1. U.S. Wine Sector and Policy Issues Daniel Pick and Agnes Perez

2. U.S. Wine Production Thousands of gallons Removals of still wine from fermenters. Excludes substandard wine produced as distilling material for the production of brandy. Also excludes increases after amelioration, Sweetening, and addition of wine spirits. Source: Wine Institute from TTB data.

3. U.S. Wine Production Sector Account For A Dominant Share of Processing Grapes Grapes crushed for wine (66.9 %) Grape dried to make raisins (24.4%) Grapes crushed for juice (8.3 %) *Average percent share of the total quantity of grapes processed during 2003-2004.

4. Utilized Grape Production in the United States and Quantity of Grapes Crushed for Wine Source: Noncitrus Fruit and Nuts Summary, NASS, USDA.

5. Top 10 U.S. States in Wine Production California (90.2%) New York (4.6%) Washington (2.6%) Oregon (0.3%) New Jersey (0.3%) Florida (0.2%) Kentucky (0.2%) Vermont (0.2%) Texas (0.2%) Ohio (0.1%) *Based on total production of 630,253,150 gallons for the period July 2004 through June 2005. Source:The National Association of American Wineries.

6. California Grows The Bulk of Grapes for Wine Source: Noncitrus Fruit and Nuts Summary, National Agricultural Statistics Service, USDA.

7. Leading Grape Varieties Crushed in California Percent of Total Crush in 2005 Source: 2005 Grape Crush Report, USDA, NASS, California Field Office. Chardonnay 17.1 % Cabernet Sauvignon 12.5% Zinfandel 10.4% Thompson seedless 10.2% Merlot 9.8% French Colombard 7.0% Rubired 3.9% Other 18.5 %

8. California Lead in Number of Wineries But Share of Total Declining Source: Alcohol and Tobacco Tax and Trade Bureau, U.S. Department of the Treasury.

9. U.S. Wine Exports: Quantity and Value Hectoliters U.S. dollars Source: U.S. Census Bureau, U.S. Department of Commerce.

10. U.S. Wine exports As A Share of Domestic Production Percent Based on fresh-weight equivalent. Source: Derived by the Economic Research Service, USDA.

11. Value of U.S. Wine Exports by Leading Countries U.S. million dollars Source: U.S. Census Bureau, U.S. Department of Commerce.

12. Leading Suppliers of Imported Wine to the United States Source: U.S. Census Bureau, U.S. Department of Commerce.

13. Imports as A Percent of U.S. Wine Consumption Percent Based on fresh-weight equivalent. Source: Derived by the Economic Research Service, USDA.

14. U.S. Wine Imports: Quantity and Value LitersU.S. dollars Source: U.S. Census Bureau, U.S. Department of Commerce.

15. Volume of U.S. Wine Imports by Leading Suppliers Million liters Source: U.S. Census Bureau, U.S. Department of Commerce.

16. Policy Issues Affecting the U.S. Wine Industry Commitment to implement sustainable practices amongst wineries and grape growers Supreme Court Ruling (spring 2005) on inter- State shipments of wine. First-phase completion of U.S.-E.U. agreement on wine.

17. Sustainable Practices Formal programs being implemented by the Agricultural Environmental Management Program in New York, California’s Central Coast Vineyard Team and Lodi-Woodbridge Winegrape Commission, Oregon Low Input Viticulture and Enology, and Washington’s Walla Walla Valley Wine Alliance. The Wine Institute and California Association of Winegrape Growers introduced the California Code of Sustainable Winegrowing Practices.

18. Supreme Court Ruling on Inter-State Wine Shipments States cannot discriminate in favor of their in-state wineries by allowing only local wineries to make shipments via common carriers to their in-state consumers while prohibiting out-of-state wineries from making shipments to those same consumers. Approximately one dozen States were directly affected by this ruling. Many of the affected states have already taken legislative action to provide for fair competition for all domestic wineries.

19. U.S.-EC Wine Agreement First-phase completion of the agreement on March 2006 which will provide for mutual acceptance of existing wine-making practices and addresses labeling issues. Major provisions of the agreement –U.S. to seek legislative changes to limit use of 16 semi- generic names, such as Chablis and Sherry, to wine that originates in the EU. Existing uses of these names on non-EU wine will be permitted to continue.

20. –Once the changes are made, EU will accept all current U.S. winemaking practices, including those that are not currently approved for use in the EU and those granted temporary derogation. As of the March 2006 signing of the agreement, two provisions are not yet in effect. –EU acceptance of U.S.winemaking practices –U.S. limitation of use of semi-generic name