1. Before the harvest – State of the Industry
Jeff Bitter (Moderator) – Allied Grape Growers
Steve Fredricks – Turrentine Brokerage
Rob McMillan – Silicon Valley Bank
Jon Moramarco – BW166/Gomberg-Fredrikson Report
July 17, 2018

2. Setting the Stage Grape & Wine Markets Are Under Constant Evaluation
Short and Long Term Supply Evaluation
Crop Size, Bulk Market and Acreage Analysis
Short and Long Term Demand Evaluation
Consumer Behavior and Demographics
Producers/Winemakers Generally Slow to React
Varietally vs. Categorically
Growers Seek Stability
Challenges to Stability Exist
Mother Nature
Global Supply
Desire to Find Margin
Grape/Wine Spot Market Activity
Provides Directional Information
Doesn’t Necessarily Measure Stability

3. Wine Industry Stability
Stability can come in times of growth, times of regression, or amidst no change at all.
Market stability is a function of supply/demand equilibrium, regardless of specific market volume/size or direction.

4. Supply Stability
Planting at Attrition Rate
(Forecast)

5. Potential Threats To Stability
Large Crops (short-term)
Economic Regression (mid-term)
Consumer Age Demographics (long-term)

6. Premiumization vs. Commoditization
The
$10/Bottle
Divide
Premiumization: The action or process of attempting to make a brand or product appeal to consumers or buyers by emphasizing its superior quality and exclusivity.
Commoditization: The process by which goods that have economic value and are distinguishable in terms of attributes (uniqueness or brand) end up becoming simple commodities in the eyes of the market or consumers.

7. Wine Shipment Growth Rates are Slowing
Wine Shipments
Wine Shipment Growth Rates are Slowing

8. Wine Shipments Slowing
Percentage changes reported from the Gomberg-Fredrikson Report

9. Production for 2018-2020 based on average yield of 7.2 tons/acre
Supply Stability
Production for based on average yield of 7.2 tons/acre

10. Wine Shipments
What are some of the characteristics associated with slowing wine shipments?
Incredible competition and product offerings
Growth brands are essentially cannibals
Wine producers practice “just-in-time” supply management
Start/stop buying behavior
Speculative or opportunistic grape buying is limited
Enhanced efforts surface to maintain margin
Wine producers focus on value
More attention on the intersection of price/quality