Exports of U.S. wine, much of it from Modesto, break record

MODESTO -- Drinkers in foreign lands snapped up a record $1.43 billion in U.S. wine exports last year, much of them from the Modesto area, an industry group announced Thursday.

Sales rose 2.6 percent over the previous record in 2011, the Wine Institute reported. It put the volume at 112.2 million gallons, equal to 47.2 million cases and second only to the 2011 figure.

The gain was a pleasant surprise given the reduced grape harvests in 2010 and 2011, said Chris Indelicato, chief executive officer at DFV Wines near Manteca, formerly Delicato.

He expects even more growth once the wines made from last year's bumper crop hit the market.

"There's a good amount of (grape) supply from 2012 and the quality is high, so I think a lot of markets around the world will look for access to that wine," said Indelicato, a former Wine Institute chairman.

DFV has become a major player in the industry, exporting products priced from $5 to $150 per bottle. Larger producers in the area are involved, too — E.&J. Gallo Winery, Bronco Wine Co. and The Wine Group.

The Wine Institute, based in San Francisco, represents California wineries, which account for about 90 percent of U.S. exports.

They are aided by a weak dollar, which makes U.S.- made goods more attractive, and by reduced production in some wine regions around the world.

The California industry has combined efficient production with improved grape-growing and savvy marketing to become a powerhouse in the world market.

"We've seen a big demand," said David Gates, vice president of vineyard operations at Ridge Vineyards in Santa Clara County. "And as demand has picked up, we pushed a little harder into the more developing markets, the biggest one being China."

Asia, Canada buying more

The European Union remained the top market for California wines, accounting for about 34 percent of all sales. The state's wineries also saw significant growth in Canada and Asia.

Sales in China reached $74 million in 2012, up 18 percent from the previous year. South Korea, at $16 million, was up 26 percent. And Vietnam, at $27 million, was up 22 percent.

Exports to Mexico grew for a second consecutive year to $20 million, an amount that was double the 2009 figure.

In Canada, the second largest market for California wines, sales reached $434 million, up 14 percent.

The increase came despite a highly competitive global market, significant trade barriers and a recovering economy, according to institute President Robert P. Koch.

The institute promotes California wines through a video campaign, website and social media campaigns across the globe.

California winemakers say they've seen increased demand from overseas but still face some barriers to exporting wine.

Another barrier is price, said Skylar Stuck, general manager at Halter Ranch in Paso Robles. Land and labor in places such as Chile and Australia are cheaper than in the Napa and Sonoma valleys, he said.

Even French and Italian wines can cost less to make, he said. The result is that iconic California wines that have cache sell well at high prices, but less known wineries have a harder time competing.

Despite the barriers, Stuck said, California winemakers are focusing on overseas markets to bring more exposure to their growing region.

The best way to promote California wines?

"I've traveled a lot, going store by store, doing tastings," Stuck said.

Bee staff writer John Holland can be reached at jholland@modbee.com or (209) 578-2385.