California’s wines well positioned for shifting market

September 23, 2014

 

bronco wine company

COURTESY PHOTO
Bronco Wine Company has 40,000 acres of wine grapes in its vineyards near Ceres. Wine industry executives expect the state’s wines to have continued strong sales despite changing demographics and competition from abroad.

Wine industry leaders surveyed by UC Davis say the state’s wines will hold their own in the global market despite shifts in consumer demographics, scarce water, and competition from imported wines, craft beers and cocktails.

Findings from the tandem surveys of wine executives and industry professionals were presented at Tuesday, during the Wine Industry Financial Symposium at the Napa Valley Marriott in Napa.

Robert Smiley, professor and dean emeritus of the UC Davis Graduate School of Management, gathered the opinions and projections from the heads of 26 wineries for this 13th annual wine executives survey. About 60 percent of those wineries are located in the Napa or Sonoma valleys, while most of the others are in the Central Coast and North Coast regions, and in California’s northern interior, Central Valley and Sierra foothills. One winery was in Washington.

While wine consumption by baby boomers is likely to continue to decline as that group ages, consumption by the millennial generation is expected to increase.

Millennials are bringing a new interest in craft beer and cocktails, survey participants said. Many respondents suggested that the wine industry must pay close attention to those two competitive trends in the beverage business but seemed confident that the wine industry would eventually benefit from them.

Competition from imported international wines will increase, most respondents said. The industry can combat that by increasing promotional efforts through local trade organizations, paying greater attention to wine quality and value, and better communicating those benefits to consumers to maintain brand loyalty.

Climate change and water scarcity were also on the wine executives’ minds, many of them listing these among the industry’s top issues over the next five to 10 years.

They said that they are already implementing a number of strategies including using imaging technology to minimize vineyard water use, recycling winery water for use in vineyard irrigation, and changing winery equipment and procedures to use water more efficiently.

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