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02.07.2013  
 

Washington State Contemplates Market Impacts

Executive from Young's Market addresses effects of privatization, 2012 harvest at WAWGG conference

 
by Peter Mitham
 
 
washington winegrape harvest 2012
 
Source: National Agricultural Statistics Service
Kennewick, Wash.—Some of the best news of the week at the annual Washington Association of Wine Grape Growers convention in Kennewick was of the continued growth of the state’s winegrape industry.

The Feb. 1 release of the National Agricultural Statistics Service’s most recent numbers regarding grape production fueled much discussion in the session rooms and on the trade show floor, which was home to a number of new exhibitors this year.

NASS numbers peg the 2012 harvest at 188,000 tons—up from 145,000 tons in 2008 and just 112,000 in 2003. (Though not noted in the release, acreage also has increased over the same 10-year period—from 26,936 acres in 2003 to more than 35,000 today.)

Chardonnay remains the single most-harvested grape in the state, at 36,900 tons in 2012, but red varieties (led by Cabernet Sauvignon) topped white varieties for the first time with 50.3% of the harvest. A decade ago, reds accounted for just 45.9% of the total.

Filling the shelves
But with the 2012 harvest putting winemakers on track for record output, speakers such as Dan Ewer, Young’s Market senior vice president for the Northwest, noted that the newly privatized Washington liquor market will have extra product to move.

While the state has made headway with exports to Asia and other countries, Washington state remains prime territory for many state wineries, and Ewer brought word from the retail frontlines.

The advent of major retailers such as Total and BevMo have generated headlines and angst, and grocers such as Safeway have moved to central warehousing with dramatic effects for the wine business.

Safeway used to represent 170 separate accounts for Young’s Market in Washington; now, thanks to centralized warehousing, it represents just one. With the exception of Albertson’s, Ewer expects other grocers to follow suit in 2013.

During Wednesday’s general session examining major trends affecting the Washington state wine business, Ewer said that more retailers are planning to use centralized warehousing because it’s more cost-efficient.

While some of the cost savings may be passed along to consumers, Ewer said a greater range of products in stock and on shelves risks crowding out wine.

“There’s less space,” he said. We’re fighting for that space.…We’re fighting to keep wine top of mind.”

A taste for fine wine
And there are signs the wine business is holding its own against the spirited competition. While the alcohol business in North America runs on beer (Washington state case sales are 70% suds, approximately 20% wine and 10% spirits), the dollar value of sales reflects a more even split in spending.

Wine accounts for about a third of total dollars spent on alcohol in Washington state, and while case sales are down in the wake of privatization, the dollar value has increased 2.6%.

Ewer’s data was consistent with reports from vendors (see “Fall-Out Continues in Washington State”), who report that spirits buyers show a taste for fine wine.

Ewer told growers that the average bottle of wine in the U.S. now sells for 44 cents more now than it did a year ago. Washington state wine isn’t far behind, garnering 35 cents more per bottle at retail than a year ago.

The major variable in the outlook for 2013 is whether or not the record production vintners have flowing to market in 2013 will dilute the price gains.

On the trade show floor, however, opinion was optimistic.

Many exhibitors noted that interest from prospective buyers was steady, if not aggressive, and while the schedule may have kept activity during the day to a minimum, Wednesday afternoon’s post-session reception saw a lot of networking.

Long lines at the tasting stations testified that, if nothing else, the Washington state industry believes in itself and its long-term prospects.

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