California Wine Sales in ‘07
Fueled by strong gains in premium California wine volume, California wines sales in the U.S. continued to increase in 2007 to a record high 457 million gallons (192.1 million nine-liter cases), up 2% over the previous year, reports the California Wine Institute. The retail value of these shipments increased 6% to $18.9 billion, according to the year-end summary in the Gomberg-Fredrikson Report.
Total California winery shipments to all markets in the U.S. and abroad increased 3% to 554 million gallons (233.2 million nine-liter cases) last year.
"The long-term trend for California wine is favorable with the U.S. wine market growing for 14 consecutive years, increasing 66% by volume from 1993 to 2007," said wine industry consultant Jon Fredrikson. "Wine continues to enjoy a positive standing with the press, government and consumers, and many positive news reports on moderate wine consumption and health have also contributed to its positive image. Though the economy is slowing, wine is gaining traction among American adult consumers, and it is likely that wine consumption will continue to expand over the next decade."
DIRECT TO CONSUMER SALES. While more than 95% of wine is delivered through the three-tier system, many wineries have focused more on direct-to-consumer sales since the 2005 U.S. Supreme Court decision in spite of legislative problems and the economic slowdown, says the Wine Institute.
"Direct sales in 2007 increased 7.4% from 2006 while the previous year's direct sales grew 33%. The effect of the Supreme Court verdict that accelerated 2006 direct sales growth may be settling, and the slowing economy and increased complexity of the direct sales legislation are also factors, but, the industry appears to be cautiously optimistic as wineries continue to invest in direct sales marketing," said Katie Hoertkorn, founder and ceo of New Vine Logistics, a direct sales wine fulfillment company.
U.S. LARGEST RETAIL MARKET. California wine sales in the U.S., other states and foreign producers rose 4% compared to the previous year to 745 million gallons (313 million cases) for a total retail value of $30 billion. This value makes the U.S. the largest retail wine market in the world. Of the total volume, table wine sales were 650 million gallons; dessert wine 62 million gallons; and sparkling wine 33 million gallons. California wine's 457 million gallons shipped in the U.S. accounted for a 61% market share of the volume sold.
MORE WINE SHOPPING IN GROCERY. Wine purchased by consumers in U.S. food stores increased by 2.4 million cases, up 4% in 2007, according to Nielsen. By volume, Chardonnay (19%), Cabernet Sauvignon (11%), Merlot (10%), and White Zinfandel (8%) accounted for a 48% share of market in U.S. food stores. Cabernet Sauvignon grew the most, expanding by 723,000 cases, up 11%, with notable gains for Pinot Noir, Zinfandel, Sauvignon Blanc, Riesling and Pinot Grigio. Nielson reported that U.S. consumers are making fewer shopping trips as they look for ways to combine errands and save money in an effort to battle rising gas prices and other economic pressures. Retailers increased store openings to respond to the consumer desire for convenience and value.
CONSUMERS LOVE THE BUBBLY. Sparkling wine/champagne consumption edged up 1% in 2007 to a total of 33 million gallons (13.7 million cases), compared to the previous year. California accounted for 55% of the total volume sold. The sparkling wine/champagne category represents about 4.4% of all wine sales in the U.S.
U.S. EXPORTS REACH NEW HIGH. U.S. wine exports, 95% from California, totaled $951 million and 453 million liters (120 million gallons) in 2007, and increased 8.6% in value and 12% in volume, compared to 2006. In Europe, where the U.S. ships more than half of its sales abroad, exports totaled $474 million. Wine exports to Canada were $234 million, up 23%, compared to the previous year. The long-term trend of California wine exports shows steady expansion, says the Wine Institute, with the 2007 number representing a 77% increase in exports by value in the last decade.
ON THE DOWNSIDE. Although California wines are showing momentum in the U.S., imports continue to grow at a faster rate and take more market share. Younger drinkers in particular seem to prefer imports. In addition, on-premise establishments, such as restaurants and bars, are seeing a slowdown as consumers try and save a buck in these tougher times. As a result, some restaurants are stocking less high-end wines for fear they’ll never be bought.
V&S BUTTERFLY EFFECT
Since Pernod surprised the industry earlier this week by acquiring Absolut, a lot of questions are hanging in the air. In a research note yesterday, UBS analyst Melissa Earlam attempted to answer some of those questions, including: What is the future for Fortune Brands and Maxxium? Who will distribute or acquire Stolichnaya vodka? Could Remy Cointreau or Patrón tequila be acquired?
As Melissa put it, “the neatest solution” would be Fortune acquiring Stoli, which could end up benefiting everybody involved. If Fortune succeeded in doing so, it could partially offset the loss of Absolut by taking the US Stoli distribution from Pernod. Fortune would gain a premium vodka, and Pernod would have the chance to start distributing Absolut sooner in the U.S.
“This would plug Fortune’s premium vodka gap and could cause the Future Brands JV to be terminated ahead of “early 2012”. This would accelerate the release of synergies for Pernod. Fortune could thereafter possibly even acquire Stolichnaya (UBSe US$3-3.5bn),” said Melissa.
UBS speculates that Campari could acquire Plymouth Gin, which Pernod will eventually sell, and could even distribute either Remy or Fortune Brands’ portfolios in certain markets. Meanwhile, Bacardi or Brown-Forman could eventually snatch Remy Cointreau, while Pernod, Bacardi and even Diageo might duke it out for Patron.
“Pernod’s 20.8x EV/EBITDA paid for V&S highlights the scarcity value of premium spirits (even more so for Cognac and Champagne),” said Melissa.
Until Monday, Megan
“Man is a credulous animal, and must believe something; in the absence of good grounds for belief, he will be satisfied with bad ones.”
