As the 4th largest wine producing country in the world, the US wine industry has steadily increased in size and revenue over the past decade. In 2010 the US became the leading wine consuming nation at 330 million cases (Wine Institute, 2011). This equates to Americans drinking 3.96 billion bottles of wine in comparison to France’s record of 3.85 billion bottles (Press Democrat, 2011). According to the Impact Databank Report, Americans spent more than $40 billion on wine in 2010, and wine consumption recorded its 17th annual increase in the US. California, the largest wine producing state in the nation, currently accounts for 61% volume share of the US market (Wine Institute, 2011).
Wine Production in the US
Wine is produced in all fifty US states. According to Wine Business Monthly (2012), the total number of wineries in the US reached 7,116 in 2011 showing a 9% increase from the previous year. Of these, 6,027 are bonded wineries with a physical location, whereas the other 1,089 are virtual wineries. California is the largest wine producing state with a current count of 3,458 wineries. The next largest wine producing states are Washington, Oregon, New York, Virginia and Texas, respectively.
According to the US International Trade Association (2011), in 2010 grape production in the US was 6.86 million tons with 944,800 bearing acres. The top 5 wine grape varieties grown in the US are Chardonnay, Cabernet Sauvignon, Zinfandel, Merlot, and Pinot Noir. The highest price per ton of wine grapes in the US is Napa County with an average of $3,389 per ton paid in 2011(USDA, 2012).
Wine Consumers in the US
Of the more than 313,000 million inhabitants in the US, approximately 35% drink wine at a per capita rate of 3.03 gallons or 11.5 liters (Wine Market Council, 2012). In terms of demographics (SVB, 2012), 69% are white, 14% Hispanic, and 11% African American, with the remainder 9% from other races. The average age of the American wine consumer is 49, with Millennials, or those who fall between the ages of 21 and 34 making up 26% of wine consumers, ages 35-44 at 19%, ages 45 to 54 at 21%, and those over 55 at 34%. College degrees are held by 24% of American wine consumers. Consumption rates are growing amongst Millennials and men.
Preferred varietals of Americans in terms of sales are chardonnay, which holds first place in the US, at 21% market share and cabernet sauvignon in second place at 15% (Nielsen, 2012). Though sales are decreasing, merlot still holds third place, with pinot gris and pinot noir as fourth and fifth favorites, respectively. Fastest growing categories are Moscato, Malbec, Riesling and sweet red blends. The most popular price point in 2011 was the $9 – $11.99 category. Some of the best selling brands include Sutter Home Moscato, Cupcake Chardonnay, Barefoot Pinot Grigio, Gnarly Head Zinfandel, Menage a Trois Red, and Gallo’s Apothic Red.
Americans also enjoy drinking imported wine, with 1 out of every 4 bottles sold from a foreign country. In 2010, the top imported wines countries were (ITA, 2011): Italy (30%), France (24%), Australia (14%), Chile (7%), Argentina (6%), and Spain (6%). These accounted for 87% of the total value of imported US wines.
In general, the future prospects for continued wine growth in the US market are positive. American consumers are adopting wine at a strong level with 17 years of continued growth (Wine Spectator, 2011) and prospects for this trend to continue. On the negative side, the US wine industry has experienced two years of poor weather resulting in lower crop loads. This indicates a looming shortage in US wine supply, which will require supplements from foreign sources