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Monday, 10 March 2014

When Buying U.S. Wine, Europeans Are Cheapskates!



Depending on where you are in the world, U.S. wine is either a luxury product or a cheap way to get your wine fix.



Despite some Americans being willing to spend more than $1000 on a single bottle of Napa Cabernet, Europeans are happier to dive into the bargain basement when it comes to U.S. wines.

Prices at this year's Premier Napa Valley auction reached astounding levels, but less esoteric American wines are struggling to command a serious price in Europe.
In Vietnam, an ordinary bottle of American wine is something you splurge on – at $9.83 a bottle, it costs more than the average daily wage.

But in the European Union, it's plonk. Europeans spent an average of just $3.36 for the equivalent of a 750ml bottle of U.S. wine in 2013, the second-lowest of any of the 20 top U.S. wine importers. Only Mexico, at $3.20 a bottle, spent less.

The figures come from the U.S. Department of Commerce, which released rosy numbers about overall U.S. wine exports to the Wine Institute last week. Exports play a small role in the U.S. wine industry, but they increased by 16.4 percent in value last year, for a total of more than $1.5 billion.

A closer look at the stats for the top 20 importers shows that the image of "American wine" differs greatly by country. In Canada, Hong Kong, Russia, Taiwan and Singapore, U.S. wine is, relatively speaking, a luxury product.
In the Philippines and Brazil, it's a cheap way to drink. But no place is cheaper than Europe.

Part of the reason the E.U. per-bottle price is so low is that Europeans aren't actually importing bottles of U.S. wine. About 80 percent of exported U.S. wine is now shipped in bulk containers and bottled or boxed abroad, said Gladys Horiuchi of the Wine Institute. Thus it's hard to untangle what the average price is in, say, the U.K., because some of the wine actually shipped there might end up being sold in Latvia or Poland.

The E.U. is by far the largest consumer of U.S.-exported wine, buying 40 percent of it by value. That's a lot of plonk.


But it could be argued that the most important importer of U.S. wine is Canada, which accounts for 29 percent of all U.S. wine exported and pays a nice price for it – $8.31 per 750ml bottle. Only Hong Kong ($8.85) and Vietnam pay a higher premium.

Hong Kong is also a major market, accounting for 5 percent of U.S. wine exports. Horiuchi explained that around one-third of that wine is destined for China. The latest figures also show that wines shipped directly to mainland China represent about 5 percent of total exports. The Chinese pay $5.77 a bottle for American-made wine, which is still well above the world average of $4.76.

In the U.S. itself, the average price for a bottle of American wine sold in supermarkets is $6.40, according to analysts Nielsen. Of any country, the savvy shoppers of Singapore ($6.67) are the closest to valuing American wine exactly as Americans do.

Vietnam is an interesting albeit small market for U.S. wine. Though it is the ninth-largest importer, it accounts for less than 1 percent of U.S. exports – but its imports of U.S. wine nearly doubled from 2012 to 2013.

Japan is the third-largest importer of U.S. wine (though if Hong Kong and China are combined it slips to fourth), but Japan's imports slipped in every way in 2013, and its per-bottle price is now a below-average $4.60.

It's not likely that President Obama will get Russia to pull out of Crimea by threatening to cut off President Putin's Opus One. But Russia is a fast-growing fan of U.S. wine, buying 15 percent more in 2013 with a per-bottle price leaping from a pedestrian $4.21 to $7.72 – which is almost exactly what Barefoot Chardonnay costs in Russia. Let's not ask what they were drinking before.


MarketTotal imports (value) 2013Price per bottle 2013
E.U. $617 million $3.36
Canada $454 million $8.31
Japan $102 million $4.60
Hong Kong $77.6 million $8.85
China $77.2 million $5.77
Mexico $21.5 million $3.20
South Korea $18.3 million $5.53
Switzerland $17.1 million $5.84
Vietnam $12.7 million $9.83
Singapore $11.6 million $6.67
Source: www.wine-searcher.com