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Allied Grape Growers, 2014. All rights reserved.
Winegrape Supply andMarket Outlook
Jeff BitterAllied Grape Growers
May 7, 2014
Allied Grape Growers, 2014. All rights reserved.
Today’s presentation utilizes information obtained via Allied Grape
Growers’ (AGG) annual Nursery Survey combined with critical evaluation of reports and data made available by
the State of California. Wine shipment data is courtesy of the Gomberg
Fredrikson Report. AGG’s internal operations data along with numerous pieces of anecdotal evidence was also used in the formulation of conclusions.
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions…….
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Question #1:How did the 2013 crush size up?
Allied Grape Growers, 2014. All rights reserved.
California Production
Answering Some Key Industry QuestionsHow did the 2013 crush size up?
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
2005 2006 2007 2008 2009 2010 2011 2012 2013
3.76
3.143.25
3.06
3.70 3.583.34
4.024.23
4.33
3.673.49
3.673.67
Tons(in Millions)
Statewide Grape Crush 2005-2013
Other Crush Winegrape Crush
4.09 3.98
4.694.39
Allied Grape Growers, 2014. All rights reserved.
Region 2013% Change from 2012
Three-Year Average
% Above Average
North Coast 583,012 1% 518,760 12%Central Coast 588,399 7% 508,036 16%Lodi/Clarksburg 942,546 3% 847,038 11%Central Interior 2,025,989 8% 1,904,643 6%Other 90,621 1% 85,353 6%Total 4,230,567 5% 3,863,831 9%
A regional look at production, stated in tons crushed
How did the 2013 crush size up?
Answering Some Key Industry Questions
Allied Grape Growers, 2014. All rights reserved.
2009 3,703,031 495,000 7.48
2010 3,588,985 505,000 7.11
2011 3,342,689 515,000 6.49
2012 4,018,237 530,000 7.58
2013 4,230,567 545,000 7.76
Average per acre yield from 2009-2013: 7.28
Crop Year
Winegrape Tons Crushed or Projected
AGG Estimated Bearing
Winegrape Acres
Average Winegrape
Yield
A look at average yields statewide
How did the 2013 crush size up?
Answering Some Key Industry Questions
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Question #1:How did the 2013 crush size up?
Answer:Clearly larger than recent
averages, in total production as well as in per acre yields
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Question #2:How many acres do we really
have?
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry QuestionsHow many acres do we really have?
- 5,000
10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000
Three YearsAgo
Two YearsAgo
One Year Ago Currently
Range of Potential California Winegrape Acres Planted (Current Year 2013/2014)
Allied Grape Growers, 2014. All rights reserved.
Bearing Non-Bearing TotalState Reported 469,062 25,131 494,192 State Estimated 525,000 45,000 570,000 DPR Permitted N/A N/A 620,837 AGG Estimated 545,000 75,000 620,000
2014 AGG Estimate 555,000 90,000 645,000
2013 Acreage Data Comparison
Answering Some Key Industry QuestionsHow many acres do we really have?
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Question #2:How many acres do we really
have?Answer:
Much more than the state has historically reported or estimated
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Question #3:What are growers planting today?
(other than almonds)
Allied Grape Growers, 2014. All rights reserved.
29% White
71% Red
Other Reds Include:GrenacheCab Franc
SyrahMalbecTannat
Other Whites Include:GewurztraminerRieslingViognierOther florals
What are growers planting today?
Answering Some Key Industry Questions
Cabernet Sauvingon
29.4%
Pinot Noir12.5%
Zin/Primitivo10%
Petite Sirah5%
Merlot3.5%
Rubired2.7%
Petite Verdot2%
Other Red6%
Other White2%
Sauvignon Blanc<1%
Muscat Alex/Canelli
1.4%
French Colombard6%
Pinot Grigio5%
Chardonnay13.7%
2013 Winegrape Vines Sold by California Nurseries
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Question #3:What are growers planting today?
