California Winemakers Optimistic about the Future

Professor Robert Smiley, director of wine industry studies, presented his analysis of the current state and future of the wine industry to executives and financiers at the 15th annual Wine Industry Financial Symposium last September in Napa, California.

Smiley based his presentation on his annual survey of wine professionals, now in its 16th year, which included responses from 104 wine producers, wine grape growers, distributors, retailers and lenders. It is the largest study of its kind in the wine industry. He also conducted in-depth interviews with chief executive officers and senior executives of 26 major wine operations, including growers, wine producers and distributors.

According to Smiley’s findings, both winemakers and vineyard owners predict higher profitability over the next two years in the California wine industry. During the next three years, the survey participants believe the major challenges to growth in wine sales will be increased government regulation, global competition and consolidation of wine retailers and distributors. Both winery owners and grape growers predicted that the greatest growth in consumer demand and resulting sales will be seen in pinot noir, followed by pinot grigio and chardonnay wines. A decline in sales was projected for white zinfandel. Finally, many in the industry say that environmental issues will top industry concerns in five to 10 years.