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Wine Institute Receives $9.8 million from USDA to Market California Wine Internationally

by Kerana Todorov
February 07, 2019

The Wine Institute has received nearly $9.8 million from the U.S. Department of Agriculture to promote California wine in China and other international markets where the industry faces retaliatory tariffs and other headwinds.

The San Francisco-based trade association is one of 57 organizations that recently received funding from USDA’s Agricultural Trade Promotion Program to “identify and access new export markets.” USDA distributed a total of $200 million to the organizations to mitigate “the effects of unjustified trade retaliation against U.S. farmers and exporters,” according to a USDA-written statement issued Jan. 31. 

U.S. wine exports from January through October 2018 totaled about $1.23 billion--or 2 percent less than during the same time period in 2017, according to Wine Institute., which added that wine exports to China decreased by 15 percent in 2018.

The $200 million in Agricultural Trade Promotion Program funding--or ATP--total slightly more than the annual total funding USDA allocates to various groups to help them market commodities overseas. The subsidies are allocated under the Market Access Program--or MAP. Wine Institute’s last MAP allocation was $5.5 million, according to USDA.

By comparison, the European Union in 2017 budgeted $307 million in subsidies for wine promotion, according to the Wine Institute.

“We are pleased to be able to invest $9.8 million in export promotion funds from the ATP program,” said Wine Institute’s president and chief executive officer Robert P. Koch on Wednesday. “We thank USDA Secretary Sonny Perdue and Under Secretary Ted McKinney for their continued support of our world-class wine industry and the 786,000 U.S. jobs that it supports.”

“These funds come at a critical time when California wineries and winegrape growers are competing for market share with wine producers around the world who receive substantial subsidies from their governments,” Koch said. “These subsidies, combined with reduced tariffs from free trade agreements, have allowed our competitors to gain pricing advantages and expand sales. The additional resources from ATP will allow us to expand promotional activities and distribution channels in key markets including: China, Japan, Canada and the United Kingdom.”

The ATP grant requires a 10 percent match.

USDA made the announcement late last week just as Linsey Gallagher left Wine Institute, where she was vice president on international marketing, to become president of Visit Napa Valley in Napa.

“I’m very happy. That was a parting gift,” Gallagher said Tuesday.

Eric Pope, owner of Pope Global LLC, noted the MAP allocations to the Wine Institute have decreased by $1.5 million over the past two years. Agricultural Trade Promotion Program’s $9.9 million allocation for Wine Institute amounts to a “true windfall” for the California wine industry, he said.

“I could see these ATP funds being used to re-invest in focus markets globally but also to broaden marketing programming and communications in key emerging markets,” said Pope, a former regional director for emerging markets at Wine Institute. “In a slow Chinese market, for example, targeted messaging to stay top of mind could be very beneficial given the tremendous competitive pressures from other new world regions and the effects of the trade war-related retaliatory tariffs,” Pope said.

Other organizations that received the ATP funding include the Distilled Spirits Council, which was awarded $815,000.

USDA’s Foreign Agricultural Service accepted applications for the ATP grants between Sept. 4 and Nov. 2, with requests totaling nearly $600 million, according to USDA.

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