EXPORTING U.S. WINE TO THE DOMINICAN REPUBLIC

Abstract

The project's objective was to assess the emerging wine market of the Dominican Republic with the goal of identifying potential for exporting U.S. wine. Data Collection: The data were collected through the following activities: • in-depth interviews with wine importers, restaurant, hotel, and resort managers • wine consumer survey • examination and assessment of retail price points and shelf allocation • examination of wine lists • examination of promotional and informational materials related to wine Main Findings: Wine consumption began to experience rapid growth in the 1990s, surpassing an annual sale of over 100,000 cases to approximately 500,000 cases in the year 2000 (Hernandez, 2004). By the year 2001, beer and wine had experienced a 55% average growth (Mendez, 2002), and by 2007, wine consumption alone was estimated to be 7 million liters annually, valued at more than U.S. $18 million dollars, with an expectation to grow (ProChile, 2010). Wine's popularity in the Dominican Republic is growing rapidly. Researchers found that increase in discretionary incomes and growing number of international tourists contribute greatly to this growth. As the largest Caribbean economy, the Dominican Republic averages about 6% in economic growth each year. In 2009, the gross domestic product (GDP) was estimated at $45.6 billion, with the per capita GDP of $ 8,648 , a much higher amount in terms of Purchasing Power Parity (PPP) than in previous years (U.S. Department of State, 2010). According to the U.S. Department of State (2010), tourism, transportation, communication, and finances comprise about 54% of the nation's GDP; it is expected that employment in travel and tourism industries will continue to increase. U.S. wines have increased their presence in the Dominican Republic due to increased exposure to consumers, changing consumption patterns, and lower transportation costs. Carlo Rossi is currently the bestknown U.S. brand among the Dominican population. Overall, other than a few higher-end California wines, consumers are not generally willing to pay much for U.S. wines, as there is strong competition with Rioja wines. Although wine from various wine regions of the world is available in the Dominican Republic, the market is currently dominated by wine from Spain and Chile. According to the GAIN report of 2011, the U.S. has 14% of the total wine market share, after Spain (36%), Chile (27%), and Italy (15%). Argentina holds 5% and other markets 3% of the remaining market share. Almost all available wine in the DR is controlled by importers. The vast majority of importers interviewed agreed that the current wine market in the Dominican Republic is saturated. The U.S. high-end wines present the best market potential and a few importers indicated they are open to negotiate on these high-end wines. Retail is by far the biggest potential for imported wines, as the vast majority of Dominican consumers purchase wine for personal consumption or as a gift at supermarkets or liquor stores. All-inclusive resorts represent about 30% of the wine market in the DR. These resorts import wine directly and almost exclusively in bulk, mainly from Spain.