featured experts on the wine market, farming amid drought and other topics.
California produced about 60 percent of the wine sold in the United States last year, according to the Wine Institute, based in San Francisco. Much of it came from big producers in and near Stanislaus County – E.&J. Gallo Winery, The Wine Group, Bronco Wine Co. and Delicato Family Vineyards.
The companies have worked to improve grape growing and winemaking in the Valley while investing as well in premium coastal regions. Smaller producers, such as McManis Family Vineyards near Ripon and several in the Lodi and Sierra Nevada regions, turn out notable wines, too. Several thousand people work in the industry in these areas and in businesses that provide related goods and services.
Wines priced at $10 or more are doing especially well, industry consultant Jon Fredrikson said in a Wine Institute news release. He sees lower-priced bottles losing ground to these products, as well as to craft beer, hard cider and other alcohol options.
Wine shipments are measured by the case – a dozen 750-milliliter bottles – but much of the sales are in other bottle sizes or boxes. The latter are a specialty of Valley companies – and they no longer are just the cheap stuff.
The increasing demand is helping the California industry deal with three straight years with large grape harvests.
“Though the growth is not astronomical, it’s healthy growth,” said Greg MaGill, a broker with Ciatti Co. in Marin County, at the vineyard gathering.
He contrasted this with the grape glut of a dozen years ago, which depressed prices for growers. It was a boon to consumers, who could find decent wine for just $1.99 in many stores. Best-known was a Bronco product called Charles Shaw, sold at Trader Joe’s and dubbed Two Buck Chuck by a fan.
The group also heard from Lisa Francioni-Hai, program director for the California Sustainable Winegrowing Alliance. It certifies vineyards and wineries that conserve energy and water, recycle materials and do other things good for society.
Francioni-Hai said surveys have found many consumers are looking for products made with this approach. She also noted that retailers, notably Wal-Mart, are requiring suppliers to meet many of the goals.
“The marketplace has a lot more interest in sustainability,” she said.
The wine industry already has cut water use with drip irrigation, which directs the supply to the vine roots, and timely pruning, which reduces leaf growth to concentrate fruit flavor. This has helped California vineyards continue to produce during the four-year drought.
Peterangelo Vallis, executive director of the Valley grower group, said production might drop off this year in areas especially stressed for water. He added that this is a good time for growers to take out underperforming vineyards, since wineries have ample supplies.
Vallis said the association, based in Fresno, is making progress in its mission of boosting Valley wine quality in every price category.
“The wine industry can’t survive on boutique wines alone,” he said.
John Holland: (209) 578-2385