In experts' opinions, what in recent years was the biggest trend affecting the U.S. wine production market? The rise of imported bulk wines, giving consumers decent to good wines for great values.
Bulk wines took center stage Tuesday during the first general session at Unified Wine & Grape Symposium, "How the Global Wine Market Affects U.S. Production."
Panelists were Kym Anderson, Greg Livengood, Stephen Rannekleiv and Mike Veseth (details on each follow).
From margins, to production to wages, "globalization is a two-way street," said Mike Veseth, writer for The Wine Economist and an instructor at the University of Puget Sound in Washington.
Down the line, it's packaging and how the wine itself is shipped around the world.
What is another product like wine that is a little further along the route of globalization — one that those in the wine industry can learn from? Veseth: "Apples."
Or: "Juice boxes." Read the ingredient list, he urged the crowd. Apple juice comes from the "U.S.A, Argentina, Austria, Chile, Austria, German and Turkey."
And: This means apple juice sources are "interchangeable and highly sensitive to exchange," and can this be the future of "basic wine?"
Or, a step further, the future of branded wines?
The next speaker was Kym Anderson from the University of Adelaide in Australia. While the latest wave of wine globalization began in the mid-1980s, it was in the 1990s that the share of the global exportation rose in the Old World to 25 percent from 15 percent, he said.
In the New World, the rate rose from 3 to 20 percent within that same decade, he noted.
And that New World increase was a "big challenge to Old World wines."
Moving along, the exports of bulk wines from today's biggest players — Australia, Argentina, Chile and New Zealand — have obvious consequences for grape growers and winemakers in the United States.
Retail buyers, for one, have access to better wines at lower costs, and in turn offer those benefits to supermarket consumers, Anderson said.
Nations with the largest increase in consumption are Northern Europe, and Asia.
In the latter, especially in the "developing" regions, Anderson said, dollars (billions) spent on wine consumption are forecast to rise from 11 to 28 percent between 2007 and 2030.
Residents of China, in particular, are forecast to represent the world's largest jump in consumption, which means countries such as Italy, Spain and Australia are spotlighting China for export, he noted.
Third to speak was Steve Rannekleiv of Rabobank in New York.
Fresno has seen the most explosive growth, followed by Lodi, and then Napa, he noted.
On the North Coast, sales of bottles priced $20 and above show the most increase, and that demand, he said, matches middle-class income — families making around $90,000 per year.
How will this improve in 2013? Consumers are making strides paying down debt, the banking system has recapitalized, and both the housing and labor markets have improved, he told the audience.
In Fresno, the supply of both grapes and prices of wine are increasing, which, by itself, doesn't make a lot of sense, but when we factor in globalization of bulk wine, then, yes, it does, Rannekleiv said.
Global inventories have tightened, but Fresno continues to outpace, if you will, the world, as far as total inventory. This is quite the opportunity for Fresno, and for California, Rannekleiv noted.
"California is very price competitive," he said.
That said, however, he expects that the weak U.S. dollar will remain weak — but stable — for the immediate future.
The session's final speaker was Greg Livengood of California' Ciatti Company, a global brokerage company.
Imports, he said: Who wins? Who loses? Who are the importers?
They are either foreign-based and foreign-owned companies, or U.S. companies with value brands or potential line extensions, such as with muscato, Livengood said.
Why go overseas? Price, for one. Consumers want deals. Second, in search of a pecific varietal, such as pinot grigio, which is enjoying an upswing. Third: Consumer-driven demand, such as that of New Zealand sauvignon blanc, for example.
Grape varietals most commonly imported: cabernet sauvignon, merlot, chardonnay, muscato, malbec and sauvignon blanc.
Livengood said that of the 347 million cases of wine sold in the United States in 2011, 61 percent was California-grown, and 34 percent was wine imported to the U.S.
Looking ahead, California had a big crop in 2012, which is good news all around.
On the other hand, grape and bulk prices could have reached greater heights (in certain varieties) without foreign competition, he said.
Since wine consumers will continue to drive global competition, Livengood urged winemakers and growers to "have a global strategy."
A member of the audience questioned the panel about how and if future water needs will affect global grape production, and in particular, the conditions faced by China.
Anderson noted that the vineyard regions of China are quite similar in size of those of Australia, and while water is plentiful in sections, water rights are issues in others.
Another question: What country is poised to be the next "wine nation" as far as promoting an identity for itself?
While the name on everyone's lips might be China, Livengood said, Spain has recently moved a lot of its wines to overseas' consumers after Chile "opened the door" with its lower-priced wines.
This morning's panel was moderated by Jeff O'Neill, O'Neill Vintners & Distillers of California.