US wine exports increase to record $1.6 billion in 2016

U.S. wine exports reached a record of $1.62 billion last year despite a strong dollar that placed domestic wines at a competitive disadvantage to their foreign competitors.

The 1 percent increase in exports came even as the overall volume of shipments was 11 percent smaller in 2016 compared to the previous year, decreasing from 51.2 million cases to ?45.9 million, according to the Wine Institute, the main trade group for California vintners. About 90 percent of wine exports come from California.

The increase in dollar value reflected the global trend placed on higher-priced premium bottles, which benefits Napa and Sonoma counties because the two regions produce the most expensive wine in the United States.

“California wines are well positioned for this trend - our vintners are offering quality, value, diverse styles and environmental stewardship in their winemaking,” said Robert Koch, Wine Institute president and CEO, in a statement.

The top export market was the European Union with a ?42 percent share, followed by Canada at 27 percent, Hong Kong at 6 percent, and Japan and China at 5 percent each.

The data comes at a time when the Trump administration has taken a more protectionist stance toward global trade. It includes pulling out of the Trans-Pacific Partnership, which would have lowered tariffs for U.S. wine to Japan, and wanting to renegotiate the North American Free Trade Agreement with Canada and Mexico.

“We have all seen the benefits of free trade,” said Brent Shortridge, owner of Anders-Lane Artisan Wine in Napa, who expressed concern over the administration’s position. “We have seen vigorous growth in those markets where tariffs are dropped.”

His winery sells about 15,000 cases annually. He noted his main label, Waterstone, sells about one-third internationally, with about one-third of that amount to ?Canadians.

International customers provide a hedge against movements in the U.S. market, Shortridge said. For example, during the 2008 economic downturn, Anders-Lane’s U.S. sales were down 10 to 15 percent. But foreign customers helped make up the difference.

“In rough economic times, having that diversity is key,” Shortridge said.

Despite the pro-trade sentiment in the local wine industry, there are still some concerns with lingering barriers. At the behest of the Wine Institute, the Obama administration in January challenged the province of British Columbia over its policy allowing only locally produced wine to be sold in its grocery stores.

The U.S. Trade Representative made a request to the World Trade Organization for talks with the government of Canada to resolve the dispute.

You can reach Staff Writer Bill Swindell at 521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.