US WINERIES FACING MORE EC COMPETITION

US WINERIES FACING MORE EC COMPETITION

A large surplus of table wine in the European Community will mean more competition for U.S. producers, according to an Agriculture Department report.

During the late 1970s and early 1980s, EC exporters supplied a rising share of the U.S. wine market, with imports peaking in 1984. Since then, Spain and Portugal have joined the trading bloc, raising EC membership to 12 countries.Based on grape, wine and transportation cost comparisons, California, France and Italy have similar total costs for producing and transporting wine to major U.S. markets, the report said.

Imports of non-premium table wines from the EC should not reach the levels they did in 1984 in the near future, it said. However, because of its wine surplus, which is projected to reach 20 million to 25 million hectoliters in 1991-92, the (EC) will continue to place heavy emphasis on exports to the United States.

A liter is slightly more than a quart, and a hectoliter is 100 liters, or roughly 26.5 gallons. The EC wine surplus, therefore, could exceed 660 million gallons in four years.

The report was prepared by two Cornell University agricultural economists, Gerald B. White and David Blandford, for the department's Economic Research Service.

According to studies, the transportation costs of shipping wine to the eastern United States are about $3 a case from Italy and France, and $2 from California. Actual production costs were estimated at $9.98 a nine-liter case in California, $9.37 a case in France and $8.10 in Italy.

One reason for the large EC wine surplus has been a shift in European drinking habits, according to consumer studies in France.

A switch from high-energy-using manual labor to lower-energy-using work reduced caloric needs of which wine was an important source, the report said. In addition, wine had an 'old product' image that was less in tune with younger people than other beverages such as mineral water, beer and soft drinks.

The French studies probably also explain declining wine consumption in Italy and Spain, where an exodus of population from the rural economy continues and old traditions are being replaced, the report said.

However, there has been a trend toward the consumption of higher quality wines produced in specific regions, the report added. Accordingly, EC policy for the last 15 years has emphasized the production of the quality wines.