U.S. wine exports for 2018 valued $1,457 billion in 2018, according to just-released reports based on U.S. Commerce Department data. While a tidy sum, it’s the lowest tally since 2012. The report cites tariffs, a strong U.S. dollar, and strong international competition—with substantial government subsidies in some cases—as primary reasons for the decline. 

The high-water mark for our wine exports was $1,620 billion in 2016. In 2017, we exported $1,530 billion. That’s a drop of roughly six percent from 2016 to 2017 and just over four percent from 2017 to 2018.

The U.S. also dropped a notch in global rankings. In 2017, we were sixth, behind France, Italy, Spain, Australia, and Chile. Final 2018 numbers aren’t in from all countries, but they should place us seventh, as New Zealand’s exports increased to $1.7 billion.

The United States remains the fourth-largest producer of wine in the world. Our exports don’t reflect that, because we are also the world’s largest wine consumer. Australia, Chile and New Zealand have much lower populations than the the United States, so their wine business is highly dependent on exports and many of their most iconic wines sell substantially overseas. 

The very best U.S. wines rarely leave the country, so too most of the middle tiers. Their producers can sell everything domestically, which affords higher margins and saves the hassle of dealing with export regulations. (Many of these wines are also fairly  low volume, often sold primarily direct-to-consumer and not even into U.S. retail or restaurants.) 

Top Markets for U.S. Wine Exports

The top six “countries” for U.S. wine exports aren’t surprising. They are the European Union, Canada, Hong Kong, Japan, China, and Mexico. The next six may be less expected: South Korea, Nigeria, Dominican Republic, Singapore, Philippines, and Vietnam.

Little Exposure to U.S. Wine in Australia

The combination of low U.S. wine exports compared to total production volume and the low populations—and thus buying potential—of countries such as Australia and New Zealand creates interesting perceptions of our wine business in those countries. The typical Aussie consumer, and even some people in their wine business, don’t know much about American wine.

I’ve seen this firsthand recently while traveling in Australia. It’s rare to see wine from the U.S. in Australian shops or on restaurant wine lists. European wines, and those from New Zealand, are very present. One of the country’s most famous restaurants—which boasts a 30,000 bottle cellar—has at least six pages of their wine list devoted to Pinot Noir. Only two wines came from the U.S.: the La Crema Russian River Valley AVA and one Willamette Valley AVA wine from a  producer I don’t recall. 

I spoke to the sommelier and he cited difficulty sourcing wines. I think he’s also much less familiar with U.S. wine than those from other places, including South Africa and South America. He was interested in learning about wines from New York, but showed relatively little interest in California.

Demand is likely another issue. The Australians are rightly proud of their wines. There are hundreds of labels, many excellent, which never reach our shores but are well-deserving of spots in Australian restaurants and are understandably popular with both locals and tourists. The wines of France and Italy, as well as Rieslings from Germany, are world-renowned and also in-demand.

On the other hand, due to distance and our relative lack of exports, we’re a cipher. When asked by one person where I was from and what I did, I told them I’m a wine writer from San Francisco. They were confused and asked, “is there wine near San Francisco?” Everybody I talk to in Australia loves “San Fran,” but it’s mostly about the hills, the wharf, and the clam chowder.

Even more knowledgeable people have been shocked to learn the U.S. is the fourth largest producer in the world and the largest consumer. They tend to assume China is the largest consumer. That’s no wonder. Australian wine exports to China broke $1 billion in 2018.

Of course, those in Australia who are keen to sell more wine in the U.S. do know the market. They are working hard to gain traction, but find it “difficult to crack.” The U.S. market is extremely competitive, even for domestic wineries. There are only so many slots available for imports and a lot of countries’ wineries trying to fill them. And, because of distance, smallish wineries from places like Australia are especially dependent on their importers to drive both placement and demand.

Copyright Fred Swan 2019. Photo of Cali. Wine Fair in Toronto copyright Rick Vyrosko & Calif Wine Institute. All rights reserved.