1. Wine Import Analysis – Team 8
Bret Allen
Melanie
Bisson
David
Dickel
Jared
Johnson
Elizabeth
Taylor

2. Wine Industry
US wine demand is $20 Billion. $5.7 Billion is imported (2016).
France, Italy, Spain are considered Tier 1 wine exporting countries. The highest quality and most expensive wine, in general, comes from these countries.
Australia, New Zealand, and Argentina are considered Tier 2 wine exporting countries.
Source: IBISWorld Global Wine Manufacturing November 2016

3. Import Market
The largest import markets are United States, United Kingdom, Germany, and China.
Demand for wine is related to the consuming country’s GDP and is highly dependent on consumer disposable income.
Factors that affect consumer disposable income are savings, unemployment rate, employment levels, interest and tax rates.
Source: IBISWorld Global Wine Manufacturing November 2016

4. Industry Players
10% market share comes from large conglomerates like Diageo, Constellation, and LVMH.
Larger companies have improved their product portfolios through brand acquisition and can negotiate well with retailers.
In contrast, the smaller wineries are often looking for places to distribute their product on a local level.
The profit margin for the industry averages ~12%.
Source: IBISWorld Global Wine Manufacturing November 2016

5. Key Industry Performance Indicators
Economic Country Indicators
Country GDP: USA, France, Italy, Spain
Trade Figures – Import/Export/FDI
Unemployment Rates
Demographics – Consumer Profile
Savings Rate
Tax Rates
Industry Trend/Forecast
Supply – Buyer’s/Seller’s Market
Demand – Internal/External Split
Business Financials: Growth Trends,
Competitive analysis
Critical Issues/Business Challenges
Trade regulations – Shipping/Tax/Local Laws
Environment – Weather/Land/Pests/Land
Capital Costs – Equipment/Labor/Materials
Consumption habits
Industry Opportunities
Traditional varieties/fusion flavors

6. Wine Industry Performance Indicators
A high correlation exists between levels of consumer income and the amount spent on wine.
During the late 2000s recession, demand for premium wines decreased. Americans consumed the same amount of wine, but changed to less-expensive brands.
As the economy improves, many consumers are trading up to brands at higher price points. Sales of premium wines priced above $20 per bottle rise and producers raise prices in response to growing demand.
Meanwhile, fewer consumers are buying wines that cost less than $10 a bottle, putting downward pressure on prices in the value segment.
Source: IBISWorld Global Wine Manufacturing November 2016

7. US Wine Demand & Key Indicators
Economic and Industry Indicators US Market
2016 US wine demand was 1.1B gallons and grew 3.8% over the past 10 years
Considerable increase in year-over-year demand in 2011 at 10.4% likely as a result of the US economic recovery from the recession started to take hold

8. US Wine Demand & Key Indicators
Economic and Industry Indicators US Market
Key indicators relationship to US wine demand by volume shows strong relationship to disposable personal income with a correlation of 0.94
Disposable income growth is projected to track evenly with Gross Domestic Product at 2.2% CAGR from 2006 to 2021

9. US Wine Demand & Key Indicators
The Tier 1 and Tier 2 Countries correlate very different with GDP
TIER 2
TIER 1
France, Spain and Italy are premium wines and generally more expensive
Australia, New Zealand, and Argentina are generally less expensive wines
US imports of wine were 320 million gallons in 2016, with a valued of $5.7 billion
Imports by volume represented 30% of demand, while exports accounted for 13% of domestic production
France represents 42% of imports which declined sharply in 2009 as the recession took hold
French wine tops the list of countries for premium wine in taste and price and is impacted greater in a recession with the availability of lower priced substitutes (show regression of GDP and YoY change)
French imports had the most dramatic YoY drop in 2009 of 27% with Spain and Italy at 15% and 8% respectively

