Unified Wine & Grape Symposium
State of the Industry
Supply Side Analysis
Nat DiBuduo
Allied Grape Growers
January 29, 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.
Answering Some Key Industry Questions
How did the 2013 crush size up?
A regional look at production, stated in tons crushed
Region
North Coast
Central Coast
Lodi/Clarksburg
Central Interior
Other
Total
Four-Year
Average
470,642
495,405
802,646
1,814,438
80,003
3,663,134
2012
579,852
548,444
916,138
1,884,293
89,510
4,018,237
2013
Estimate
540,000
500,000
925,000
2,000,000
85,000
4,050,000
% Change
from 2012
-7%
-9%
1%
6%
-5%
1%
% Above
Average
15%
1%
15%
10%
6%
11%
Estimating 11% over the four-year production average,
but only about 4% over the four-year average yield for the state.
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
How did the 2013 crush size up?
California Production
Statewide Grape Crush 2005-2012, with 2013 Estimate
Tons
(in Millions)
5.00
4.33
4.09
4.50
3.67
3.76
3.70
3.14
3.00
3.25
3.58
4.50
4.02
4.05
3.67
3.49
4.00
3.50
3.98
3.67
4.39
3.34
3.06
2.50
2.00
1.50
1.00
0.50
0.00
2005
2006
2007
2008
Other Crush
2009
2010
2011
Winegrape Crush
2012
2013
Est.
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Question #1:
How did the 2013 crush size up?
Answer:
Large, compared to recent average
production, but only slightly above
average when only considering yield.
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 Questions
How many acres do we really have?
State Reported
State Estimated
DPR Permitted
AGG Estimated
2014 AGG Estimate
2012 Acreage Data Comparison
Bearing
Non-Bearing Total
459,187
19,222
478,409
508,000
38,000
546,000
N/A
N/A
608,000
530,000
60,000
590,000
555,000
90,000
645,000
Notes: 2013 state data will be released in April of 2014.
DPR data may include raisin variety acreage classified as wine.
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
How many acres do we really have?
Range of Potential California Winegrape
Acres Planted (Current Year 2013/2014)
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
Three Years
Ago
Two Years One Year Ago Currently
Ago
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:
Is the market balanced now?
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Is the market balanced now?
Millions
of Tons
5.0
California Wine Shipments and Grape Production (for wine only)
2004-2012 with 2013 estimates
Inventory long, then balancing, then short and back to balance
4.5
Working thru inventory
Recession
Short crop/recovery
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2004
2005
California Wine Shipment Data Source:
The Gomberg Fredrikson Report
Updated January 2014
2006
2007
2008
Wine Shipments
2009
2010
2011
2012
Grapes Crushed for Wine
Allied Grape Growers, 2014. All rights reserved.
2013
Est.
Answering Some Key Industry Questions
Question #3:
Is the market balanced now?
Answer:
Yes. There is no wine shortage.
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Question #4:
What are growers planting today?
(other than almonds)
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
What are growers planting today?
29%
White
2013 Winegrape Vines Sold by California Nurseries
Chardonnay
13.7%
Cabernet
Sauvingon
29.4%
Pinot Grigio
5%
71%
Red
French Colombard
6%
Muscat
Alex/Canelli
1.4%
Sauvignon Blanc
<1%
Other White
2%
Other Whites Include:
Gewurztraminer
Riesling
Viognier
Other florals
Other Red
6%
Petite Verdot
Rubired
2%
2.7%
Merlot Petite Sirah
5%
3.5%
Zin/Primitivo
10%
Pinot Noir
12.5%
Allied Grape Growers, 2014. All rights reserved.
Other Reds Include:
Grenache
Cab Franc
Syrah
Malbec
Tannat
Answering Some Key Industry Questions
Question #4:
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 #5:
What are today’s issues?
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
What are today’s issues?
