Vines Being Replaced as Wine Market Changes

Feb. 6, 2015 – About 22,000 acres of vines have been bulldozed in California’s Central Valley.  Also known as the San Joaquin Valley, the area produces two thirds of the State’s wine production.  Nut trees, primarily almonds, walnuts and pistachios, which yield higher returns to the farmers, are replacing them.

The market for low priced wines declined in 2014.  Neilson Company figures show sales of table wines up to $7.00 fell by 1.2 million cases while wines above $7.00 increased by 1.7 million cases.

The wine industry, which has enjoyed increasing popularity and growth for several decades is being squeezed by the resurgence of a cocktail culture as well a growth of craft beers and hard cider all of which are more profitable than wine when it comes to on premise or restaurant sales.

At the recently held Unified Wine and Grape Symposium in Sacramento, respected industry prognosticator Jon Fredrikson of Gomberg Fredrikson & Associates, told the packed audience of wine industry players that wine listings on restaurant menus have declined.  Bottles are down 16 percent and by the glass is off 12 percent.  He described two different market levels for wine with the gap widening between the two.  Premium wines are doing well and the outlook is “terrific”.  That’s encouraging news.

Another factor affecting the low end is the flood of imports, both bottled and bulk wine.  The American dollar is strong making imports inexpensive.

On the bright side, California wine shipments grew 4 percent while imports declined by 5 percent and the over $10 category is prospering.