10. Year over Year Growth – Tier 1 Countries
YoY Growth
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Correlation
GDP | United States
1.8%
-0.3%
-2.8%
2.5%
1.6%
2.2%
1.7%
2.4%
2.6%
Tier 1 | France, Italy, Spain
7.8%
-3.8%
-19.2%
4.0%
14.1%
6.7%
3.8%
4.3% r2
0.83
Tier 2 | Australia, New Zealand, Argentina
8.1%
-6.7%
-1.0%
3.1%
-0.1%
6.0%
-4.6%
-5.4%
-4.7%
-0.54

11. Cumulative Growth – Tier 1 Countries
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
GDP | United States
1.8%
1.5%
-1.3%
1.2%
2.8%
5.1%
6.8%
9.4%
12.2%
14.0%
Tier 1 | France, Italy, Spain
7.8%
3.7%
-16.2%
-12.8%
-0.5%
1.9%
8.7%
12.8%
14.8%
19.8%
Tier 2 | Australia, New Zealand, Argentina
8.1%
1.4%
0.4%
3.5%
3.3%
9.3%
4.7%
-0.6%
-0.7%
-5.5%

12. Year over Year – Tier 2 Countries
YoY Growth
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Correlation
GDP | United States
1.8%
-0.3%
-2.8%
2.5%
1.6%
2.2%
1.7%
2.4%
2.6%
Tier 1 | France, Italy, Spain
7.8%
-3.8%
-19.2%
4.0%
14.1%
6.7%
3.8%
4.3% r2
0.83
Tier 2 | Australia, New Zealand, Argentina
8.1%
-6.7%
-1.0%
3.1%
-0.1%
6.0%
-4.6%
-5.4%
-4.7%
-0.54

13. Cumulative Growth – Tier 2 Countries
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
GDP | United States
1.8%
1.5%
-1.3%
1.2%
2.8%
5.1%
6.8%
9.4%
12.2%
14.0%
Tier 1 | France, Italy, Spain
7.8%
3.7%
-16.2%
-12.8%
-0.5%
1.9%
8.7%
12.8%
14.8%
19.8%
Tier 2 | Australia, New Zealand, Argentina
8.1%
1.4%
0.4%
3.5%
3.3%
9.3%
4.7%
-0.6%
-0.7%
-5.5%

14. US Wine Demand & Key Indicators

15. CONCLUSION When GDP increases, people purchase more expensive wine.
When GDP decreases, people continue to purchase wine but drink less expensive brands.

16. DB 1: US GDP vs. Wine Demand
Tier 1 Wine Year-over-Year Demand
“More Expensive Wine Imports”
Tier 1 Wine Cumulative Demand
“More Expensive Wine Imports”
Tier 2 Wine Year-over-Year Demand
“Less Expensive Wine Imports”
Tier 2 Wine Cumulative Demand
“Less Expensive Wine Imports”

17. DB 2: US Unemployment vs. Wine Demand
Tier 1 Wine Year-over-Year Demand
“More Expensive Wine Imports”
Tier 1 Wine Cumulative Demand
“More Expensive Wine Imports”
Tier 2 Wine Year-over-Year Demand
“Less Expensive Wine Imports”
Tier 2 Wine Cumulative Demand
“Less Expensive Wine Imports”

18. DB 2: US Income (per capita) vs. Wine Demand
Tier 1 Wine Year-over-Year Demand
“More Expensive Wine Imports”
Tier 1 Wine Cumulative Demand
“More Expensive Wine Imports”
Tier 2 Wine Year-over-Year Demand
“Less Expensive Wine Imports”
Tier 2 Wine Cumulative Demand
“Less Expensive Wine Imports”

19. Wildcard Slide

20. Appendix

21. US GDP | Matrix Calculation Methodology
2009 GDP Base Year, Manufacture Imports 2009 CPI Adjusted

22. US Unemployment Rate | Matrix Calculation Methodology
Manufacture Imports 2009 CPI Adjusted

23. US Income (per capita) | Matrix Calculation Methodology
2009 Income Base Year, Manufacture Imports 2009 CPI Adjusted