1. Issues, Trends and Careers In the Wine Industry
Jeff Bitter
Allied Grape Growers
Jeff Oliver
Oliver Search Consulting
February 28, 2017

2. Sections
What is Allied Grape Growers, and what purpose do we serve in the industry?
A review of industry macro-trends
What does AGG look for in employees?

3. What is Allied Grape Growers?
California Winegrape Marketing Association
Represent our winegrape grower-members, negotiating on their behalf to sell their winegrapes to various buyers statewide
Provide grapes & field services to buyers
Grower-owned
Formed as a cooperative
Represent +/-600 California growers
Governed by an elected board of directors

4. What is a cooperative?
An autonomous association of persons who voluntarily cooperate for their mutual and economic benefit. It can include a farm, business, or other organization that is owned and run jointly by its members, who share the profits or benefits.

5. Agricultural Cooperatives
Agricultural cooperatives are organized to help farmers gain market power by joining together to market their crops and increase their bargaining power by achieving economies of scale, processing their commodity to add value, and/or to purchase supplies and services.

6. Ag Cooperatives - Examples
Sun-Maid (Raisins)
Blue Diamond (Almonds)
Land O’Lakes (Dairy)
Welch’s (Grape Juice)
Ocean Spray (Fruit Juice – Cranberry)

7. At AGG our primary purpose is to:
Match winegrape growers with buyers & negotiate Grape Purchase Agreements on our growers’ behalf
A secondary purpose AGG has is to:
Analyze market data and trends and communicate that, as appropriate, to the industry and our stakeholders.

8. Negotiating Grape Purchase Agreements
The “Parts” of a Grape Purchase Agreement
Grape “Parts”
Law “Parts”
Risk of Loss
Entry onto Seller’s Property
Encumbrances
Force Majeure Provisions
Entire Agreement, Waivers, Notices & Modifications
Representations & Covenants
Disputes & Waiver of Jury Trial (Attorney’s Fees)
Specific Performance & Liquidated Damages
Indemnification (Damage to Equipment, etc.)
Compliance With the Law; Warranties
Severability
Assignment; Successors
Recordation
Governing Law &Uniform Commercial Code
Grapes & Specifications
Term of Agreement
Price Determination
Payment Terms
Quality Standards
Inspection & Adjustments
Viticulture Practices (Farming Plan)
Harvest & Delivery

9. How to find available grapes….
Grape Sourcing
How to find available grapes….
The “Middleman”
Marketing company (i.e. Allied Grape Growers)
Grower’s representative with title to the grapes
Grape dealer (i.e. Agajanian Vineyards)
Buyer/reseller for profit
Grape broker (i.e. Ciatti Company)
Deal-maker earning a commission - no signatory authority
On-line or print exchanges
Regional grower associations
Use leads to growers (like fellow winemakers)

10. Grape Pricing – the first of many hurdles
Grape Sourcing
Grape Pricing – the first of many hurdles
Grape Pricing General Rule:
100 X’s the retail bottle price
i.e. $10 bottle of wine X’s 100 = $1,000 per ton for the grapes

11. Building The Supply Foundation
Light crop in a much stronger market
Record state crops & huge coastal crops
Three short crop sets stage for balance
Strengthening economy,
but relatively weak dollar
Recession
Strengthening Dollar,
Economic Optimism

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

13. California Wine Shipment Volume
Premiumization
Graph Source: The Gomberg Fredrikson Report Annual Wine Industry Review

14. Our forecast for 2017 is +/-15,000 new acres.
Planting Trends
Our forecast for 2017 is +/-15,000 new acres.

15. What’s Hot, What’s Not….
71% Red
29% White

16. Planting Trends, 2014-2016 2016 – 15 million vines
Cabernet Sauvignon - 35%
Chardonnay – 16%
Pinot Noir – 16%
Pinot Grigio – 7%
2015 – 19 million vines
Cabernet Sauvignon - 31%
Pinot Grigio – 17%
Pinot Noir – 15%
Chardonnay – 13%
2014 – 27 million vines
Cabernet Sauvignon - 29%
Chardonnay – 17%
Pinot Noir – 12%
Pinot Grigio – 12%

17. Evolving California Acreage Base
Growing
Stable
Declining

18. What do we look for in employees?