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GAINing the upper hand
TL;DR USDA's Foreign Agricultural Service Reports
Welcome to the latest edition of TL;DR.This is where I provide a summary of a recent industry report or survey and share my own commentary. Think of it as Cliff Notes for wine and spirit professionals. Today we’re looking at the USDA's Foreign Agricultural Service Reports.
What it is
Lagos has been on my mind.On a recent visit to Washington, D.C., I was speaking to my cab driver and the conversation turned to business. When I mentioned I worked in the alcohol industry, he excitedly asked if I exported any products to Nigeria. When I told him that I didn’t, he wasted no time in expounding on the myriad opportunities I’d lost out on by failing to get my products to Lagos. The following weeks found my curiosity getting the better of me and led me to discover a hitherto unknown treasure trove of free government data: the GAIN database.
While the TTB gathers numbers regarding things like taxation and US booze production, the USDA runs the GAIN database, a repository of reports on everything from New Zealand wine production to export prospects for American alcohol to Sub-Saharan Africa. Since the TTB is the natural go-to for all things ABV, the USDA is not usually the first source of data for sommeliers, portfolio managers, or export managers. However, I’m beginning to suspect it should be.
Well, the USDA sums it up best:
USDA's Foreign Agricultural Service (FAS) provides timely reports on foreign markets through the Global Agriculture Information Network (GAIN) database. An average of 2,000 reports are added each year, with reports going back to 1995.
GAIN reports are compiled by FAS’ global market intelligence network, which includes FAS foreign service officers and locally engaged staff in over 90 overseas offices world-wide. They provide on-the-ground intelligence, insight, and analysis on nearly 200 countries, delivering information on foreign agricultural markets, crop conditions, and agro-political dynamics of interest to U.S. agriculture.
It’s because of the GAIN database that I don’t have to rely on hunches and hearsay when it comes to wine and spirit producing and/or consuming countries; I know that Lagos (and Nigeria, at large) has or will have the potential to be a viable export market for US alcoholic beverages.
Maybe my driver was onto something!
What they say
There are currently 522 reports that touch on alcohol; more than two dozen have been published this year alone. Many of these reports are quick reads, at less than 10 pages apiece. While I’m not going to pretend I read all of them, here are some interesting, if not useful, facts from reports published in the preceding six months:
“Despite its small size, New Zealand is already an important market for alcoholic beverages and ingredients from the United States, including being the 13th largest market for U.S. whisky and the 11th largest market for U.S. hops. The United States is the fifth-largest supplier of alcoholic beverages to New Zealand and imports from the United States have shown some growth over the past half-decade. Whiskies, wine, and liqueurs are the largest alcohol categories being imported by New Zealand. Total import demand from all suppliers was worth US$ 330 million last year.”
“During MY 2019/20, Portuguese wine exports to the United States increased ten percent to $106 million,” and “Portuguese wine production for Marketing Year 2020/21 is estimated to drop three percent to 6.3 million hectoliters due to unstable weather conditions.”
In India, “the Government of the National Capital Territory of Delhi (NCTD) issued a notification permitting the home delivery of wine and liquor within its territory…” Certain licensed vendors are “able to deliver liquor to Delhi residents as long as customers place orders through a mobile app or website.”
“In 2019, Russia was the world’s ninth-largest importer of wine in both volume and value. However, the Russian Ministry of Agriculture is focused on making wine production one of the key branches of agriculture in the country. In 2020, the total area of vineyards in the country was 80,000 hectares. However, to fully supply the country with grapes, at least 250,000 hectares are needed, which will take more than 15 years to achieve.”
Also, some reports feature the author’s email address so you can follow up if you want more information.
Why they matter
Data might want to be free, but the people and organizations that collect it like to charge. The GAIN database puts an army of civil servant analysts to work for the benefit of anyone knowing and willing to sift through their reports.
Also, this is current data and current data is useful data. Whether you’re expanding your company’s footprint through export or growing your portfolio, the Foreign Agricultural Service’s reports provide you the advantage of being able to act on recent info rather than a Business Insider article from 2013.
What it means for you
If you’re a US-based supplier or an exporter… it’s time to dig into the numbers. Start by searching for relevant beverage types. I recommend leaving the geography section blank as you don’t want to limit yourself to preconceived notions about where opportunity exists. A craft gin distillery once told me that he exported 25% of his production to Italy. Who knew!
If you’re a portfolio manager (or just really interested in a particular country)… brush up on the USDA’s perspective of your respective countries and categories. Are vineyard plantings growing or shrinking? How about exports? What about domestic consumption? These reports won’t tell you what producers are up-and-coming, but they will provide the 10,000 foot-view of what’s going on in places like Germany or Spain.
TL;DR = Too Long; Didn’t Read
From the March 2021 report titled Prospects for U.S. Sips & Snacks in Sub-Sahara Africa, “In terms of U.S. wine exports to the region [of Sub-Sahara Africa], Nigeria is the number one destination accounting for 82 percent of U.S. export sales to the region in 2019. Growing at 13.3 percent between 2015 and 2019, the long-term prospects for U.S. wine sales in Nigeria remain very strong.” and “When it comes to wine imports, Nigeria’s imported wine sales grew at a faster pace (6 percent per annum) than total sales (1.4 percent per annum) between 2015 and 2019, making it not only the fastest-growing market for imported wine but also the largest in sub-Saharan Africa.”
In paying our taxes, we inadvertently funded Uncle Sam doing our homework.