nat dibuduo, allied grape growers

Allied Grape Growers, 2013. All rights reserved.

SJVWA

Annual Meeting & Industry

Forum

Nat DiBuduo

Allied Grape Growers

December 5, 2013


Answering Some Key Industry Questions…….


Answering Some Key Industry Questions

Question#1: Just how big was this crop?

•Related Questions:

Are we in supply/demand balance?

Will our domestic supply depress imports?


Production Analysis

A regional look at production

Stated in tons crushed

Region

Four-Year

Average 2012

2013

Estimate

% Above

Average

North Coast 470,642 579,852 525,000 12%

Central Coast 495,405 548,444 500,000 1%

Lodi/Clarksburg 802,646 916,138 920,000 15%

Central Interior 1,814,438 1,884,293 2,000,000 10%

Other 80,003 89,510 80,000 0%

Total 3,663,134 4,018,237 4,025,000 10%


Just how big was this crop?


California Production

Just how big was this crop?





Are we in supply/demand balance going forward?




0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2005 2006 2007 2008 2009 2010 2011 2012 2013

Est.

2014

Est.

2015

Est.

2016

Est.

California Wine Shipments 2005-2012,

with estimates and projections thru 2016

California Wine Shipment Data Source:

The Gomberg Fredrikson Report

Updated March 2013

Millions

of Tons

Projected Need: 3.74 3.80 3.87 3.93




2005 3,755,166 477,000 7.87

2006 3,136,000 480,000 6.53

2007 3,247,504 480,000 6.77

2008 3,014,769 482,000 6.25

2009 3,703,031 489,000 7.57

2010 3,588,985 497,000 7.22

2011 3,342,689 506,000 6.61

2012 4,018,237 520,000 7.73

2013 4,025,000 535,000 7.52

2014 3,932,500 550,000 7.15

2015 4,039,750 565,000 7.15

2016 4,248,000 590,000 7.20

Average per acre yield from 2005-2012: 7.07

Crop

Year

Winegrape

Tons Crushed

or Projected

Bearing Winegrape Acres

Estimated by the State

(2012-2016 = AGG Est.)

Average

Winegrape

Yield




0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2005 2006 2007 2008 2009 2010 2011 2012 2013

Est.

2014

Est.

2015

Est.

2016

Est.





Updated March 2013

Millions

of Tons

Projected Need: 3.74 3.80 3.87 3.93




0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2005 2006 2007 2008 2009 2010 2011 2012 2013

Est.

2014

Est.

2015

Est.

2016

Est.





Updated November 2013

Millions

of Tons

Balanced2014-2016: The forecasted winegrapecrush less 220,000 tons for other uses





0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00

0

100

200

300

400

500

600

700

800

900

1000

1100

1200

Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Dec 13

Exchange Rates (Value to $1 U.S.), January 2008 - December 2013

Chilean Peso Argentine Peso Australian Dollar Euro British Pound

ChileanPeso

Aust $Arg Peso

Euro & Pound




0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

2008 2009 2010 2011 2012 2013 -

Tracking

Imported Wine - Bottled and Bulk

(In Millions of Cases)

Bottled Imports Bulk ImportsData obtained via the Gomberg Fredrikson Report

Total

-1%

Total

+12%

Total

+0%

Total

+7%

Total

+16%

Total

-4%

-5%

+27%

+92%

-2%+7% +3%

-2%

+7%

-20%+26%

+71%

-23%




0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2005 2006 2007 2008 2009 2010 2011 2012

California Grapes Crushed for Wine vs. California Wine Shipments

2005-2012

Grapes Crushed for Wine Wine ShipmentsCalifornia Wine Shipment Data Source:

The Gomberg Fredrikson Report.

Millions

of Tons



0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

2008 2009 2010 2011 2012 2013 -

Tracking




Total

-1%

Total

+12%

Total

+0%

Total

+7%

Total

+16%

Total

-4%

-5%

+27%

+92%

-2%+7% +3%

-2%

+7%

-20%+26%

+71%

-23%






0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2005 2006 2007 2008 2009 2010 2011 2012


2005-2012



Millions

of Tons


0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

2008 2009 2010 2011 2012 2013 -

Tracking




Total

-1%

Total

+12%

Total

+0%

Total

+7%

Total

+16%

Total

-4%

-5%

+27%

+92%

-2%+7% +3%

-2%

+7%

-20%+26%

+71%

-23%





0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2005 2006 2007 2008 2009 2010 2011 2012


2005-2012



Millions

of Tons



0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

2008 2009 2010 2011 2012 2013 -

Tracking




Total

-1%

Total

+12%

Total

+0%

Total

+7%

Total

+16%

Total

-4%

-5%

+27%

+92%

-2%+7% +3%

-2%

+7%

-20%+26%

+71%

-23%




The Answers:


BIG….. About 10% above recent history


Are we in supply/demand balance?

YES


YES – it should based on inventory and

exchange rates, but the timing on bulk and

vs. bottled may be different.


Question#2: What are current planting trends?


What varieties are hot?

What areas are being planted?

Are we over-planting?



Each January, Allied Grape Growers conducts a confidential &

voluntary survey of California grapevine nurseries to

determine up-to-date planting trends.

Data is aggregated for the purpose of identifying what is

being planted, how much, and where.



