state of the industry: today tomorrow unified wine grape symposium nat dibuduo allied grape growers january 26, 201

3. Market Factors Recession (global & domestic) Consumer behavior Global supply (imports/exports) Industry Planning Crush report and acreage report Planting/supply needs for future Availability of reliable information (both domestically and globally) Investment in facilities (capacity) Grower/Winery Relationships Cultural practices � needs vs. costs Vineyard/Farming plans Price determination (when & how) Changing quality standards Harvest determination (objective vs. subjective)

4. Process Issues (Vitculture/Winemaking/Marketing) Sustainability - Self assessment vs. certification program Invasive Pests � EGVM, LBAM, GWSS, Mealybug Promotion of domestic wine � �California� appellation (sustainability is only step one) Research & investment in viticulture & winemaking to compete globally Assessments, Regulation & Taxation Mandatory assessments Ag issues within the legislature � Immigration, 40 hour week, card check, etc. Label issues before TTB Drawbacks The ongoing pursuit of new & higher excise tax

30. As always, the wine industry faces many challenges from market issues, to planning and relationship issues to taxation/regulation and process issues. The 2010 winegrape crop was likely below average overall. This downward swing in production, coupled with increasing wine shipments could go a long way toward re-establishing overall market balance. Planting has slowed significantly at the high end. Most new vineyards in the state have been planted in the interior regions for value-priced wines. Growers are planting mostly red grapes, but popular varieties for planting include: Cabernet Sauvignon, Chardonnay, Rubired & Muscat Alexander. Costs of acquisition/development/production continue to increase. Today�s market prices are mostly economically unsustainable.