Vines of Mendoza San Francisco September 2013

Nora Z. Favelukes

Wine Consumption Adults per Capita / Population

Adult Population Gallons per Adult 134 1.05 147 1.78 222 211 194 184 164 173 154 2.98 2.81 2.58 2.46 2.29 2.13 1.96

For the 19 th year in a row wine sales have continued to grow in the US market, at a rate of 2.9% in 2012

228 3.08 70 75 80

Source: Census Bureau – Wine Information Group

85 90 95 00 05 10 12 Source: Census Bureau, Beverage Information Group

2012: 228 Million Adults

(millions by segment)

100 78 50 Beer / Liquor Source: Wine Market Council 2012 Non Drinkers Wine Drinkers

Consumers: Core vs. Marginal 1994 - 2012

(Percentage by segment)

Source: Wine Market Council 2012

Core Wine Drinkers by Generation, 2012

(Percent by generation)

40

Older Millennials

19%

Younger Millennials

9% 28 Source: Wine Market Council 2012 Millennial 20 Gen X Baby Boomer 67+ 12

Consumers by Gender

( Percentage )

Source: Wine Market Council 2012

Wine Shipments by Volume 9 L Cases

January / July – 2012/2013 18,000.00

16,000.00

14,000.00

12,000.00

10,000.00

1% 8,000.00

6% 6,000.00

14% 4,000.00

7% 2,000.00

17% 0.00

Italy France Australia Argentina 2012 15,557.20

4,941.60

7167.6

3,321.80

2013 15,685.90

5,622.00

7562.2

3,561.60

Source: U.S. Department of Commerce, Gomberg, Fredrikson & Associates New Zealand 1,518.70

1,779.80

13

%

Spain 2,517.70

2,839.90

10% Chile 3,449.60

3,806.90

Imported Wine Shipments by Value

January/July - 2012/2013 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 6% 12% 5% 12% 19% 0 Italy France Australia Argentina 2012 2013 696,153 739,491 439,506 491,405 221,207 233,049 131,522 146,751 Source: U.S. Department of Commerce, Gomberg, Fredrikson & Associates New Zealand 105,281 125,169 15% Spain 108,457 125,071 10% Chile 112,500 123,507

Bulk Wine Exports to the U.S.

Source: U.S. Department of Commerce, Gomberg, Fredrikson & Associates

Nielsen Report FDL (Food, Drug & Liquorstores)

Argentine Wine Sales:

4 Weeks period ending on August 17, 2013: Volume +7.5% Dollars + 10.2% % 52 weeks ending on August 17, 2013 Volume 6.3% Dollars 12.6% Retail wine numbers are strong at $13.3 billion in 2012 (Nielsen)

Source: Nielsen Report FDL (Food, Drug & Liquorstores) August 2013

Nielsen Report FDL (Food, Drug & Liquorstores)

Malbec Wine Sales:

4 Weeks period ending on August 17, 2013: Volume +12.1% Dollars + 11.5% 52 weeks ending on August 17, 2013 Volume 13% Dollars 12.7%

Source: Nielsen Report FDL (Food, Drug & Liquorstores) August 2013

U.S. Imports: Bottled Dessert and Table Wines Over 14% 2012 -2013 Country 2012 Value in Dollars 2013 Change % Shipment in Cases 2012 2013 Change % Italy

$ 43,517.00 $ 57,353.00 32% 293.1

406.3

39%

Argentina $ 38,606.00 $ 44,180.00 14% France Spain

$ 31,576.00 $ 42,654.00 $ 25,089.00 $ 31,334.00 35% 25% Australia $ 32,693.00 $ 29,522.00 -10%

Portugal

$ 20,917.00 $ 23,185.00 11%

Chile

$ 9,000.00 $ 10,895.00 21%

Source: U.S. Department of Commerce, Gomberg, Fredrikson & Associates 610.3

212.2

395.1

411.8

217.6

118.3

691.9

13%

263.2

486 24% 23% 336.2

235 138.8

-18% 8% 17%

Top 15 Varietals Exported to the U.S

August 2012-2013 Varietal

Malbec Torrontes

US$ FOB

$ 188,629,731 Generic Reds $ 20,659,091 $ 6,761,368 $ 2,710,940 $ 1,809,591

9 Liter Cases

4,817,697 588,113 397,255 212,382 186,919 129,753 55,250 55,969 80,370 42,145 45,648 38,713 21,797 29,293 39,633

Source: Top Varietals Exported to US 2012-2013 – Vinos de Argentina US$ FOB Per Case

$ 39.15 $ 40.89 $ 52.00 $ $ 35.19 36.17 $ 24.54 $ 49.07 $ 32.33 $ 22.11 $ 37.61 $ $ 30.39 34.73 $ $ $ 53.36 36.36 25.90

Imported Table Wine Shipments

% Change by Color YTD to June, 2013 Source: U.S. Department of Commerce, Gomberg, Fredrikson & Associates

Malbec

 Millennial generation wine of choice  It gave Argentina a unique identity in the world  Critical success factors for sommeliers: competitive pricing and delivering taste/quality  Sold at all price levels:   Retail mostly in the $ 8 - $30 a bottle range Restaurant mostly in the $30 -$100 a bottle range.

