1. Central Coast Grape Expo
Malcolm Media’s
Central Coast Grape Expo
State of the Winegrape Industry
Nat DiBuduo
Allied Grape Growers
November 11, 2016

2. Presentation Outline Part 1: The Supply Foundation
Production History & Trends Driving Categorical Supply
Part 2: Segmenting the Business (By Price and Variety)
A Look at Planting Trends
Understanding Future Supply by Segment
Part 3: Shipment Trends & Industry Opportunities
Part 4: Application to the Central Coast

3. Supply Foundation

4. 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
Recession
Strengthening Dollar

5. Over the Hump….. Our prediction for 2016 is 16,000 new acres.
Almost entirely northern interior

6. What’s Hot, What’s Not….
65% Red
35% White

7. Planting Trends, 2013-2015 2015 Cabernet Sauvignon - 31%
Pinot Grigio – 17%
Pinot Noir – 15%
Chardonnay – 13%
2014
Cabernet Sauvignon - 29%
Chardonnay – 17%
Pinot Grigio – 12%
Pinot Noir – 12%
2013
Chardonnay – 14%
Pinot Noir – 13%
Zinfandel – 10%

8. Our Production Potential……

9. Segmenting the Business

10. 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)

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

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

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

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

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

16. So what isn’t growing?
A largely undiscussed category of varieties, primarily in the San Joaquin Valley:
Generics
Zinfandel (for White and Red)
Merlot
From here on out: Florals

17. Shipment Trends/Industry Opportunities

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

19. Wine Shipments

20. Wine Shipments

21. 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
Pinot Grigio at higher than traditional price points
Reds with color/depth for the red blend market – Petite Sirah, Teroldego, etc.
Non-traditional varieties that add layers to traditional wines

22. Application to Central Coast

23. So what does all this mean?
I just want to know if the Central Coast is over or under planted….

24. Comparing Production and Demand

25. Evolving Acreage Base…
Represents only 1.3% total growth annually

26. Supply Summary
Although there is no forecasted shortage of winegrapes in the near future, there may continue to be categorical and/or varietal shortages as annual yields and changing consumer preference present ever-moving targets for our industry. Current areas of over-supply should continue to moderate as growers make removal decisions based on relatively weak market conditions.

27. Come by our booth or visit us at:
Thank you.
Come by our booth or visit us at: