The secret no one in California wine is talking about

According to the Gomberg Fredrikson Report, nearly 68 million gallons of foreign bulk wine was imported by California wineries in 2022. And no one is talking about it. Over the past couple of months countless industry presentations have discussed the slowing wine market, the anti-alcohol movement, how young people aren’t drinking wine, and the excess inventory of California-grown wine. We’ve been told that potentially 400,000 tons of grapes were left on the vine last harvest. Growers have been told they need to remove thousands of vineyard acres to balance supply with demand. But no one is mentioning that California’s largest grape buyers also imported the equivalent of 400,000 tons of grapes in 2022. The importation of foreign bulk wine began in the late 1990s when a rapidly growing wine market looked overseas to fill demand. That trend slowed significantly in the early 2000s as California vineyard plantings exceeded demand but began to pick back up around 2006 and have grown steadily ever since.

California Grape Crush Report and Demand

Total wine shipments

(all bottled domestic and imported wine entering distribution) to the U.S. market declined in 2022 and 2023. Prior to that, the U.S. wine market had experienced 30 straight years of growth leading up to

2022. However, even as the market continued to grow over the past decade, the total California winegrape crush and winegrape purchases from independent growers has shrunk. The “Purchased CA Grape Crush” (see table) reflects tons purchased from independent grape growers and eliminates winery owned acreage. The ”5 Year Average” columns reflect a 5-year rolling average of grapes crushed and grapes purchased for wine production. As you can tell from subtracting 2023 purchase levels from 2014, California wineries have decreased grape purchases by over 500,000 tons annually over the past 10 years.

Some of the decrease in grape purchases can be attributed to an expansion of vintner-owned acreage, but that is minimal. Total California grapes crushed for wine production has decreased 433,000 tons on average annually since

2014. In Crush District 11 (Lodi) where we have approximately 750 winegrowers, 89% of the grapes harvested in 2023 were from independent growers, and that number would likely have been higher if all the grapes had been harvested. In 2014, 92% of Lodi grapes came from independent growers. Statewide, in 2023, 77% of grapes came from independent growers which is down from 80% in 2014.

Foreign Imports Undermine California Growers

Clearly, bulk and bottled imports have had a profound impact on the demand for California winegrapes. What is frustrating to growers is that many of the largest buyers of California winegrapes are also the largest importers of foreign bulk wine (see table). This situation is exacerbated by a global oversupply of wine which allows wineries to source incredibly cheap foreign bulk wine to reduce their cost of goods sold.

Further complicating matters, and potentially incentivizing foreign bulk imports, is the federal government’s Duty Drawback program. “Drawback is the refund of Customs duties, certain Internal Revenue taxes, and certain fees that have been lawfully collected at importation.”

In other words, duties paid on importing foreign bulk wine into

California can be refunded by exporting similar products. The decrease in demand for winegrapes has also led to a stagnation in grape pricing. Thus, many growers feel forced to increase yields in order to compensate for higher farming costs. And many older vineyards, capable of producing high quality wine, cannot produce high enough yields to remain economically viable. Many acres of Historic Vineyard Society-registered vineyards in Lodi are unfortunately being removed this year.

American Wine

Where is all this imported bulk wine ending up? Much of it is in plain sight on the grocery store shelves, labeled as “American” wine. Federal TTB (Tax and Trade Bureau) regulations allow for up to 25% foreign (non-US) wine to be blended with California wine and legally labeled “American.” Additionally, a lot of the imported foreign bulk wine is showing up in traditionally California brands. Some of the wines are labeled American, while others indicate they are a product of Chile, Australia, Italy, and New Zealand.

And in many cases, you must look very carefully to find the country of origin. Unfortunately, many of these foreign-sourced wines are mixed in on the shelf with the domestically sourced wines so the consumer is likely not even aware of where their wine was grown. Or they may be inadvertently purchasing a wine believing they are supporting California farmers.

Retailers — Living Local, Buying Foreign

Every retailer and grocery store I visited over the past few months had their shelves stocked with foreign-sourced bulk imports. Target, Safeway, Whole Foods, Raley’s, and independent grocers all had “American” wines intermixed with their domestic counterparts.

Lodi is California’s largest producer of Cabernet Sauvignon, Chardonnay, Sauvignon Blanc, Merlot and many more winegrape varieties. Even in the heart of Lodi wine country, our grocery store shelves are stocked with foreign bulk wine. These grocery stores actually depend upon the success of local winegrowers and the adjacent industries to shop and support their stores. And all the while so many retailers proudly proclaim their support for our local farms. This is an insult to Lodi farmers, and an insult to the community of Lodi.

In no world does it make sense to ship bulk wine from across the globe to sit on a shelf in Lodi while thousands of tons of California winegrapes go unharvested and local growers remove family vineyards and take out loans to pay their farming bills. This is a call to our California retailers, grocery stores, and restaurants to start paying attention. “Living Local”, “Farm to Fork” and “Doing what is right for our community” need to be more than just marketing slogans.

Community — The Foundation of Sustainability

California wine industry has embraced sustainability, but importing millions of gallons of cheap foreign bulk wine to save a dollar is not in the true spirit of sustainability. It is the opposite. If we are serious about true sustainability and the long-term health of our industry, we need to put a stop to this cheap foreign bulk wine importing and proudly invest in California-grown, produced and bottled wines.

At countless industry presentations that ignored this subject, we were told that young consumers desire transparency, authenticity, and quality. Cheap foreign bulk wine that hides its origin in the fine print of a back label is not transparent or authentic and undermines the California winegrowers that are the heart and soul of our industry.

Lodi residents, even if you don’t drink wine, you should be offended. Grape farming has been at the heart of our community for over 150 years and is the economic engine that supports our local economy. This imported bulk wine directly harms our community. At the very least, we should demand our local retailers, grocery stores and restaurants remove these wines from their shelves.