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THE VINEGAR INSTITUTE 2017 ANNUAL MEETING
WORLD WINE SUPPLY OUTLOOK
MARCH 5, 2017
GLOBALLY BASED TO BUILD YOUR BUSINESS WORLDWIDE
DEDICATED BROKERS IN 8 COUNTRIES
INTRODUCTION
- CIATTI COMPANY
- BROKER PERSPECTIVE
- INFO + DATA = MARKET
INTELLIGENCE
- TODAY’S GOAL
- PAST PRESENTATION – 2011 & 2015- ACREAGE / PRODUCTION / CONSUMPTION
- 2017 – WHAT’S TRENDING TODAY
2014 WORLD WINE PRODUCTION: 270 M HL
80% OF THE WORLD’S WINE IS PRODUCED BY TEN COUNTRIES
NORTHERN & SOUTHERN HEMPISHERE COMPARISON
0
5
10
15
20
25
30
35
40
2010 2011 2012 2013 2014 2015 AVERAGE
IN M
ILLI
ON
S O
F U
S TO
NS
HARVEST YEAR
Total Southern Northern
PLANTED SURFACE AREA vs WORLD WINE PRODUCTION
230
240
250
260
270
280
290
300
7,300
7,400
7,500
7,600
7,700
7,800
7,900
8,000
Mill
ion
s o
f h
ecto
liter
s
Tho
usa
nd
s o
f h
ecta
res
Area Under Vines ProductionSource: OIV
GLOBAL ACREAGE TRENDSCOUNTRY 2010-2015 % CHANGE PLANTING
SPAIN 6 ↓ HIGHER PRODUCTIVITY
FRANCE 2 ↓ REMOVED YIELD RESTRICTIONS
ITALY 8 ↓
CHINA 42 ↑CABERNET SAUVIGNON,
CHARDONNAY, MERLOT
USA 4 ↑REMOVAL OF GENERICS / PLANTINGS
OF VARIETALS
ARGENTINA 3 ↑ MALBEC
CHILE 3 ↑CABERNET SAUVIGNON, SAUVIGNON
BLANC, MERLOT, PINOT NOIR
AUSTRALIA 13 ↓ REMOVAL OF GENERICS
SOUTH AFRICA 2 ↓
GERMANY 0 ↔
NEW ZEALAND 12 ↑SAUVIGNON BLANC, PINOT NOIR
Source: OIV
NORTHERN HEMPISPHERE
ITALY FRANCE SPAIN
ITALY
- LARGEST WORLD PRODUCER IN 2016
- PINOT GRIGIO MARKET BALANCED – DOC
- LOWER YIELDS, NO BLENDING OPTIONS
- PROSECCO CONTINUES TO PERFORM
- HOT ITEM
- LARGEST EXPORTER TO THE WORLD
’12 ’13 ’14 ’15 ’16
6.9 M 8.2 M 6.8 M 7.5 M 7.2 M
FRANCE
- LOSING AT THE LOW PRICE END TO SPAIN
- PROVENCE ROSE IS THE BRIGHT SPOT
- BORDEAUX – LARGE HARVEST
- BURGUNDY – TOUGH HARVEST
- BOTTLED GROWTH TO USA
- DECLINING DEMAND LOCALLY
’12 ’13 ’14 ’15 ’16
6.3 M 6.4 M 7.2 M 7.3 M 6.6 M
SPAIN
- SUBSIDIES ARE OVER FOR DISTILLATION / BIGGER CROPS DUE
TO SUBSIDY PROGRAM
- GENERIC VERSUS VARIETAL
- POTENTIALLY OVERPLANTED GIVEN GENERIC DEMAND
- CONTINUED OVERSUPPLY EXPECTED
- EXPORTER OF PRODUCT – FRANCE, GERMANY, & ITALY NOW
CHINA
’12 ’13 ’14 ’15 ’16
4.7 M 6.9 M 6.7 M 6.4 M 6.4 M
SOUTHERN HEMPISPHERE
CHILE AUSTRALIA
SOUTH AFRICA
ARGENTINA
CHILE
- FREE TRADE WITH MANY COUNTRIES: INCLUDING CHINA
- QUALITY CONTINUES TO IMPROVE
- LARGE RED WINE BULK SUPPLIERS / FOCUSED ON EXPORT
- DIFFICULT 2016 HARVEST – RAINS
- STRONG PLAYER IN CS, ME, PN, & SB
- DECADE OF VINEYARD MODERIZATION & PLANTING
’12 ’13 ’14 ’15 ’16
1.9 M 2.0 M 1.5 M 2.0 M 1.58 M
ARGENTINA
- BIG DOMESTIC MARKET / GRAPE CONCENTRATE
- QUALITY IMAGE
- MALBEC – PRICES UP
- GENERICS – DOMESTIC
- NEW GOVERNMENT IN 2016
- INFLATION AN ISSUE
