A new report published by Rabobank has suggested that while the wine market in the US is growing steadily, California will struggle to retain its market share in the face of rising imports.

The report, entitled "The future of the California wine industry: A 'perfect storm' of imports brewing?" states that while California produces 90% of wine on the US market, and has benefited from growing consumption more than any other state, virtually every other wine-producing country is looking eagerly at the expanding US market. Indeed, the report points out that since 1995, imports have grown by 184%.

The particular challenge for California will be in the higher price brackets, the report states. "Currently, nearly all the major wine-producing countries are developing plans to increase sales to the US market, targeting the high-value market, where California producers have had more success fending off competition in recent years," said Stephen Rannekleiv, food and agribusiness research vice president at Rabobank.

The report further contends that the US is emerging "as one of the most attractive markets in the world for high-value table wine due to the size and continued growth of the industry". Moreover, wine consumption not only grew by more than 50% between 1994 and 2006, but the strongest growth has been observed among wines valued at over US$9 a bottle and over $12 a bottle.

However, the report warns that an impending shortage of certain varietals, notably in Chardonnay, Zinfandel and Cabernet, stemming primarily from the prohibitively high cost of expansion in California's higher quality areas, may provide further opportunities for imports.

"The pending shortage of specific varietals combined with California's challenges for expanding production of ultra-premium wines may be creating an opportunity for imports to gain further share of the US market," Rannekleiv said. "European imports made significant process in gaining share of the super- and ultra-premium segments. This trend may be poised to continue, as most wine-producing countries are focusing their efforts at selling higher priced wines into the US market."