1. Vineyard Values and Trends: The Cycle Continues Vineyard Values and Trends: The Cycle Continues Central Valley Wine Growers Thursday, November 30, 2006 Central Valley Wine Growers Thursday, November 30, 2006 Tony Correia, ARA

2. What the Vintners buy… “…I often wonder what the Vintners buy One half so precious as the Goods they sell.” “…I often wonder what the Vintners buy One half so precious as the Goods they sell.” The Rubaiyát of Omar Khayyám Seventy-First Quatrain First Edition of the Translation by Edward Fitzgerald

3. 2.3. 1.4. Wineries: Insufficient inventory but big price increases Insufficient inventory but big price increasesWineries: Marketing costs up, prices down Wineries: Must contain cost & add value in a competitive market 1996 & 97 1988 & 89 Wineries: Eliminate discounts, increase volume increase volume Growers: Higher prices, longer contracts longer contracts Plantings: Experienced growers get planting contracts Consumers: Prices up DEPRESSIVE SUPPLY EXCEEDS DEMAND Growers: Low prices, shorter commitments, higher quality standards Plantings: Phase 1 plantings bearing, some new speculative plantings Consumers: Low prices, better selection Growers: Astronomical prices, long contracts Plantings: Planting mania Consumers: Starting to find imported alternatives 1998 -2000 1990 & 91 1982 & 83 2001 -2004? 1992 & 93 1984 & 85 1994 & 95 1986 & 87Growers: Grapes without contract hard to sell hard to sell Plantings: Phase 2 plantings now bearing; little new plantings Consumers: Great Values! MANIC DEMAND EXCEEDS SUPPLY HIGH PRICES Acute Shortage Slight Excess Slight Shortage Acute Excess LOW PRICES The Manic-Depressive Wine Business Wheel of Fortune Copyright Turrentine Wine Brokerage 1997 All Rights Reserved :) :(

4. California Chardonnay

5. Overall Trends

6. Production Trend; Total Tons (1,000s)

7. Production Trend; Share of Total Tons

8. Production v Crop Value

9. Average Grape Prices

10. what does all this mean to our local Real Estate markets? And, what are they telling us? But;

11. Land and Vineyard Markets Coastal areas are totally different Real Estate Markets Grape prices do impact vineyard and land values, especially for marginal properties, but relationship is weak. Demographic driven demand has driven rural homesite values higher; “Vineyard Estates” (Chorus: Bubble, what bubble? I don’t see no stinkin’ bubble?) Coastal areas are totally different Real Estate Markets Grape prices do impact vineyard and land values, especially for marginal properties, but relationship is weak. Demographic driven demand has driven rural homesite values higher; “Vineyard Estates” (Chorus: Bubble, what bubble? I don’t see no stinkin’ bubble?)

12. Quote of the Day Once a price history develops, and people hear that their neighbor made a lot of money on something, that impulse takes over, and we're seeing that in commodities and housing...Orgies tend to be wildest toward the end. It's like being Cinderella at the ball. You know that at midnight everything's going to turn back to pumpkins & mice. But you look around and say, 'one more dance,' and so does everyone else. The party does get to be more fun -- and besides, there are no clocks on the wall. And then suddenly the clock strikes 12, and everything turns back to pumpkins and mice.“ Warren Buffett Once a price history develops, and people hear that their neighbor made a lot of money on something, that impulse takes over, and we're seeing that in commodities and housing...Orgies tend to be wildest toward the end. It's like being Cinderella at the ball. You know that at midnight everything's going to turn back to pumpkins & mice. But you look around and say, 'one more dance,' and so does everyone else. The party does get to be more fun -- and besides, there are no clocks on the wall. And then suddenly the clock strikes 12, and everything turns back to pumpkins and mice.“ Warren Buffett

13. Vineyard Market Issues Consolidation ; the BIG get BIGGER Perception of Value ; Quality at Reasonable Prices Consolidation ; the BIG get BIGGER Perception of Value ; Quality at Reasonable Prices

14. Vineyard Market Issues BIG Buyers: –Professional Investors (PPV & CALPERS; REITs, and rumors of rumors of REITs) – §1031 Exchangers –Real Estate Developers Grape Crush Capacity? Replacement Costs Increasing; LAND PRICES!!!! WATER BIG Buyers: –Professional Investors (PPV & CALPERS; REITs, and rumors of rumors of REITs) – §1031 Exchangers –Real Estate Developers Grape Crush Capacity? Replacement Costs Increasing; LAND PRICES!!!! WATER

15. The Central Valley Largest Producer largest vineyards highest yields per acre lower quality = lower prices of Grapes AND Vineyards Commodity, undifferentiated

16. The Central Valley CYCLE: First to feel the pain Hits soonest, hardest and longest Market Response? PULL ‘EM, and plant ALMONDS!!

17. Average Vineyard Values; Fresno & Madera Counties Wine Grapes

18. Fresno & Madera County Wine Grapes Vineyard Values vs Average Grape Prices

20. Fresno & Madera County Wine Grapes Vineyard Sales; Prices per Acre; 1998 - 2006

21. Fresno & Madera County Wine Grapes Vineyard Sales; Prices per Acre; 2004 - 2006

22. Fresno & Madera Thompson Grapes Vineyard Sales; OVER 15 Acres; 2005 - 2006

23. Fresno & Madera Thompson Grapes Vineyard Sales; OVER 30 Acres ; 2005 - 2006

24. San Joaquin County Wine Grapes Vineyard Values vs Average Grape Prices

26. Monterey County Wine Grapes Vineyard Values vs. Average Grape Prices

27. San Luis Obispo & Santa Barbara Counties Vineyard Values vs. Average Grape Prices

28. Napa County Open Land

29. Napa County Vineyards On Resistant Rootstock Vineyard Values vs. Average Grape Prices

30. Sonoma County Vineyards On Resistant Rootstock Values vs. Price

31. Thank You!!! And, Drink more wine!