Picture this: a region boasting a population of over 92 million, an expanding middle class, and soaring wine purchases. Where can we find this rosé-hued economic region amid the global effects of climate change, uprooting of vineyards, and declining wine sales? Is this paradise?
Almost. It’s the Caribbean Basin, defined here as Central America plus the Caribbean island nations. Some areas, like the Dominican Republic (a.k.a. the D.R.), have for years enjoyed steadily increasing sales, in both value and volume — the D.R.’s annual wine market is now almost $80 million. Regional demand for wine has exploded recently, and that vinous thirst comes from Basin residents themselves, not just the many tourists pouring in from traditional wine-drinking countries. A burgeoning interest in premium, organic, and artisanal wines stands out when looking at Basin residents.
And yet, all but the biggest U.S. producers appear to be ignoring this market, which literally lies in North America’s front yard.
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Bring Your Own Wine Culture
Despite the Basin’s proximity and the friendly nature of commercial relations with these countries, the general attitude among the industry is that these neighboring tropical and subtropical nations don’t produce wine themselves, and thus have no traditional wine culture. So, what’s the use of marketing there? While sheer sales volume is an obvious factor, some of this thinking comes down to cultural bias, misconceptions based on past trends, and anecdotes from vocational visits to Caribbean isles when rum was king.
California wine industry veteran and Silicon Valley Bank (SVB) vice president and wine division chief Rob McMillan sums up a common perception regarding the very limited nature of the Caribbean Basin market: “There are wines sold in better hotels for tourists, then there are very cheap wines from Spain and Chile typically available for locals.”
The numbers alone help disprove that perception. According to trade data recorded by the International Trade Center (ITC), every country in Central America and the Caribbean has reported positive demand for wine over the past five to seven years, with increasing imports in terms of both volume and value without major multi-year stagnation or decline in wine imports. Fine wine also can and increasingly is being profitably sold in the land where rum and beer reign supreme.
In fact, the increase in demand for wine is quite impressive. For example, balmy El Salvador’s wine market is experiencing “constant growth,” according to Spain’s trade office, España Exportación e Inversiones (ICEX). From 2017 to 2021, overall wine exports increased by a whopping 67.2 percent. D.R. consumers are very focused on wines with “higher added value,” especially sparkling wines, says the Observatorio Español del Mercado del Vino (OEMV).
So, imports are increasing, but who is drinking the vino?
A Younger Market
The answer lies in a growing, better-educated middle class with higher incomes than even 10 years ago. Hence, greater disposable income and a desire to demonstrate status by filling copas and Champagne flutes.
This is true of multiple nations across the Basin: In Guatemala, Spain’s ICEX says the imbibers include “high-class” local “consumers who seek quality” and in El Salvador, increased sales result from “the growing wine culture among the middle-to-upper-income Salvadoran population.” In Costa Rica, demand stems from “the prestige that consuming wine has gained among Costa Rica’s middle and upper classes.”
“Since the early 2000s, I’ve witnessed a significant transformation. While commercial brands still dominate, there’s been a growing interest in classical wines … as well as newfound excitement for wines from emerging regions.”
The trade promotion offices of major exporters Spain and Chile, notably, are paying attention to the Basin. Analysts with Chile’s trade office credit the “greater awareness” of wine’s range and variety to “an increase in gastronomic concepts available to Central Americans” who have a growing interest in trying new flavors and products. “This trend has allowed new varieties of wines and wineries focused on very specific niches, such as organic wines, to enter the market with a price margin above the average and be well received,” said a recent report.
On Grand Cayman, sommelier Christian Esser has owned and directed wine education center Wineschool3 for 16 years and, tellingly, now co-owns the new wine bar Le Petit Bar Cayman.
“Over the past decade, many countries have evolved from a predominant rum and beer culture to embracing fine wines,” he says. “Established markets like Cayman, Bermuda, and Aruba have flourished into significant wine hubs where you can find an array of wines. … The demand continues to grow, particularly in the premium sector.” Andrea Consuegra, chief of staff at Basin-wide wine and spirit distributor WEBB Banks, agrees that “targeting locals is crucial” to expanding sales “in many of our markets.”
In fact, by lacking a traditional cultural familiarity with wine, Basin residents actually have open minds regarding wine in all its wonderful variety.
“Since the early 2000s, I’ve witnessed a significant transformation,” says Gobindjit “Gobi” Singh Dhaliwal, an economist and co-owner of high-end wine importer Abaton in Panama City. “While commercial brands still dominate, there’s been a growing interest in classical wines … as well as newfound excitement for wines from emerging regions.”