Grower Issues:
•Water
•The Market & Contracts
•Max tons/quality/terms
•Scheduling/Delivery
•Hang-time
•Vine Diseases/Pests
•Impact on suitability
•Labor
•Mechanization
•Sustainability
Industry Issues:
•Water
•California Promotion
•Marketing order?
•Capacity
•Fermentation/Storage
•Research & Investment
•Upcoming PD vote
•Legislation/Regulation
•Air, labor, water, etc.
•Sustainability
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Question #6:
What about the drought?
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
What about the drought?
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
What about the drought?
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
What about the drought?
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)
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
What about the drought?
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
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Question #7:
Will our domestic supply depress
import growth?
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Will our domestic supply depress import growth?
Exchange Rates (Value to $1 U.S.), January 2008 - December 2013
Chilean
Peso
Aust $
Arg Peso
Euro & Pound
1300
6.50
1200
6.00
1100
5.50
1000
5.00
900
4.50
800
4.00
700
3.50
600
3.00
500
2.50
400
2.00
300
1.50
200
1.00
100
0.50
0
Jan 08
Jul 08
Jan 09
Chilean Peso
Jul 09
Jan 10
Jul 10
Argentine Peso
Jan 11
Jul 11
Jan 12
Australian Dollar
Jul 12
Euro
Jan 13
Jul 13
0.00
Jan 14
British Pound
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Will our domestic supply depress import growth?
Imported Wine - Bottled and Bulk
(In Millions of Cases)
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Total
-1%
-5%
Total
+12%
-2%
Total
+0%
+7%
Total
+7%
+3%
Total
+16%
Total
-5%
+5%
-2%
+71%
-24%
+92%
-20%
+26%
+27%
2008
2009
Data obtained via the Gomberg Fredrikson Report
2010
2011
Bottled Imports
2012
Bulk Imports
Allied Grape Growers, 2014. All rights reserved.
2013 Tracking
Answering Some Key Industry Questions
Will our domestic supply depress import growth?
Millions
of Tons
California Grapes Crushed for Wine vs. California Wine Shipments
2005-2012
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2005
2006
California Wine Shipment Data Source:
The Gomberg Fredrikson Report.
2007
2008
2009
2010
Grapes Crushed for Wine
2011
2012
Wine Shipments
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Will our domestic supply depress import growth?
Imported Wine - Bottled and Bulk
(In Millions of Cases)
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Total
-1%
-5%
Total
+12%
-2%
Total
+0%
+7%
Total
+7%
+3%
Total
+16%
Total
-5%
+5%
-2%
+71%
-24%
+92%
-20%
+26%
+27%
2008
2009
Data obtained via the Gomberg Fredrikson Report
2010
2011
Bottled Imports
2012
Bulk Imports
Allied Grape Growers, 2014. All rights reserved.
2013 Tracking
Answering Some Key Industry Questions
Will our domestic supply depress import growth?
Imported Wine - Bottled and Bulk
(In Millions of Cases)
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Total
-1%
-5%
Total
+12%
-2%
Total
+0%
+7%
Total
+7%
+3%
Total
+16%
Total
-5%
+5%
-2%
+71%
-24%
+92%
-20%
+26%
+27%
2008
2009
Data obtained via the Gomberg Fredrikson Report
2010
2011
Bottled Imports
2012
Bulk Imports
Allied Grape Growers, 2014. All rights reserved.
2013 Tracking
Answering Some Key Industry Questions
Will our domestic supply depress import growth?
Millions
of Tons
California Grapes Crushed for Wine vs. California Wine Shipments
2005-2012
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2005
2006
California Wine Shipment Data Source:
The Gomberg Fredrikson Report.
2007
2008
2009
Grapes Crushed for Wine
2010
2011
2012
Wine Shipments
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Will our domestic supply depress import growth?
