California wine emerges as a well-poised rising star welcomed by the world’s fine wine community, with ever-rising demands, supplies and prices, according to figures published by a recent report from the vintners exchange platform Liv-ex.
Californian wine is rapidly taking over the secondary market with 200 different Californian wine brands traded on the platform in 2020 , an 809% increase over 5 years, surpassing Italy and Australia which recorded increases of 373% and 286% respectively. In 2021, Californian wine accounted for 7% of the total value of traded wine on the platform.
Along with its growing market shares and popularity, Californian wine prices have been increasing slowly and steadily. Since 2003, the average prices for leading California wines have risen 220% over the 18 years. Just in July this year, the California 50 index broke its all-time high record by an increase of 8.7% this year.
Predictably, Cabernet Sauvignon-based wines from Napa Valley account for the majority of trade. Average case prices of Napa’s leading estates soared over 5 years with Screaming Eagle (40.7%), Opus One (36.6%), Dominus (33%) and Harlan Estate (23.4%) recording promising growth.
However, Napa is facing challenges from other players. Ridge Monte Bello, a wine coming from the Santa Cruz Mountains recorded 76.6% price increases over 5 years. Not to mention, it has all the winning qualities.
It is the most affordable brand out of the above-mentioned five brands in Liv-ex’s California 50 index, with low production compared to Europe’s top wines. The maths is easy, high quality with low prices equals sweet success.
Another interesting challenge on the secondary market comes from other Californian AVAs. Wines designated as “Napa Valley” have accounted for less than 90% of California’s trade share by value this year, down from 93% in 2010, as other Californian regions and varieties have attracted new buyers.
Within Napa, increasing demand from a wider variety of wines in sub-AVAs such as Oakville, Rutherford and Stag’s Leap has managed to grow in trade as well.
TOP BUYERS OF CALIFORNIA WINES
Not only the variety of wines increased, but also the buyer base. Historically, the UK has been the biggest buyer of Californian wine, accounting for 64% of traded value in the secondary market, but the USA is squeezing in.
The USA has always been an active seller who brought California wine to the world stage, but it is transforming into an active buyer. The USA buyers account for 38% of secondary market trade Year-to-date, with the UK sitting at 46%
According to the California Wine Institute, the top export markets for California wines in 2020 were Canada ($424 million), the UK ($236m) and the EU ($191m).
While Californian wines are winning the hearts of wine lovers, we should not forget the alarming concern of climate change as wine regions in California have been crippled by exceptional droughts and fire in recent years.
The fires in 2020 have destroyed wineries and vineyards, leaving Colgin and Schraeder announcing they will not produce wine from that vintage at all.
The Golden State would have to learn how to cope with the fire in order to sustain its glorious record.