California producers could a face battle as the supply chain tightens up

California producers could a face battle as the supply chain tightens up

Wine companies in California that fail to plan their future sourcing strategies will face a struggle to grow brands, as the region's supply chain becomes "tighter", a new report argues.

The study, published by Rabobank this week, says that the dynamics for securing wine supplies are "rapidly changing", as the supply and demand for the region's wines have shifted. It flags that 2012 was a "watershed moment" in the US industry as domestic wine availability became an issue, after years of excess supply. 

"Looking forward, US wine consumption is projected to continue growing and is likely to increase by at least 60m cases by 2018," the 'From Flexibility to Control: Wine Suorcing Strategies for Future Growth' report states. "However, accessing additional supplies will be more challenging."

Land for vineyards in California is becoming "scarce", the report says. 

Rabobank suggests three strategies that companies should look to adopt: acquire extra vineyards, either through "accepting higher land prices" or looking beyond traditional appelations; consider "third-party" contracts with other companies, or extract greater value from existing assets.

"Wine companies that fail to develop viable solutions to secure supplies ... will face increasing challenges to grow their brands over the long-term," the report concludes.

Accolade's North American MD Tim Matz recently told just-drinks the US wine market is "extremely healthy", but Australian brands in the market face challenges