Bertrand Russell
--------- Sell Day Calendar ----------
Today's Sell Day: 4
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Wed.
This month last year ended on a: Mon.
YTD sell days Over/Under: 0
Total California winery shipments to all markets in the U.S. and abroad increased 3% to 554 million gallons (233.2 million nine-liter cases) last year.
"The long-term trend for California wine is favorable with the U.S. wine market growing for 14 consecutive years, increasing 66% by volume from 1993 to 2007," said wine industry consultant Jon Fredrikson. "Wine continues to enjoy a positive standing with the press, government and consumers, and many positive news reports on moderate wine consumption and health have also contributed to its positive image. Though the economy is slowing, wine is gaining traction among American adult consumers, and it is likely that wine consumption will continue to expand over the next decade."
DIRECT TO CONSUMER SALES. While more than 95% of wine is delivered through the three-tier system, many wineries have focused more on direct-to-consumer sales since the 2005 U.S. Supreme Court decision in spite of legislative problems and the economic slowdown, says the Wine Institute.
"Direct sales in 2007 increased 7.4% from 2006 while the previous year's direct sales grew 33%. The effect of the Supreme Court verdict that accelerated 2006 direct sales growth may be settling, and the slowing economy and increased complexity of the direct sales legislation are also factors, but, the industry appears to be cautiously optimistic as wineries continue to invest in direct sales marketing," said Katie Hoertkorn, founder and ceo of New Vine Logistics, a direct sales wine fulfillment company.
U.S. LARGEST RETAIL MARKET. California wine sales in the U.S., other states and foreign producers rose 4% compared to the previous year to 745 million gallons (313 million cases) for a total retail value of $30 billion. This value makes the U.S. the largest retail wine market in the world. Of the total volume, table wine sales were 650 million gallons; dessert wine 62 million gallons; and sparkling wine 33 million gallons. California wine's 457 million gallons shipped in the U.S. accounted for a 61% market share of the volume sold.
MORE WINE SHOPPING IN GROCERY. Wine purchased by consumers in U.S. food stores increased by 2.4 million cases, up 4% in 2007, according to Nielsen. By volume, Chardonnay (19%), Cabernet Sauvignon (11%), Merlot (10%), and White Zinfandel (8%) accounted for a 48% share of market in U.S. food stores. Cabernet Sauvignon grew the most, expanding by 723,000 cases, up 11%, with notable gains for Pinot Noir, Zinfandel, Sauvignon Blanc, Riesling and Pinot Grigio. Nielson reported that U.S. consumers are making fewer shopping trips as they look for ways to combine errands and save money in an effort to battle rising gas prices and other economic pressures. Retailers increased store openings to respond to the consumer desire for convenience and value.
CONSUMERS LOVE THE BUBBLY. Sparkling wine/champagne consumption edged up 1% in 2007 to a total of 33 million gallons (13.7 million cases), compared to the previous year. California accounted for 55% of the total volume sold. The sparkling wine/champagne category represents about 4.4% of all wine sales in the U.S.
U.S. EXPORTS REACH NEW HIGH. U.S. wine exports, 95% from California, totaled $951 million and 453 million liters (120 million gallons) in 2007, and increased 8.6% in value and 12% in volume, compared to 2006. In Europe, where the U.S. ships more than half of its sales abroad, exports totaled $474 million. Wine exports to Canada were $234 million, up 23%, compared to the previous year. The long-term trend of California wine exports shows steady expansion, says the Wine Institute, with the 2007 number representing a 77% increase in exports by value in the last decade.
ON THE DOWNSIDE. Although California wines are showing momentum in the U.S., imports continue to grow at a faster rate and take more market share. Younger drinkers in particular seem to prefer imports. In addition, on-premise establishments, such as restaurants and bars, are seeing a slowdown as consumers try and save a buck in these tougher times. As a result, some restaurants are stocking less high-end wines for fear they’ll never be bought.
V&S BUTTERFLY EFFECT
Since Pernod surprised the industry earlier this week by acquiring Absolut, a lot of questions are hanging in the air. In a research note yesterday, UBS analyst Melissa Earlam attempted to answer some of those questions, including: What is the future for Fortune Brands and Maxxium? Who will distribute or acquire Stolichnaya vodka? Could Remy Cointreau or Patrón tequila be acquired?
As Melissa put it, “the neatest solution” would be Fortune acquiring Stoli, which could end up benefiting everybody involved. If Fortune succeeded in doing so, it could partially offset the loss of Absolut by taking the US Stoli distribution from Pernod. Fortune would gain a premium vodka, and Pernod would have the chance to start distributing Absolut sooner in the U.S.
“This would plug Fortune’s premium vodka gap and could cause the Future Brands JV to be terminated ahead of “early 2012”. This would accelerate the release of synergies for Pernod. Fortune could thereafter possibly even acquire Stolichnaya (UBSe US$3-3.5bn),” said Melissa.
UBS speculates that Campari could acquire Plymouth Gin, which Pernod will eventually sell, and could even distribute either Remy or Fortune Brands’ portfolios in certain markets. Meanwhile, Bacardi or Brown-Forman could eventually snatch Remy Cointreau, while Pernod, Bacardi and even Diageo might duke it out for Patron.
“Pernod’s 20.8x EV/EBITDA paid for V&S highlights the scarcity value of premium spirits (even more so for Cognac and Champagne),” said Melissa.
Until Monday, Megan
“Man is a credulous animal, and must believe something; in the absence of good grounds for belief, he will be satisfied with bad ones.”
Bertrand Russell
--------- Sell Day Calendar ----------
Today's Sell Day: 4
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Wed.
This month last year ended on a: Mon.
YTD sell days Over/Under: 0
posted at 11:43 AM
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