- 2016 ISSUES WITH QUALITY & QUANTITY – 2017 BETTER
’12 ’13 ’14 ’15 ’16
2.5 M 3.0 M 2.9 M 2.6 M 1.9 M
AUSTRALIA
- REDS, CHARDONNAY & PINOT GRIGIO ARE
STRENGTHS
- ACRES MOVING INTO ALMONDS / DISAPPEARING
GRAPE ACREAGE
- UK, USA, CANADA ARE TRADITIONAL MARKETS
- CHINA MAKES ALL THE DIFFERENCE / FREE TRADE
’12 ’13 ’14 ’15 ’16
1.8 M 2.0 M 1.9 M 1.8 M 2.0 M
SOUTH AFRICA
- DEMAND UK/GERMAN DRIVEN
- STEADY PRODUCTION FOR YEARS
- DRY WHITE, CHARDONNAY, MERLOT, ROSÉ
- MARKET SLUGGISH OVERALL
- CURRENCY / EXCHANGE
’12 ’13 ’14 ’15 ’16
1.5 M 1.6 M 1.7 M 1.6 M 1.5 M
NEW ZEALAND
- PREMIUM PRICING SB & PN
- LIMITED PRODUCTION – NEED PLANTABLE ACRES
- BIG HARVEST – BIG DEMAND
- USA – LARGEST MARKET
- RECENT EARTHQUAKE
’12 ’13 ’14 ’15 ’16
296,000 380,000 490,000 359,000 480,000
USA
USA
’12 ’13 ’14 ’15 ’16
4.0 M 4.2 M 3.9 M 3.7 M 4.0 M
CALIFORNIA
- VINEYARD ACRES IN TRANSITION
- GROWTH OF PREMIUM SEGMENT
- DECLINE OF VALUE BRANDS
- CONSOLIDATION – BIG GET BIGGER
USA
- WASHINGTON – 270,000 TONS
- OREGON – 80,000 TONS
- NEW YORK – 40,000 TONS
- BONDED WINERIES – 9,000 TOTAL
- PREMIUM FOCUS – VARIETALS
- SUPPLIERS TO DOMESTIC MARKET
WINERIES – LARGEST
- TOP 10:
- GALLO – 75M
- THE WINE GROUP – 57M
- CONSTELLATION – 51M
- TRINCHERO – 19M
- TREASURY – 15M
- BRONCO – 10M
- DELICATO – 9M
- STE. MICHELLE (WA) – 9M
- JACKSON FAMILY – 6M
- FETZER-CONCHA – 3M
US MARKET
- TOP BRANDS:
- BOGLE
- FRANCIS FORD COPPOLA
- J. LOHR
- JOSH
- APOTHIC
- MICHAEL DAVID
- NAKED
- BAREFOOT
- MEIOMI
- BOTA BOX / BLACK BOX
- DUCKHORN
- JOEL GOTT85%
ALL OTHER = 15%
SALES & CONSUMPTION
SALES & CONSUMPTION
- WORLD – OLD WORLD VS NEW WORLD
- USA
- GROWTH – BIGGEST & BEST MARKET
- PREMIUMIZATION
- STRONG ECONOMY
- DISTRIBUTION SYSTEM – DIRECT TO CONSUMER
- CHAIN STORE SALES
- PACKAGING OPTIONS
TOP 10 WINE CONSUMERS
Source: OIV
USATIMES ARE GOOD!! TOTAL GROWTH 4.3%
Ultra Premium ($15 plus)
Premium ($9-15)
Value($2-9)
GROWTH % OF MARKET
+ 11.0%
+ 7.5%
- 2.0%
15.5%
37.0%
47.5%
USA
NIELSEN HIGHLIGHTS
- GLASS – 750 ML + 5%
- PREMIUM BOX – 3L + 14%
- RED WINE + 6%
- BLUSH = ROSE + 6%
IMPORTS
- ITALY + 6%
- FRENCH + 15%
- NEW ZEALAND + 15%
VARIETIES
- CHARDONNAY + 2.8%
- CABERNET SAUVIGNON + 7.3%
- RED BLENDS + 11.2%
- SWEET RED + 12.5%
- PINOT NOIR + 9.4%
- SAUVIGNON BLANC + 12.1%
TRENDS & FUTURE OUTLOOK
- M + A – BRANDS & LANDS
- GLOBAL ACREAGE – CHANGING
- MILLENNIALS – OUR FUTURE
- COMPETITION – SHARE OF MOUTH
- CHINA – THE GREATEST UNKNOWN??
- FUTURE LOOKS GOOD
LASTLY…
- BEER MARKET – DECLINING OVERALL
- PREMIUM GROWTH – (+8%) – 26M BARRELS
- CRAFT BEERS – HOPS DRIVEN
- MEXICAN BREWS – STEADY GROWTH
- CONSUMER
- YOUNG & CURIOUS
- EXPLORERS
- 5,000 BREWERIES IN US
- TASTING
CIATTI CRAFT BEVERAGESJOHN FEARLESS
