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16 WINES&VINES January 2017 METRICS U.S. Wine Market Reaches 400 Million Cases n JON MORAMARCO T he U.S. wine market has shown continued growth for more than 20 years. Various sources report the size of the market at levels from 320 million 9-liter cases to more than 400 million 9-liter cases. Based on bw166. com's analysis of data available as of November 2016, wine entering the U.S. market in 2016 will total 400 million cases excluding cider. Inclusive of cider, the volume would be 424 million cases. This represents volume growth of 3.3% over 2015, which is the strongest growth wine has seen since 2011, when inventories were being rebuilt after the Great Recession. The 400 million cases figure is the actual volume of wine entering the U.S. market based on tax-paid data from the Alcohol and Tobacco Tax and Trade Bureau (TTB), import wine volumes as reported by U.S. Customs and California Board of Equalization data. The breakdown by wine type can be seen in the chart "Market Share by Wine Type," with traditional table wines accounting for 87% of the total wine market. 2016 is the first year that the U.S. market has reached 400 million cases. Given this significant milestone, it is worth demonstrating the ac- curacy of this information versus other methodologies. Not all of the data for 2016 is available, but it is available for 2015 and prior periods. Two methods further validate that using tax-paid volumes into the U.S. market is the most accurate way to measure the total market. The first method looks at excise taxes collected versus volumes reported. It is generally assumed that the wine industry is compliant in paying taxes as required, but industry members generally do not pay more taxes than are due. The table "Volumes and Tax Data" looks at both 2014 and 2015 and shows that over the two years, tax collections were as expected based on the volumes shipped into the market after account- ing for the small producer tax credit. Given timing of tax collections versus tax reporting by the TTB, there are some swings from year to year. This is seen between 2014 and 2015, and the same small fluctuations have occurred in a similar review of the past 10 years of ship- ment and tax-collection data. The second validation method looks at inventories, production, imports and exports to calculate wine enter- VOLUMES & TAX DATA All Numbers in Millions Calendar Year 2014 2015 Two-Year Total 9-Liter Volume Including Cider 401.9 415.1 817.1 Total Calculated Federal Excise Tax $1,125.0 $1,168.8 $2,293.8 Small Producer Tax Credit ($66.3) ($71.3) ($137.6) Federal Excise Tax Payable $1,058.7 $1,097.6 $2,156.2 Federal Excise Tax Collected $1,083.8 $1,078.1 $2,161.9 Percent Tax Collected 102.4% 98.2% 100.3% INVENTORY FLOW INCLUDING CIDER 9-Liter Case Volume (Millions) 2014 2015 Two-Year Total Opening Inventory 467.8 494.4 467.8 Net Wine Production 350.2 325.7 675.9 Imported Wines (Packaged & Bulk) 125.5 132.2 257.7 Total Wine Available 943.5 952.3 1,401.5 Less: Wines Exported (Packaged & Bulk) (49.2) (51.2) (100.4) Ending Inventory (494.4) (485.9) (485.9) Equals: Calculated Wine Entering U.S. Market 399.9 415.2 815.2 Tax-Paid Wine Entering U.S. Market 401.9 415.1 817.0 Variance Inventory Flow vs. Tax-Paid Volume (2.0) 0.1 (1.8)