1. Grape, Nut and Tree Fruit Expo
Malcolm Media’s
Grape, Nut and Tree Fruit Expo
State of Winegrape
and Concentrate Industries
Jeff Bitter
Allied Grape Growers
November 16, 2016

2. Presentation Outline Part 1: The Supply/Demand Foundation
Production History & Trends Driving Supply/Demand
Part 2: Segmenting the Wine Business
Future Supply by Price & Variety
Part 3: Application to the SJV Winegrower
What Does the Future Hold?
Part 4: Concentrate Industry Review

3. Supply/Demand Foundation

4. U.S. Economic Confidence Surges After Election

5. Wine Shipments U.S. Wine Market Volume
Graph Source: The Gomberg Fredrikson Report Annual Wine Industry Review

6. Wine Shipments

7. Wine Shipments

8. Wine Shipments

9. Building The Supply Foundation
Light crop in a much stronger market
Record state crops & huge coastal crops
Three short crop sets stage for balance
2016 & Beyond: Huge premium opportunity; low
end balancing occurring
Strengthening economy,
but relatively weak dollar
Strengthening Dollar,
Economic Optimism
Recession

10. Over the Hump….. Our prediction for 2016 is 16,000 new acres.
Almost Entirely Northern Interior

11. Our Production Potential……

12. Essentially, the change is happening “within”
the wine industry, not “to” the wine industry.

13. Segmenting the Wine Business

14. Breaking it Down…. Value - (<$7/bottle)
Interior (excluding Lodi/Delta)
Mid - ($7-10/bottle)
Lodi/Delta
High - ($10-20/bottle)
Coastal (standard)
Luxury - (>$20/bottle)
High-end Coastal (AVA Designations)

15. Comparing Production and Demand

16. Varietal Trends, by Segment…..
California
+6%
+25%
+62%
-15%
-8%
+26%
+75%
+1%
Note:
Change stated cumulatively
Annual attrition rates estimated

17. Varietal Trends, by Segment…..
California
+3%
+15%
+1%
-6%
+32%
+39%
+49%
+2%
Note:
Change stated cumulatively
Annual attrition rates estimated

18. Varietal Trends, by Segment….
+32%
California
+11%
+23%
-2%
+6%
+23%
+2%
+16%
Note:
Change stated cumulatively
Annual attrition rates estimated

19. Varietal Trends, by Segment….
+8%
California
+2%
+8%
-4% 0%
+1%
+9%
+4%
Note:
Change stated cumulatively
Annual attrition rates estimated

20. Estimated categorical acreage growth
Too much of a good thing?
Maybe not enough of a good thing?

21. So What Supply Isn’t Growing?
A largely undiscussed category of varieties, primarily in the San Joaquin Valley:
Generics
Zinfandel (for White and Red)
Merlot
Syrah (as a varietal)
From here on out: Florals

22. Source: Nielsen Scan Data
U.S. Scan Data
52 Weeks Ending 10/08
Source: Nielsen Scan Data

23. Application to the SJV Winegrower

24. So what does all this mean?
I just want to know if my grapes are worth anything next year….

25. The value of your winegrapes depends on a lot of factors:
Do you have a minimum price contract?
What variety do you have?
What will next year’s supply (crop size) be?
Is your vineyard productive/disease free?
What’s the status of global competition?
How strong will the US Dollar be?
Will the new Administration create opportunity?
Etc. Etc. Etc.

26. Where Opportunity Lays…
Regional:
Interior – Producing quality blenders with “reasonable” yields…..examples: Chenin Blanc, Florals, Petite Verdot, Petite Sirah, Tannat, Tempranillo.
Lodi/Delta – Continue increasing quality (and exposure) with the existing varietal mix to target blending opportunities in the $10-20 market.
Coastal – Increasing production and/or incorporating mechanization WITHOUT compromising quality.
Varietal Opportunities:
Sauvignon Blanc at all price points
Pinot Grigio at higher than traditional price points
Possibly Pinot Noir (>$10/bottle) if demand remains unfilled
Non-traditional varieties that add layers to traditional wines

27. Concentrate Industry Review

28. Go Green or Make Raisins?

29. Raisin Varieties in Crush

30. Concentrate Market

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