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Headlines Transitioning to a Market Shortage Short supply + $ vs. € + h = Strong Weak The California wine market shortage is expected to lead to an increase in import sales. a production shortage. That scenario is one prediction from Sili- Imports May Gain Share S Bank says shortage and weak euro could tip scales an Rafael, Calif.—Consumers will turn to affordable imported wine in coming years as the domestic wine industry works to overcome con Valley Bank's annual state of the wine industry report released April 17. Rob Mc- Millan, founder of the bank's wine division, said the weakening value of the euro ver- sus the dollar and California's short grape supply will cede market share to imports. "As continuing demand growth in wine is starting to exceed our ability to fill from domestic sources, market share in total wine sales will be handed over to imports in 2012. The guess here is that growth will come from EU countries," McMillan said in his report. Domestic producers won't be able to meet demand because of the low supply of bulk wine and a shortage situation for many grape varieties, especially Cabernet Sauvignon and Zinfandel. The bank's re- port is based on its own in-house research and a survey of nearly 500 wineries. Most of California's premium grape re- gions have posted low net inventory levels, and even with the rash of fevered plant- ing forecast for coming years the market is not expected to return to balance for five to eight years. "We believe we are fast trending to a position not yet experienced in the business: one where supply will be structurally short for an extended period in both the high-volume production win- eries and the fine wine business, demand will continue to grow at a little slower pace and the dollar will strengthen relative to the wine-producing regions in the euro zone, making those imports cheaper." Some relief may come this year with a bumper grape crop. McMillan noted in a webinar hosted by the bank that he's no- ticed many North Coast growers leaving kicker canes this year for extra bud set. "People are farming for higher yield," he said. "It wouldn't surprise me to see a re- cord, or heavy, crop." Tony Correia, an agricultural property valuation expert, said grape prices and land costs would continue to increase. He noted there's already some tension be- tween growers look- ing for the best price in a short market and wineries that are still unable to raise their bottle prices to pre- recession levels. winesandvines.com Learn more: Search keywords "Short imports." —Andrew Adams JUNE NEWS NEWS BY TE S A WASHINGTON WINE'S IMPACT new study pegs the economic impact of the Washington state wine industry at $8.6 billion. Based largely on data from 2010, the study also sets the national value at $14.9 billion. Funded by the Wash- ington State Wine Commission, the study indicates that the industry has doubled in size since a similar analysis taken in 2006. winesandvines.com Learn more: Search keywords "Washington impact." FROST DAMAGES MIDWEST vINES of the Midwest. According to the Ohio Wine Producers Association, 30%-75% of the state's grape crop was damaged. Vineyards in western R winesandvines.com Learn more: Search keywords "Midwest frost." Missouri experienced little damage, but growers in the southeastern part of the state saw significant losses. Iowa grow- ers who waited to prune experienced the least damage. In Michigan, frost was cruelest to juice grape vineyards in the southwest. There was less than 50% shoot damage in Indiana's main growing area in the southern part of the state. PESTICIDE FACING SCRUTINy of neonicotinoid insecticides to protect honeybees could lead to one of the most effective in- secticides for the glassy-winged sharp- shooter (GWSS) being taken off the mar- ket. Imidacloprid is used by the California Pierce's Disease Control Program to con- trol GWSS, the vector of the disease. The pesticide is a possible cause of honeybee colony collapse and has been targeted for tighter regulations. . A winesandvines.com Learn more: Search keyword "Imidacloprid." Wines & Vines JUne 2012 13 resolution introduced in the Califor- nia Assembly urging the prohibition ecord high March temperatures were followed by icy weather in much SILICON VALLEY BANK