Imported Wine - Bottled and Bulk
(In Millions of Cases)
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Total
-1%
-5%
Total
+12%
-2%
Total
+0%
+7%
Total
+7%
+3%
Total
+16%
Total
-5%
+5%
-2%
+71%
-24%
+92%
-20%
+26%
+27%
2008
2009
Data obtained via the Gomberg Fredrikson Report
2010
2011
Bottled Imports
2012
Bulk Imports
Allied Grape Growers, 2014. All rights reserved.
2013 Tracking
Answering Some Key Industry Questions
Question #7:
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 #8:
What are the regional planting
trends?
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
What are the regional planting trends?
Regional Allocation of Major Winegrape Vines Sold, 2013
Cabernet
Sauvignon
High End
Mid Range
Value
A high percentage of the “Value” plantings are in Lodi
Chardonnay
Pinot
Noir
Zinfandel/
Primitivo
Petite Sirah
Merlot
French
Colombard
Pinot
Grigio
Muscats
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
What are the regional planting trends?
Breakdown of vines sold by category
Five major varieties, 2010-2013
25,000,000
20,000,000
15,000,000
High & Mid
10,000,000
Value
5,000,000
2010
2011
2012
2013
Varieties charted are Chardonnay, Cabernet Sauvignon, Merlot, Pinot Noir and Zinfandel.
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Question #8:
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 #9:
Are we headed for surplus,
balance or shortage?
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Are we headed for surplus, balance or shortage?
Crop
Year
Winegrape
AGG Estimated
Tons Crushed
Bearing
or Projected Winegrape Acres
Average
Winegrape
Yield
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
4,050,000
545,000
7.43
2014
3,885,000
555,000
7.00
2015
4,086,900
570,000
7.17
2016
4,284,000
595,000
7.20
2017
4,500,000
625,000
7.20
Allied Grape Growers, 2014. All rights reserved.
Average Statewide
Yield = 7.17 TPA
Assumes no
escalation in the
current rate of
annual vineyard
removals…….
(<2% per year).
Answering Some Key Industry Questions
Are we headed for surplus, balance or shortage?
Millions
of Tons
5.0
4.5
California Wine Shipments and Grape Production (for wine only)
2009-2012 with estimates and projections thru 2017
Grapes crushed for wine, NOT winegrapes crushed.
Average difference = 220,000+ tons
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2009
2010
California Wine Shipment Data Source:
The Gomberg Fredrikson Report
Updated January 2014
2011
2012
2013
Est.
Wine Shipments
2014
Est.
2015
Est.
2016
Est.
2017
Est.
Grapes Crushed for Wine
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Are we headed for surplus, balance or shortage?
Millions
of Tons
California Wine Shipments and Grape Production (for wine only)
2009-2012 with estimates and projections thru 2017
5.0
Forecast shows production growth
outpacing shipments in the near future
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2009
2010
California Wine Shipment Data Source:
The Gomberg Fredrikson Report
Updated January 2014
2011
2012
2013
Est.
Wine Shipments
2014
Est.
2015
Est.
2016
Est.
2017
Est.
Grapes Crushed for Wine
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Are we headed for surplus, balance or shortage?
Estimated California Bearing Winegrape Acres
From 1990 with projections
700,000
600,000
Forecast shows acreage growth beginning
to outpace the trendline by 2017.
500,000
400,000
300,000
200,000
100,000
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
Allied Grape Growers, 2014. All rights reserved.
Answering Some Key Industry Questions
Question #9:
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.
Final Thoughts
• The future looks bright for California and American grown
grapes and wine but, as always, we need to be cautious and
plan diligently to match future growth potential.
• The opportunity for grower and winery profitability stays
with us. A balanced supply will underwrite the ability for
all in the business to continuously achieve profitability.
• Sustainability continues to be an industry priority. We all
need to work together to assure the success of our
industry, our workforce, our communities and the
reasonable protection of our environment; but most of all
we have to stay focused on those things that create
economic sustainability.
Allied Grape Growers, 2014. All rights reserved.
For more information
come see us at
Booth 727
Or visit us at:
alliedgrapegrowers.org
Allied Grape Growers, 2014. All rights reserved.