Central Calif. Winegrowers and Calif. Assoc. of Winegrape

Growers 2007 Winegrape Symposium“Today, Tomorrow Today, Tomorrow

and Beyond”and Beyond”

November 28th and 29th, 2007Pardini’s, Fresno, California

SJV Grapegrowers and the Global Market Place

John CiattiManaging Partner, Ciatti Company

San Rafael, CA 415/458-5150 www.ciatti.com

24 Brokers WorldwideArgentina, Australia, Canada, Chile, France, Germany, South Africa, USA

10 within CaliforniaNorth Coast, Central Coast, Lodi, Central Valley & Foothills

Grapes, Juice, Bulk Wine, Case goods, Juice Concentrates, High Proof, Spirits, Storage & Processing

Brokers Committed to your Success

Points to Discuss

Sales / Shipment News

2007 Global Harvest Review

Export / Import Discussion

Future Outlook

Questions

Source: Gomberg Fredrickson Report

Wine Shipments YTD Wine Shipments YTD (Aug ‘07 )(Aug ‘07 )

Wine shipments +1.4% (bottled) 2.1% Overall YTD

GFA Premium Wine Index +5%Premium growth offset by losses in economy wines

Bulk Exports +11% YTD; Bottled +5% YTDPositive change, Exchange rate effects?

California

Table Wine - Varietal

YTD ’07 Annual ’06 %CHG

Chard +2.1 +5.2

Pinot Grigio +13.7 +17.9

Cab Sauv +12.9 +11.1

Merlot +4.0 +1.8

Pinot Noir +26.3 +20.3

Zinfandel +10.7 +11.6

Grocery Store Scan Data

Source: The Nieslen Company

Sales $ % CHG YTD ’07 vs YAG

Table Wine – Price Tier

YTD ’07 Annual ’06 %CHG

< $3 -.7 -.2

$3-6 +4.8 +3.6

$6-9 +3.5 +6.0

$9-12 +9.3 +11.9

$12-15 +15.5 +16.3

>$15 +15.7 +10.5

Grocery Store Scan Data Sales $ % CHG YTD ’07 vs YAG

Source: The Nieslen Company

Source: Gomberg Fredrickson Report

Wine Shipments YTD Wine Shipments YTD (Aug ‘07)(Aug ‘07)

Imports still growing faster than domesticTotal imports to US + 12% (bottled +9%, Bulk +44%) (CA > US +1%)Australia bulk down Aug ’07Spain +12%, Italy +11% and Argentina +90%Imports 30% of all wine consumed in U.S.

International

Total MarketTotal US Wine Shipments (Imp & Dom) Up 4%

US highly competitive mkt – Highest Margin

2.89

1.00

2.53

0.64

2.61

0.57

3.32

0.63

3.01

0.36

3.10

0.68

2.86

0.51

2.78

0.84

3.76

0.57

3.14

0.35

3.10

0.30

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

Tons in Millions

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Est.

Winegrape Other Crush

Source: Calif. Dept. of Food & Ag Final Grape Crush Reports

Statewide Grape Crush, 1997 – 2007 Est

Domestic Picture

Inventories – moving towards balanceOlder Reds still in system, whites better

Grape Pricing slow to improveGrape Concentrate options not as competitive as raisinsSmaller 2007 Vintage should increase optimism for 2008

USA vs. WorldChina

4%

Portugal3%

So. Africa3%

Germany3%

Australia5%

Argentina5%

Spain14%

Chile2%

USA 8%

Italy18%

France20%

Rest of World15%

USA

8% of Production

USA

5% of Vine Acres

7.66B Gals (45M tons)•Source: OIV

Global Winegrape Production 2006 vs 2007

0

1

2

3

4

5

6

7

8

9In

Millions of

U.S. Tons

Italy France Spain Germany U.S. Australia Chile Argentina SouthAfrica

NewZealand

Long

Balanced

Short

California Exports

0

10

20

30

40

50

60

70

In Millions of Gallons

2003 2004 2005 2006 2007 Est

Bulk Case

76.46M Gals94.13M Gals

91.27M Gals91.85M Gals

440,000 Tons540,000 Tons

520,000 Tons525,000 Tons

Source: Gomberg Fredrikson Report; State Board of Equalization

565,000 Tons99.3M Gals

SJV Export StrengthsWhite Zinfandel

Zinfandel

Ruby Cabernet

Colombard/Whites

Competitive Varietals

Dry White Wine2006

$0.76

$1.45

$2.10

$1.00

$1.50

$1.85

0.00

0.50

1.00

1.50

2.00

2.50

U.S. $ per Gal

Argentina Australia Calif. Chile Europe S. Africa

Dry White Wine’06 vs. ‘07

$1.05

$3.25

$2.10 $2.10 $2.00$1.90

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

U.S. $ per Gal

Argentina Australia Calif. Chile Europe S. Africa

Dry Red Wine2006

$0.95

$1.30

$2.25

$1.00

$1.50$1.70

0.00

0.50

1.00

1.50

2.00

2.50

U.S. $ per Gal

Argentina Australia Calif. Chile Europe S. Africa

Dry Red Wine’06 vs ‘07

$1.15

$3.25

$2.25$1.95 $2.00

$1.70

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

U.S. $ per Gal

Argentina Australia Calif. Chile Europe S. Africa

Cabernet Sauvignon Wine2006

$1.70$1.50

$2.50

$1.10

$2.00 $1.85

0.00

0.50

1.00

1.50

2.00

2.50

U.S. $ per Gal

Argentina Australia Calif. Chile Europe S. Africa

Cabernet Sauvignon Wine

’06 vs ‘07

$1.70

$6.00

$2.70

$2.10

$2.85

$1.90

0.00

1.00

2.00

3.00

4.00

5.00

6.00

U.S. $ per Gal

Argentina Australia Calif. Chile Europe S. Africa

Chardonnay Wine2006

$2.50

$1.45

$2.65 $2.50 $2.50$2.75

0.00

0.50

1.00

1.50

2.00

2.50

3.00

U.S. $ per Gal

Argentina Australia Calif. Chile Europe S. Africa

Chardonnay Wine’06 vs ‘07

$2.65

$4.25

$3.10

$3.80$3.50

$2.85

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

U.S. $ per Gal

Argentina Australia Calif. Chile Europe S. Africa

Major Export Mkts for SJV Wines

• Canada

• Germany

• Scandinavia

• UK

• Asia

ImportsKey Varieties

Pinot Grigio, Pinot Noir, Riesling, Traditional Varieties

Worldwide inventories move toward balance due to 2007 cropUS Mkt is the most attractive & best Mkt in WorldToday consumer is exploring and finding options for purchaseCurrency & Freight

Currency Exchange Rates

2001 $0.52

2002 $0.56

2003 $0.72

2004 $0.77

2005 $0.74

2006 $0.78

2007 $0.87

2001 $0.90

2002 $0.99

2003 $1.20

2004 $1.33

2005 $1.18

2006 $1.32

2007 $1.48

AUD 1.00 = US EURO 1.00 = US

Cost of Ocean Freight

Approx. US$0.80 per gal

What the future holdsU.S. & World has thirst for Calif Wines

Market continues to grow, support it

Activity on grapes should accelerate on demand varietiesConsolidation will continue – Global Market

We must continue to be competitive to survive

Quality is the best option – deliver depth & flavor not sugarBrand Proliferation & Growth

Thank You for your time and Attention

John CiattiManaging Partner, Ciatti

CompanyT.415/458-5150www.ciatti.com