The rise of craft beer and artisan cocktails, California’s ongoing drought, increased foreign and domestic competition, and human vs. mechanized grape harvesting are all issues on the minds of California wine industry executives as they try to set a course for the future, according to a survey conducted by Robert Smiley of the UC-Davis Graduate School of Management.
More than two dozen executives were sampled in the survey, which was presented at the recent 2014 Wine Industry Financial Symposium. Though some survey participants expressed concern that millennials’ affection for craft beers and cocktails may translate into a drop in wine sales, especially in restaurants, others saw that affection as potentially increasing the market for wineries’ products.
As one put it (all participants were quoted anonymously in the survey), “I’m thinking craft beer actually expands the market for us and offers an opportunity for millennial exploration and entry into the market, which will then progress up to wine.”
The drought is a big concern for everyone in the wine industry, with several executives noting the steps they’ve already taken to conserve water, among them adjusting the procedure for washing wine barrels, increased water recycling, changing the size of hoses used to wash tanks and barrels, and installing automated systems to control the cleaning process.
There also seemed universal agreement that the U.S. wine market will only become more competitive, with California vintners under pressure from wineries in other parts of the country and from those abroad, especially since domestic wine consumption continues to increase while European wine consumption is trending down.
Still, no one seems particularly worried. “California wines will continue to be
a very relevant, large, and important segment for the future at all of the different price points,” said one executive. “Because California wines’ value. . . and taste. . . are on par, if not better, than a lot of wines that come from other countries.”