Grape, Raisin and Nut Expo State of the Winegrape Industry Jeff Bitter Allied Grape Growers

Grape, Raisin and Nut Expo State of the Winegrape Industry Jeff Bitter Allied Grape Growers November 14, 2013

Answering Some Key Industry Questions…….

Answering Some Key Industry Questions • Question#1: Just how big was this crop? • Related Questions: • Are we in supply/demand balance? • Will our domestic supply depress imports?

Answering Some Key Industry Questions Just how big was this crop? Production Analysis A regional look at production Stated in tons crushed

Answering Some Key Industry Questions Just how big was this crop? California Production

Answering Some Key Industry Questions • Question#1: Just how big was this crop? • Related Questions: • Are we in supply/demand balance going forward? • Will our domestic supply depress imports?

Answering Some Key Industry Questions Are we in supply/demand balance going forward? 3.93 3.87 3.80 3.74 Projected Need:

Answering Some Key Industry Questions Are we in supply/demand balance going forward?

Answering Some Key Industry Questions Are we in supply/demand balance going forward? 3.93 3.87 3.80 3.74 Projected Need:

Answering Some Key Industry Questions Are we in supply/demand balance going forward? Balanced 2014-2016: The forecasted winegrape crush less 220,000 tons for other uses

Answering Some Key Industry Questions • Question#1: Just how big was this crop? • Related Questions: • Are we in supply/demand balance going forward? • Will our domestic supply depress imports?

Answering Some Key Industry Questions Will our domestic supply depress imports?

The Answers: • Question#1: Just how big was this crop? • BIG….. About 10% above recent history • Related Questions: • Are we in supply/demand balance? • YES • Will our domestic supply depress imports? • YES – it should based on inventory and exchange rates, but the timing on bulk and vs. bottled may be different.

Answering Some Key Industry Questions • Question#2: What are current planting trends? • Related Questions: • What varieties are hot? • What areas are being planted? • Are we over-planting?

Answering Some Key Industry Questions Each January, Allied Grape Growers conducts a confidential & voluntary survey of California grapevine nurseries to determine up-to-date planting trends. Data is aggregated for the purpose of identifying what is being planted, how much, and where.

Answering Some Key Industry Questions What varieties are hot? • Annual Vine Sales Leaders, Based on AGG Nursery Surveys: • 2012 - Cabernet Sauvignon, then French Colombard • 2011 - Muscat of Alexander, then Cabernet Sauvignon • 2010 - Cabernet Sauvignon, then Chardonnay & Rubired • 2009 - Chardonnay, then Cabernet Sauvignon • 2008 - Pinot Noir, then Chardonnay

Answering Some Key Industry Questions What varieties are hot? 39% White 61% Red Other Reds Include: Grenache Petite Verdot Cab Franc Rubired Syrah Barbera Ruby Cab Tempranillo Other Whites Include: Gewurztraminer Riesling Viognier Sauvignon Blanc

Answering Some Key Industry Questions What areas are being planted? Note the amount of green on this chart vs. burgundy or gray.

Answering Some Key Industry Questions What areas are being planted? Vine sales began trending toward the coast in 2012

Answering Some Key Industry Questions Are we over-planting? Growing Demand; Moderate Expansion Demand Good, but Acreage Peaks; Oversupply Acreage stalls; Oversupply Chronic Growing Demand, but Rapid Expansion Growing Demand; Moderate Expansion No Growth from the 1980s

Answering Some Key Industry Questions Are we over-planting? Growing Demand; Moderate Expansion Growing Demand; Moderate Expansion

Answering Some Key Industry Questions Are we over-planting? Growing Demand; Rapid Expansion

Answering Some Key Industry Questions Are we over-planting? CAUSED THIS

Answering Some Key Industry Questions Are we over-planting? THIS CAUSED THIS

Answering Some Key Industry Questions Are we over-planting? Are we Entering a Period of Rapid Expansion? Growing Demand; Rapid Expansion

Answering Some Key Industry Questions Are we over-planting? We know this is coming for 2015 & 2016, but is it rapid expansion? Growing Demand; Rapid Expansion

Answering Some Key Industry Questions Are we over-planting? Only if we Continue the Recent Planting Trend

Answering Some Key Industry Questions Are we over-planting? Moderate Planting Matches the Trend Moderate Planting Defined: +/-15,000 NET new acres per year

The Answers: • Question#2: What are current planting trends? • Cab in the coast and slowing in the interior • Related Questions: • What varieties are hot? • Cabernet Sauvignon and some SJV generics • What areas are being planted? • Previously the interior, now the coast • Are we over-planting? • Coast – not likely; Interior – possibly

Answering Some Key Industry Questions • Question#3: What does the future hold? • Related Questions: • Will California winegrape prices be stable? • What happened to Thompsons?!?! • Will today’s higher grape prices slow sales?

Answering Some Key Industry Questions What does the future hold?

Answering Some Key Industry Questions Will California winegrape prices be stable? Three major factors driving price (demand) over the last 2-3 years. #3: The relatively weak dollar #2: Competition from alternative crops (nuts) #1: Supply planning for future (shortage)

Answering Some Key Industry Questions What happened to Thompsons?!?!

Answering Some Key Industry Questions What happened to Thompsons?!?! Major factors driving Thompson price #4: Winery use – Wine, Brandy, Alcohol #3: Concentrate (Demand and Inventory) #2: Crop size #1: Raisin industry demand

Grape, Raisin and Nut Expo State of the Winegrape Industry Jeff Bitter Allied Grape Growers