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U.S. wine sales up only 2.7 percent in 2013 as competition increases

SACRAMENTO -#8212; U.S. wine shipments increased 2.7 percent to 370 million cases last year, but sales slowed as liquor and beer companies tried to lure drinkers away from wine with an array of new products, an industry analyst reported Wednesday.

"It wasn't a great year for wine overall, but it was a growth year ... and there were many success stories," said Jon Fredrikson, president of Gomberg, Fredrikson and Associates, a Woodside wine industry consulting firm.

Fredrikson spoke at the Unified Wine - Grape Symposium in Sacramento, the largest wine industry conference in the United States. More than 15,000 people attended, organizers said.

The wine market had been growing rapidly in the last decade, with case sales up 50 percent since 2001.

But with limited vineyard planting, and small crops in 2010 and 2011, the industry essentially ran out of wine in 2011, Fredrikson said. Those short harvests led to higher grape prices, and some wineries passed those price hikes onto consumers, leading to fewer shipments of economy-priced wine in 2013, he said. Sales of moscato, the varietal that was popularized in rap songs and was a hit among younger drinkers for the past two years, slowed.

"Where did those people go? Did they go to flavored cocktails?" Fredrikson asked. "I'm a little nervous about where these consumers are going."

Meanwhile, a plethora of drink options made it onto store shelves, and the wine industry faced increasing competition from spirits and craft beers.

The wine industry needs to innovate to capture and hold the attention of drinkers as alcohol <NO1><NO>consumption in the U.S. grows, Fredrikson said. Craft breweries and cider makers are booming, and may be luring some drinkers with their "late harvest" beers instead of wine.

"The glamour of wine is rubbing off on others, so now we have beer sommeliers," Fredrikson said. "Have you heard this before? Where are they getting all these ideas from?"

Wineries have succeeded in developing direct relationships with consumers, bypassing distributors to ship from the winery straight to consumers' homes, Fredrikson said. California wineries can now ship to 40 states in the U.S., helping wineries increase direct-to-consumer sales 9.3 percent by volume in 2013, he said.


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