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Recession bites but consumption will grow – consultant

Despite the recession, wine consumption will continue to expand - especially among young adults – over the next decade, an influential consultant has said.

At the same time, as on-trade sales decline, California wineries are desperate for new ways of selling their wines.

Jon Fredrikson, president of Gomberg Fredrikson & Associates, was reviewing 2008 and examining 2009 at the Unified Wine & Grape Symposium, in Sacramento, America’s biggest annual wine-trade exposition.

He shunned ‘one-liner’ predictions about the 2009 market because of ‘dozens of variables and many different market segments performing differently.’

But he predicted, ‘Wine continues to gain traction among American adult consumers – and especially young adults in their 20’s – and it is likely that wine consumption will still continue to expand over the next decade.’

For the present, US consumers are trading down as ‘frugality becomes hip’ in the economic uncertainty.

‘Conspicuous consumption has gone out of favor as value-conscious Americans are buying more wine at lower price points, often for consumption at home.’

Wine sales in restaurants have ‘probably declined 10% to 12%,’ he said.

A result is that a majority of high-end California producers ‘are scrambling to find new distribution channels, and most small wineries are focusing on direct-to-consumer sales.’

He predicted that if excise taxes are raised in California, New York and other states to offset plunging state budgets, wine consumption growth rates will slow in those states.

In 2008, total domestic wine shipments rose less than 1%, to 316m cases, a record.

But the annual increase in overall market growth was the smallest posted since 2000.

California’s shipments to the domestic market rose only by 2%, and other states’ shipments to that market by 3.4%. Total shipments of California wines to domestic and foreign markets combined rose just 2.5%.

Imports declined by 2.9%, bringing imported wines’ share of the market down slightly to 30%.

Written by Howard G Goldberg in New York

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