U.S. Experience in and Perspectives on the Worldwide Wine Market “Crisis”

Abstract

of the U.S. wine industry, focusing on California. Among countries, the United States is the world’s fourth-largest producer of wine, and the largest consumer and importer. The wine industry is located primarily on the U.S. west coast, and California alone accounts for more than four-fifths of production. Growth in population and income and shifting preferences for different types of alcoholic beverages have been driving evolving per capita demand and hence changes in production, markets, and imports in this vibrant sector of the U.S. economy. In recent years, the U.S. wine and winegrape industry has been coping with stresses from difficult vintages and abrupt policy shifts, on top of the shrinking demand and depressed markets that have affected producers worldwide. The market-driven pressures are more pronounced in the lower-priced segments. The industry is adjusting without the benefit of any substantial assistance from national or state governments to reduce the structural surplus and restore market balance. We illustrate these patterns using detailed data on California’s wine grape industry.