Good news if you’re thirsty: USA has a lot of wine

Harriet Taylor | CNBC Trinchero Family Estates in Napa Valley, Calif.

Harriet Taylor | CNBC
Trinchero Family Estates in Napa Valley, Calif.

It’s late autumn in the Napa Valley. All the grapes have been picked. Now is the time the markets get a preview of what the 2013 crop will bear from the nation’s most prolific and most prestigious wine region.

“2013 was a great crop in birth quantity and quality,” said Bob Torkelson, CEO of Trinchero Family Estates, the nation’s fourth-largest producer with dozens of labels like Sutter Home and Ménage à Trois. “It was up probably over 4 million tons, which is above average.”

As for quality, near-perfect weather has resulted in what could be a vintage year, said Gladys Horiuchi of The Wine Institute, an association that represents more than 1,000 wineries and affiliated businesses in California. “It’s exceptional.”

Bottom line—better wine and more of it.

A Morgan Stanley report in October sent wine lovers into a panic, suggesting that global supplies were dropping as demand was rising, and fermented grape juice could end up in short supply.

So is there any chance the world will run out of wine?

“No way,” said Fred Franzia, co-founder of Bronco Wine, the firm behind Trader Joe’s enduringly popular Charles Shaw wine—also known as “Two Buck Chuck.” His crop this year is about 110 percent of normal, on top of a similarly large crop last year. “It was bigger than we expected.”

Nielsen research indicates that wine revenues in the U.S. have risen faster than volumes, meaning people are buying more expensive wines. Torkelson told CNBC that the $15 to $20 range of wine has seen sales grow “double digits.”

At the same time, American winemakers are trying to increase exports. The Wine Institute says 1 out of 5 bottles of California wine is sold abroad, mostly to Europe or Canada. China is the fastest-growing market, but it’s proving the toughest to uncork. At the 2013 Hong Kong International Wine & Spirits Fair, “Chinese buyers showed less enthusiasm compared to last year,” reports DBS Group Research, “which indicates the Chinese wine market is still struggling.”

“China is a big puzzle for us right now,” said Trinchero’s CEO. “We’re trying to get our hands around it and understand it.”

Franzia said it appears that many Chinese are drinking red wine for health reasons, not because they necessarily like the taste. “It’s like shooting that rocket to Mars that went off,” he said. “They’ll hit Mars before we figure out what the marketplace in China is.”

Harriet Taylor | CNBC Sutter Home Wines

Harriet Taylor | CNBC
Sutter Home Wines

Meanwhile, back in the States, Morgan Stanley reports that wine production increased 20 percent in the last year, yet the U.S. remains “a net importer of wine.” Per capita consumption has “almost doubled in the last 15 years,” but remains half that of Australia and the U.K., and Americans drink only a third the amount of wine your average European imbibes.

That leaves more room for growth, even with increased competition from craft beer and spirits. “Beer is no longer losing share to wine. Both are growing faster than most staple categories,” reports The Buckingham Research Group.

Perhaps more people are drinking both. This week at Trinchero Family Estates, Willie and Korie Robertson of the hit TV show “Duck Dynasty” tasted their new Duck Commander wines, which are being sold at Walmart. Is their audience made up of wine drinkers? They certainly hope so.

“Our duck calls are made for every man,” said Korie. “We want to do that for wine.”

Their wines start at around $10 a bottle. For Franzia, that’s about where prices should end. “There shouldn’t be any wine sold for over $10,” he said with his renowned bluntness. When asked if that price limit should include the finest wines in Napa like, say, Opus One, Franzia replied, “Especially Opus One.”

If Opus One ever sells for $10, we will all be drinking wine.

—By CNBC’s Jane Wells; Follow her on Twitter: @janewells

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