1. Grape, Nut & Tree Fruit Expo State of the Wine & Concentrate Industry Nat DiBuduo President CEO Allied Grape Growers November 18, 2014

2. Industry Update Today’s Talking Points: Today’s Talking Points: Wine Shipments Wine Shipments Imports/Exports Imports/Exports Production/Supply Production/Supply Market Demand Market Demand Concentrate Market Concentrate Market Vineyard Sales and Pullout Activity Vineyard Sales and Pullout Activity

3. Wine Shipment Trends

5. 2014 Wine Shipment Trends: 2014 Wine Shipment Trends: California Shipments up 4% California Shipments up 4% “Big 3” Shipments are flat “Big 3” Shipments are flat Coastal Warehouse Shipments up 14% Coastal Warehouse Shipments up 14% California bottled exports up 4% California bottled exports up 4% California bulk exports down 2% California bulk exports down 2% Wine Shipment Trends

6. Imports/Exports

8. Production/Supply

10. Market Demand

12. Concentrate Market

14. Scenarios that help create a strong Thompson market: Scenarios that help create a strong Thompson market: Short supply of white winegrapes Short supply of white winegrapes Robust brandy market Robust brandy market Robust low-end wine or high-proof alcohol market Robust low-end wine or high-proof alcohol market Short Thompson crop Short Thompson crop Healthy raisin industry Healthy raisin industry Short white concentrate market Short white concentrate market High white grape juice concentrate price High white grape juice concentrate price Concentrate Market

15. White concentrate: White concentrate: Market is weak with low volume Market is weak with low volume CA grape +/-$8/gallon – but little movement CA grape +/-$8/gallon – but little movement Foreign product is available and cheaper ($6-7/gallon) Foreign product is available and cheaper ($6-7/gallon) Apple markets are surplus, which softens grape Apple markets are surplus, which softens grape Some negative health press (i.e. sugars in kids’ drinks) Some negative health press (i.e. sugars in kids’ drinks) Red concentrate: Red concentrate: Stable demand/balanced market Stable demand/balanced market Pricing at about $12+/gallon Pricing at about $12+/gallon Other countries not expanding supply – yields are lighter Other countries not expanding supply – yields are lighter California-dominated market California-dominated market Concentrate Market

16. Vineyards are being sold at record levels. Why? Vineyards are being sold at record levels. Why? Lack of desire to fight the wine market & harvest issues. Lack of desire to fight the wine market & harvest issues. Retirement is looking pretty good. Retirement is looking pretty good. Available market demand for all nut crops at better $/acre Available market demand for all nut crops at better $/acre High values High values Plenty of cash buyers Plenty of cash buyers Land with water is being sought out Land with water is being sought out Many vineyards may be farmed for 1-2 years while others are being removed immediately by growers. Many vineyards may be farmed for 1-2 years while others are being removed immediately by growers. Limiting factors are available bulldozers and trees. Limiting factors are available bulldozers and trees. We are now starting to loose our better vineyards & growers. We are now starting to loose our better vineyards & growers. The landscape of SJV agriculture is changing The landscape of SJV agriculture is changing Allied Grape Growers is here to stay! Allied Grape Growers is here to stay! Vineyard Sales & Pullout Trends

17. Take Home Message The San Joaquin Valley Grape Industry The San Joaquin Valley Grape Industry Will continue to be an important part of the wine and concentrate industry. Will continue to be an important part of the wine and concentrate industry. Will continue to provide the consumers daily wine with quality and a reasonable price. Will continue to provide the consumers daily wine with quality and a reasonable price. Will need to continue to provide better production and quality to wineries to meet consumer demands. Will need to continue to provide better production and quality to wineries to meet consumer demands. Needs pricing to step up for growers so they can be economically sustainable. If not, the result will be the continued removal of SJV wine & concentrate grapes. Needs pricing to step up for growers so they can be economically sustainable. If not, the result will be the continued removal of SJV wine & concentrate grapes.

18. For more information

19. www.alliedgrapegrowers.org Questions?