The challenges that impact the California wine industry reflect the broader hurdles agriculture faces in the state. Soaring land prices, challenging labor conditions, and increasingly competitive imports are forcing California vintners to consider how to shape the future of the industry. This 2008 article suggests that success will be found in the premium wine market. North Coast, Lodi, and Sierra Foothills producers dominate this market segment. The lower-end wines (priced below $9) do not compete well in a market flooded by inexpensive bottles from Chile, Argentina, Australia, Italy, Spain, and even France.In the picture: Ravenswood Winery's Alicante Bouschet vines on their estate; a glass of their limited-production Viura.
--Brent W.
"The largest growth was among wines valued at more then $9 and particularly for wines valued at $12 and above. In general wine priced below $9 experienced slow growth, and low value jug wines experienced negative growth although they were still the largest segment of wine sales by volume." (Review of the Industry, Page 221)
ReplyDeleteThe current trend for California wines seems to be bottles of wine that are more expensive then $9. This is where the value comes into play. For anyone to get the best "bang for their buck" the wine markets of Chile, Argentina, Australia, Italy, Spain, and France are available, which is hefty competition for California wine makers. Although the jug wines had the most volume sold, it was a decrease from previous years. In my opinion this reflects the current trends and jugs wines are decreasing in demand.
-Kyle B.
"Although California produces 90 percent of US wine and the growing consumption of wine has benefited California more then any other state, the current market is not without its challenges."
ReplyDelete- Hugh & Robinson pp. 221
This article focuses a lot on Americans as a fast growing market that the world wine makers are getting ready to tap into. As the population becomes a wine hungry nation other non United States competitors are going to sell more and more to us, making it difficult for California to stay on the top side of the market. The next generation coming into the money phase of their life is also a group of very careful spenders saving more then the generation before them. I think that the next wine enthusiast will more then definitely be looking for the great product at a stellar price. California is going to face many problems because other countries already have the cheaper exotic wine down to a science. With all of the environmental problems and labor and land fights it will be a tough to get the United States to choose California's fine wins over a red from Argentina. I believe that California will be able to make it through but i do think that their hold on the market will go down as more people become educated in wine.
-Jessica M.
"It is often possible to find better value abroad for a specific varietal for a specific price-point" (Page - 227)
ReplyDeleteCalifornian wines have been growing immensely in terms of gaining a growing domestic market. It has increased by '301 million cases in 2006 and revenues grey by 9 percent' (page 221). However, even with this extensive growth in production of this industry, it is facing several challenges due to many reasons.
One of the major challenges is being brought by the cheaper import wines from places such as Australia and New Zealand. Some grape varietals are cheaper to produce and bottle in these countries when compared to California. They have lower costs of production that Californian producers while they are competing for the same domestic market share in USA. Reasons to why they can operate at a lower production cost is because of California's own problems. Firstly, California is facing cheap labor problems, which is a significant production cost, because of the 'increasing border patrols and efforts to control illegal immigration' (page 224). Because of this, the vineyards are having to hire full time workers which have to be paid higher which are pushing production costs up. Secondly, areas such as California's San Joaquin Valley, which is a major wine producing area is now facing land shortages as land is becoming more expensive. Grape growers are pressurized to produce grapes cheaply, but with the increase in land prices, and at the same time, the increasing labor costs is making this difficult. Thirdly, water shortages in these growing areas are also increasing the costs of grape production in California.
These reasons are making Californian wine less competitive to cheaper imports which are significantly taking domestic market share in USA.
-Taijash Kakshapati
"Although California produces 90 precent of US wine and the growing consumption of wines has benefited California more than any other state, the current market is not without its challenges"
ReplyDeleteQuote from Review of the Industry: Future of California Wine Industry by Stephen Rannekleiv pg. 221.
I think this quote represents the article very well because the article is explaining the what the state of California has had to deal with during this increase in consumption within the US. Also California is the largest producer and can also be considered the number one quality producer of the US because they have been growing there longer and the areas of climate allow grapes to thrive. I like the whole article it was progressing not only focusing on the US and California but also other new world up and coming nations such as australia, new zealand, argentina, and etc.. So it opened your eyes not only to the growth and the challenges on the home front but also the progression of fellow up and comingnations. It was also interesting to here the facts, the cost of land now in prime wine areas of california and how outrageous they are, because your going to need bill gate wealth to start a winery. Also the transfer of grapevines of europe onto american vines so these vines would be able to survive phylloxera. A process that California has been criticized for but also its what they had to to to keep there grapes alive and wine production of the US moving forward.
Zach K.
"There is currently no evidence to suggest that the trends towards trading up will slow down any time soon. The market for premium wines in the US. can be expected to continue to grow over the next fe years"(234)
ReplyDeleteIn this piece Rannekleiv explores the shift in consumer demand from bulk brand wines, beers, and spirits the baby boomers enjoyed to the generation x, and y sofisticated tastes in premium wine. With the number of premium wines imported from Italy, France, and Australia, the leaders, growing every day, California needs to make sure to watch out for the competition. Although none prosper with ought their own separate challenges. California for example faces the continued development of lands, and high rent rates, as well as labor shortages, and inconsistent supply throughout the years. European suppliers on the other hand face obstacles like strict regulation laws, and produce below par marketing.
Rannekleiv believes all of the different sectors in the wine industry from California all the way to Argentina have their challenges, and strengths. He also believes all of them are growing, but few can dominate and we will see the shift in power of supply. He recommends California start to expand their North Coast operations of premium wines to continue their growth, and be on top.
“The wine market in the United States is showing sustained growth in volume and in value, presenting an attractive potential opportunity for California wine sector. However, several mitigating to this opportunity exist…” (Rannekleiv, Stephen. 225)
ReplyDeleteWe all know that California has great potential growth in the wine sector, but the alleviate to this is labor and cost of land rising and the importing market share. California biggest opportunity concern is the importers taking market share from California wineries. Although California has many opportunities for growth it also has the burden of the changing demographic consumer demand. This quote represents the article as a whole because the articles show the opportunities California has along with the issues that will come about in depth. In my opinion of the reading I agree with the author about the three main consumer driven priorities of health consciousness, premiunmization and eagerness for a new product. When considering this notion with wine it proves to be an important factor.
Yolanda B