Source: Bordeaux Management School – BEM – France

Argentine Malbec Exports to the US: 2004 - 2012 YEAR US$ FOB CHANGE SHARE OVER TOTAL

2004 2005 2006 2007 2008 2009 2010 14,714,189 21,038,556 33,144,822 49,800,539 79,999,908 112,489,268 147,173,588 /// 43.0% 57.5% 50.3% 60.6% 40.6% 30.8% 35.1% 36.7% 43.8% 48.9% 54.6% 59.3% 65.1% 2011 173,204,448 17.7% 67.3% 2012 187,919,808 8.5% 68.7%

Source: Argentina Exports Statistics from Wines of Argentina 9 LITERS CASES CHANGE

477,569 626,572 901,645 1,314,011 2,114,945 3,159,340 4,164,909 4,581,445 4,713,094 /// 31.2% 43.9% 45.7% 61.0% 49.4% 31.8% 10.0% 2.8%

SHARE OVER TOTAL

25.5% 27.8% 34.9% 40.3% 47.8% 54.3% 59.9% 64.7% 67.3%

Argentine Malbec Exports to the US: 2004 - 2012 200 000 000 180 000 000 160 000 000 140 000 000 120 000 000 100 000 000 80 000 000 60 000 000 40 000 000 20 000 000 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 9 Liters Cases Source: Argentina Exports Statistics from Wines of Argentina U$D Value

Bottled Wine Exports to U.S.

Price Segments 2012-2013 Price Segment 2012

SEG 1 - Px ≤ US$ 18 SEG 2 - US$ 18 < Px ≤ US$ 29 14,860,149 80,072,708 SEG 3 - US$ 29 < Px ≤ US$ 40 90,590,884 SEG 4 - US$ 40 < Px ≤ US$ 90 132,239,689

US$ FOB 2013 Change %

-38.30%

VOLUME (9 LITER CASES) 2012 2013 Change %

986,285 601,962 -39.00% 9,174,706 77,999,371 -2.60% 3,387,441 3,270,468 -3.50% 102,196,844 12.80% 2,632,397 2,964,684 12.60% 139,464,470 5.50% 2,394,692 2,557,665 6.80% SEG 5 - Px > US$ 90

TOTAL BOTTLED WINE

30,910,987 31,012,811 0.30% 215,273 227,534 5.70%

348,674,417 359,848,202 3.20% 9,616,087 9,622,311 0.10% Source: CAUCASIA Wine Thinking

More wine is being sold in drug stores and other chains such as Walgreens and Dollar General The sweet spot for wine pricing is $10 – $14.99

Online wine sales are finally coming into their own, with 74% of consumers purchasing wine from winery websites and 68% from Wine.com

Source: Trends in the US Wine Industry in 2013 – Liz Thach MW

The hottest varietals are still Moscato, Malbec and sweet red blends.

Americans still enjoy buying wine from Argentina, New Zealand and Spain, but wine purchases have declined from Australia and Germany.

Source: Trends in the US Wine Industry in 2013 – Liz Thach MW

The US still imports almost 30% of all wine sold in the country.

Top 25 Argentine Exporters to the U.S.

$ FOB / 9 L Winery $FOB 9 L CASES CASE Esmeralda Peñaflor Trivento Escorihuela Norton Puerto Ancona Chandon Zuccardi Dominio Del Plata Doña Paula 

$43,241,584.22 $24,426,798.69 $11,935,159.95 $10,617,613.55 $ 9,106,814.16 $ 8,249,660.88 1,060,035 871,411 461,902 262,260 187,648 155,553 $ 40.79 $ 28.03 $ 25.84 $ 40.49 $ 48.53 $ 53.03 $ 8,029,701.79 $ 7,535,341.89 138,397 210,626 $ 58.02 $ 35.78 $ 7,304,834.35 140,055 $ 52.16 $ 6,081,209.00 134,048 $ 45.37

Source: Top Argentine Exporters of Argentina – Vinos de Argentina

Top 25 Argentine Exporters to the U.S. – Cont’d Winery $FOB 9 L CASES $ FOB / 9 L CASE Diageo Argentina Finca La Celia Valentin Bianchi Lavaque Pascual Toso Leoncio Arizu Salentein Flichman Fincas Patagonicas La Rural Florida Del Tupungato Bodegas Fabre Pernod Ricard Alta Vista Viña Cobos

$ 4,939,806.40 82,784.00 $ 4,498,478.51 211,221.00 $ 4,436,676.70 171,635.00 $ 4,102,160.32 130,291.00 $ 3,975,821.42 110,451.00 $ 3,740,393.53 $ 3,541,245.24 74,549.50 99,594.00 $ 3,419,196.67 98,040.00 $ 3,030,063.80 $ 2,981,288.01 82,172.83 77,181.33 $ 59.67 $ 21.30 $ 25.85 $ 31.48 $ 36.00 $ 50.17 $ 35.56 $ 34.88 $ 36.87 $ 38.63 $ 2,890,177.99 19,101.08 $ 151.31 $ 2,819,394.01 $ 2,757,542.24 $ 2,612,446.82 $ 2,587,115.00 64,859.00 71,468.00 49,700.83 31,457.17 $ 43.47 $ 38.58 $ 52.56 $ 82.24

Source: Top Argentine Exporters of Argentina – Vinos de Argentina