(other than almonds)
Answer:Cabernet Sauvignon….
and a few other varieties
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Question #4:What about the drought?
Allied Grape Growers, 2014. All rights reserved.
Drought impacts different regions in different ways:
• North Coast
• Central Coast
• Northern San Joaquin Valley (Lodi)
• Central and Southern San Joaquin Valley (east side)
• Central and Southern San Joaquin Valley (west side)
What about the drought?
Answering Some Key Industry Questions
Allied Grape Growers, 2014. All rights reserved.
Viticulturally, what does it mean for 2014 and beyond?
• Functional root zone reduction (root flush minimized)• Potential for bud necrosis• Restricted spring growth• Nutrient deficiencies and/or toxicities• Potential lack of frost protection• Vine stress, increased pest and disease pressure• Water quality concerns• Potential canopy/crop load reduction
What about the drought?
Answering Some Key Industry Questions
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Question #4:What about the drought?
Answer:The drought will undoubtedly
cause concern and loss for California winegrape growers.
Production will likely be negatively impacted.
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Question #5:Will our domestic supply depress
import growth?
Allied Grape Growers, 2014. All rights reserved.
Will our domestic supply depress import growth?
0.00
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1300
Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14
Exchange Rates (Value to $1 U.S.), January 2008 - December 2013
Chilean Peso Argentine Peso Australian Dollar Euro British Pound
ChileanPeso
Aust $Arg Peso
Euro & Pound
Answering Some Key Industry Questions
Allied Grape Growers, 2014. All rights reserved.
Will our domestic supply depress import growth?
Answering Some Key Industry Questions
0.010.020.030.040.050.060.070.080.090.0
100.0
2008 2009 2010 2011 2012 2013 -Tracking
Imported Wine - Bottled and Bulk(In Millions of Cases)
Bottled Imports Bulk ImportsData obtained via the Gomberg Fredrikson Report
Total-1%
Total+12%
Total+0%
Total+7%
Total+16%
Total-5%
-5%
+27%
+92%
-2%+7% +3% -2%
+5%
-20%+26%
+71%
-24%
Allied Grape Growers, 2014. All rights reserved.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2005 2006 2007 2008 2009 2010 2011 2012
California Grapes Crushed for Wine vs. California Wine Shipments2005-2012
Grapes Crushed for Wine Wine ShipmentsCalifornia Wine Shipment Data Source:The Gomberg Fredrikson Report.
Millionsof Tons
Will our domestic supply depress import growth?
Answering Some Key Industry Questions
Allied Grape Growers, 2014. All rights reserved.
0.010.020.030.040.050.060.070.080.090.0
100.0
2008 2009 2010 2011 2012 2013 -Tracking
Imported Wine - Bottled and Bulk(In Millions of Cases)
Bottled Imports Bulk ImportsData obtained via the Gomberg Fredrikson Report
Total-1%
Total+12%
Total+0%
Total+7%
Total+16%
Total-5%
-5%
+27%
+92%
-2%+7% +3% -2%
+5%
-20%+26%
+71%
-24%
Will our domestic supply depress import growth?
Answering Some Key Industry Questions
Allied Grape Growers, 2014. All rights reserved.
0.010.020.030.040.050.060.070.080.090.0
100.0
2008 2009 2010 2011 2012 2013 -Tracking
Imported Wine - Bottled and Bulk(In Millions of Cases)
Bottled Imports Bulk ImportsData obtained via the Gomberg Fredrikson Report
Total-1%
Total+12%
Total+0%
Total+7%
Total+16%
Total-5%
-5%
+27%
+92%
-2%+7% +3% -2%
+5%
-20%+26%
+71%
-24%
Will our domestic supply depress import growth?
Answering Some Key Industry Questions
Allied Grape Growers, 2014. All rights reserved.
Will our domestic supply depress import growth?
