Falling Dollar Rising Wine!

The buying power of the American dollar in foreign markets reached new lows against some of our biggest wine exporters such as Italy, France, Australia among others. Conversely, the low value of the dollar means their goods are more expensive for US consumers to purchase or import. That's great news for the wine industry.

After several years of providing an umbrella under which the US dollar was historically high, meaning the imports were very cheap, we are headed back to some level of equilibrium wherein quality, price and value will likely favor US producers and California wineries specifically.

This is good news for vintners, first because they can reduce inventories and begin improving their profit margins. Improved profit margins mean there may be additional marketing and promotion which means more wine may be sold. More wine sold may mean demand for winegrapes from growers will see excess production capacity absorbed followed by rising prices.

Unfortuneately, this process is not overnight. It is underway, however it is possible to derail this progress and delay a full recovery.

At this point, lower interest rates, a lower dollar and a recovering economy are good indicators for the future of winegrape production.