A small country that’s home to 4.1 million people, the world’s second-largest free-trade zone, and the famous canal, Panama has a typical burgeoning middle class. There, Singh Dhaliwal started his import business with Greek wines. “Not the most obvious choice for Panama,” he admits. But the risky investment paid off big time. Rather than relying only on established categories of premium wine to fill his list, Singh Dhaliwal embraced a shift “towards fresher wines that complement our tropical climate, such as Greek rosé.”
He also reports success among Gen Z and millennials, segments that are causing concern in traditional wine-guzzling markets such as France and the U.S.
“I believe part of our success stems from attracting younger generations to wine,” he explains. “For the first time this year, we’ve sold more white wines than reds — a surprising development. Younger consumers are gravitating towards fresh, low-alcohol wines.”
Esser agrees that the Basin’s youth market is expanding.
“Younger generations are more conscious of what they drink, favoring organic and low-alcohol wines,” he says, noting that from what he’s seen, the neo-temperance and abstention movements have not impacted the region’s Latino and Caribbean youth.
Flowing to the Basin
Some big commercial U.S. brands have exported to these markets for decades, most from one specific segment: supermarket wine. “Larger wine companies shipping lower-quality wine,” McMillan says. There’s strategic movement in that sector, and some in the U.S. are taking note of the increasing overall demand.
Last year, U.S. distribution giant Southern Glazer’s purchased WEBB Banks, which focuses on distribution in the Caribbean and Central America as well as global travel retail. It represents the likes of Treasury Wine Estates, Bronco Wine Co. (the largest vineyard owner in California), and Caymus. Esser says that “major players like Gallo, Yellow Tail, and Kendall-Jackson do have a significant presence” in the Basin.
“Thanks to trade agreements, wines from the United States benefit from waived import tariffs,” which translates into competitive retail prices and additional sales.
But Esser gets to the important point, here and now in the circum-Caribbean: “There’s ample opportunity for small and medium-sized wineries to export profitably to these regions.” And if Panama is any example, that’s not just speculation.
Big Potential for Small and Medium Wineries
Ninety percent of Abaton’s growing wine business is allocated to Panama City’s burgeoning restaurant scene, and 10 percent to VIP retail clients. These consumers are residents of bustling Panama City, not tourists. Singh Dhaliwal’s list there gives some idea of the potential for higher-end, artisanally made wine in the region, including French producers like Beaujolais’ Marcel Lapierre and Alsatian Weingut Keller. Singh Dhaliwal’s range has expanded further in the past three years: In early 2021, he imported wines from 14 producers; today that number is 45, spanning nations including Greece, Portugal, Germany, and Spain. These ain’t all cheap wines, either, meaning higher profits per bottle exported.
But out of those 45 producers, just two are from the U.S.: Sonoma’s Bedrock Wine Co. and Sebastopol’s Pax Wines. This paucity is borne out upon examining ITC figures: In 2023, the U.S. ranked seventh in terms of imports to countries including Guatemala, Panama, Cayman Islands, and the D.R., trailing behind even the distant Australia and New Zealand.
So, why isn’t the U.S. exporting more to the Basin? The simple answer is that France, Italy, and Spain have long dominated wine sales there, maintaining the top three spots for decades. It’s a historical reality of the industry, largely because the U.S. always absorbed all the wine it produced and more. That’s no longer the case: McMillan points out a just-released SVB report that found that the U.S. wine industry has reached a point of structural oversupply. “In the past, we never had an excess of wine to deal with,” he says.
That means it’s about time time for a change in the U.S. attitude toward exporting premium wines to non-traditional markets where there’s increasing demand — and with the Caribbean Basin right next door, U.S. wineries (especially small and medium-sized ones) should seize this opportunity to expand their markets and thrive in this burgeoning region.
Singh Dhaliwal reports that “fortunately, importing wines from the U.S. is comparatively straightforward” thanks to a bilateral trade promotion agreement. He also notes something that’s true across Central America: “Thanks to trade agreements, wines from the United States benefit from waived import tariffs,” which translates into competitive retail prices and additional sales.
Professor Mike Veseth, who publishes the “Wine Economist” website, says the region is “worth investigating, especially in these days of slack demand elsewhere. … It is now important to think outside the wine box.” Esser expresses a similar sentiment, having seen the interest on the ground first-hand.
“We are in the early stages of growth, and there’s a noticeable shift away from mediocre commercial brands towards more diverse and exciting options,” he says. “Customers are increasingly seeking new and fascinating wines, and this trend will only continue to grow, with limitless potential.”
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