Annual Vine Sales Leaders, Based on AGG Nursery Surveys:

•2012 - Cabernet Sauvignon, then French Colombard

•2011 - Muscat of Alexander, then Cabernet Sauvignon

•2010 - Cabernet Sauvignon, then Chardonnay & Rubired

•2009 - Chardonnay, then Cabernet Sauvignon

•2008 - Pinot Noir, then Chardonnay




Cabernet

Sauvignon

25%

Pinot Noir

10%

Zin/Primitivo

6%

Malbec

4%Petite Sirah

4%

Merlot

3%

Other Red

Varieties

9%

Other White

Varieties

5%

Pinot Grigio

3%

Muscat Canelli

1%

Muscat of

Alexander

7%

Chardonnay

10%

French Colombard

13%

2012 Winegrape Vines Sold by California Nurseries39%

White

61%

Red

Other Reds Include:

Grenache

Petite Verdot

Cab Franc

Rubired

Syrah

Barbera

Ruby Cab

Tempranillo

Other Whites Include:

Gewurztraminer

Riesling

Viognier

Sauvignon Blanc




Categorical Allocation of Vines

Sold by California Nurseries, 2011

High

Mid

Value

Note the amount of

green on this chart

vs. burgundy or gray.




Regional Allocation of Major Winegrape Vines Sold, 2012

High End

Mid Range

Value

French

Colombard

Muscat

Canelli

Muscat

Alexander

Pinot

Grigio

Chardonnay

Malbec

Zinfandel/

Primitivo

Pinot

Noir

Merlot

Cabernet

Sauvignon

Vine sales began trending toward the coast in 2012




-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

Estimated California Bearing Winegrape Acres

From 1990 with projections

No Growth

from the

1980s

Growing

Demand;

Moderate

Expansion

Growing

Demand, but

Rapid

Expansion

Demand Good,

but Acreage

Peaks;

Oversupply

Acreage stalls;

Oversupply

Chronic

Growing

Demand;

Moderate

Expansion

Answering Some Key Industry QuestionsAre we over-planting?


-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18



Growing

Demand;

Moderate

Expansion

Growing

Demand;

Moderate

Expansion



-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18



Growing

Demand; Rapid

Expansion



-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18



THIS

CAUSED



-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18



THIS

CAUSED

THIS



-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18



Growing

Demand; Rapid

Expansion

Are we Entering

a Period of

Rapid

Expansion?



-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18



Growing

Demand; Rapid

Expansion

We know this is coming

for 2015 & 2016, but is it

rapid expansion?



-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18


From 1990 with projections Only if we

Continue the

Recent Planting

Trend



-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18


From 1990 with projections Moderate

Planting

Matches the

Trend

Moderate Planting Defined:

+/-15,000 NET new acres per year



The Answers:


Cab in the coast and slowing in the interior



Cabernet Sauvignon and some SJV generics


Previously the interior, now the coast


Coast – not likely; Interior – possibly


Question#3: What does the future hold?


Will California winegrape prices be stable?

What happened to Thompsons?!?!

Will today’s higher grape prices slow sales?




What does the future hold?


Three major factors

driving price (demand) over the last 2-3 years.



#3: The relatively weak dollar

#2: Competition from alternative crops (nuts)

#1: Supply planning for future (shortage)


Major factors driving Thompson price

#4: Winery use – Wine, Brandy, Alcohol

#3: Concentrate (Demand and Inventory)

#2: Crop size

#1: Raisin industry demand




Every $100 in grape value = $.12 in the bottleAverage Average Average Estimated Bottle

Price Price Price Price Addition:

2010 2011 2012 Grape Cost Only

Chard - Sonoma 1,808$ 1,828$ 1,874$ 0.08$

Chard - Monterey (Dist 7) 894$ 1,068$ 1,141$ 0.30$

Chard - Lodi 451$ 524$ 568$ 0.14$

Chard - SJV (Dist 13) 333$ 408$ 473$ 0.17$

Muscat - SJV ( Dist 13) 361$ 398$ 400$ 0.05$

Cab Sauv - Napa 4,242$ 4,518$ 5,067$ 0.99$

Cab Sauv - Paso (Dist 8) 924$ 1,072$ 1,276$ 0.42$

Cab Sauv - Lodi 511$ 633$ 738$ 0.27$

Cab Sauv - SJV (Dist 13) 357$ 486$ 542$ 0.22$

Pinot - Santa Barb (Dist 8) 2,539$ 2,709$ 2,638$ 0.12$

Pinot - Mendocino 2,300$ 2,412$ 2,500$ 0.24$

Zinfandel (Red) - Lodi 658$ 760$ 940$ 0.34$

All Winegrapes Statewide 582$ 640$ 772$ 0.23$




The Answers:


No immediate shortage of wine

Related Questions:


Mostly yes, but spot market softening

What happened to the Thompsons?!?!

Premature speculation of a low raisin price


Not necessarily, but it may mean lower

winery margins


• Global market is ever-changing in quality/quantity

-Need for California research and outreach

• State of the Industry - Healthy, Growing & Stable

• Sustainability’s role in the future success of the

SJV wine industry

• SJV - Major supply contributor to California wines

-At various price points

Closing Thoughts


Quality, proper planning and

economic sustainability will

keep our industry strong and

successful into the future.


Questions?

nat dibuduo, allied grape growers

Business

key industry questionsjust

key industry questionsquestion

domestic supply

supplydemand balance

related questions

projected need

california production

forecasted winegrapecrush