Answering Some Key Industry Questions
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2005 2006 2007 2008 2009 2010 2011 2012
California Grapes Crushed for Wine vs. California Wine Shipments2005-2012
Grapes Crushed for Wine Wine ShipmentsCalifornia Wine Shipment Data Source:The Gomberg Fredrikson Report.
Millionsof Tons
Allied Grape Growers, 2014. All rights reserved.
0.010.020.030.040.050.060.070.080.090.0
100.0
2008 2009 2010 2011 2012 2013 -Tracking
Imported Wine - Bottled and Bulk(In Millions of Cases)
Bottled Imports Bulk ImportsData obtained via the Gomberg Fredrikson Report
Total-1%
Total+12%
Total+0%
Total+7%
Total+16%
Total-5%
-5%
+27%
+92%
-2%+7% +3% -2%
+5%
-20%+26%
+71%
-24%
Will our domestic supply depress import growth?
Answering Some Key Industry Questions
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Question #5:Will our domestic supply depress
import growth?
Answer:Yes. Based on market behavior in
the recent past, it should.
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Question #6:What are the regional planting
trends?
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry QuestionsWhat are the regional planting trends?
Regional Allocation of Major Winegrape Vines Sold, 2013
High End
Mid Range
Value
FrenchColombard
Muscats
PinotGrigio
Chardonnay
Zinfandel/Primitivo
PinotNoir
Merlot
CabernetSauvignon
Petite Sirah
A high percentage of the “Value” plantings are in Lodi
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry QuestionsWhat are the regional planting trends?
Varieties charted are Chardonnay, Cabernet Sauvignon, Merlot, Pinot Noir and Zinfandel.
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
2010 2011 2012 2013
Breakdown of vines sold by categoryFive major varieties, 2010-2013
High & Mid
Value
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Question #6:What are the regional planting
trends?
Answer:Coastal planting of major varietals has increased
substantially. Interior planting has shifted north to Lodi.
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Question #7:Are we headed for surplus,
balance or shortage?
Allied Grape Growers, 2014. All rights reserved.
2009 3,703,031 495,000 7.48
2010 3,588,985 505,000 7.11
2011 3,342,689 515,000 6.49
2012 4,018,237 530,000 7.58
2013 4,230,567 545,000 7.76
2014 3,774,000 555,000 6.80
2015 4,132,500 570,000 7.25
2016 4,343,500 595,000 7.30
2017 4,581,250 625,000 7.33
Crop Year
Winegrape Tons Crushed or Projected
AGG Estimated Bearing
Winegrape Acres
Average Winegrape
Yield
Are we headed for surplus, balance or shortage?
Answering Some Key Industry Questions
Average Statewide Yield = 7.28 TPA
Assumes no escalation in the current rate of annual vineyard removals…….(<2% per year).
Allied Grape Growers, 2014. All rights reserved.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2009 2010 2011 2012 2013 2014Est.
2015Est.
2016Est.
2017Est.
California Wine Shipments and Grape Production (for wine only)2009-2013 with estimates and projections thru 2017
Wine Shipments Grapes Crushed for Wine
Millionsof Tons
Forecast shows production growth outpacing shipments in the near future
Are we headed for surplus, balance or shortage?
Answering Some Key Industry Questions
Allied Grape Growers, 2014. All rights reserved.
Are we headed for surplus, balance or shortage?
Answering Some Key Industry Questions
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Estimated California Bearing Winegrape AcresFrom 1990 with projections
Allied Grape Growers, 2014. All rights reserved.
Are we headed for surplus, balance or shortage?
Answering Some Key Industry Questions
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Estimated California Bearing Winegrape AcresFrom 1990 with projections
Forecast shows acreage growth beginning to outpace the trendline by
2017.
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Question #7:Are we headed for surplus,
balance or shortage?
Answer:We are not forecasting a shortage
in the foreseeable future
Allied Grape Growers, 2014. All rights reserved.
Questions?
You may download or view a copy of this presentation at:www.alliedgrapegrowers.org