Transcript Document 7534681

Central Calif. Winegrowers and
Calif. Assoc. of Winegrape Growers
2007 Winegrape Symposium
“Today, Tomorrow and
Beyond”
November 28th and 29th, 2007
Pardini’s, Fresno, California
SJV Grapegrowers and
the Global Market Place
John Ciatti
Managing Partner, Ciatti Company
San Rafael, CA
415/458-5150
www.ciatti.com
Brokers Committed to your Success
24 Brokers Worldwide
Argentina, Australia, Canada, Chile, France, Germany,
South Africa, USA
10 within California
North Coast, Central Coast, Lodi, Central Valley &
Foothills
Grapes, Juice, Bulk Wine, Case goods, Juice
Concentrates, High Proof, Spirits, Storage &
Processing
Points to Discuss
Sales / Shipment News
2007 Global Harvest Review
Export / Import Discussion
Future Outlook
Questions
Wine Shipments YTD (Aug ‘07 )
California
Wine shipments +1.4% (bottled) 2.1% Overall
YTD
GFA Premium Wine Index +5%
Premium growth offset by losses in economy wines
Bulk Exports +11% YTD; Bottled +5% YTD
Positive change, Exchange rate effects?
Source: Gomberg
Fredrickson Report
Grocery Store Scan Data
Sales $ % CHG YTD ’07 vs YAG
Table Wine - Varietal
YTD ’07
Annual ’06 %CHG
Chard
Pinot Grigio
Cab Sauv
Merlot
Pinot Noir
Zinfandel
Source: The Nieslen Company
+2.1
+13.7
+12.9
+4.0
+26.3
+10.7
+5.2
+17.9
+11.1
+1.8
+20.3
+11.6
Grocery Store Scan Data
Sales $ % CHG YTD ’07 vs YAG
Table Wine – Price Tier
YTD ’07
Annual ’06 %CHG
< $3
-.7
-.2
$3-6
+4.8
+3.6
$6-9
+3.5
+6.0
$9-12
+9.3
+11.9
$12-15 +15.5
+16.3
>$15
+10.5
+15.7
Source: The Nieslen Company
Wine Shipments YTD (Aug ‘07)
International
Imports still growing faster than domestic
Total imports to US + 12% (bottled +9%, Bulk
+44%) (CA > US +1%)
Australia bulk down Aug ’07
Spain +12%, Italy +11% and Argentina +90%
Imports 30% of all wine consumed in U.S.
Total Market
Total US Wine Shipments (Imp & Dom) Up 4%
US highly competitive mkt – Highest Margin
Source: Gomberg
Fredrickson Report
Statewide Grape Crush, 1997 – 2007 Est
0.57
0.63
1.00
4.50
4.00
0.36
0.64
0.68
0.51
0.57
0.35
0.84
3.50
0.30
Tons in
Millions
3.00
2.50
2.00
2.89
1.50
3.32
2.53
2.61
3.76
3.01
2.86
3.10
2.78
3.14
3.10
1.00
0.50
0.00
1997
1998
1999
2000
2001
2002
Winegrape
Source: Calif. Dept. of Food & Ag Final Grape Crush Reports
2003
2004
Other Crush
2005
2006
2007 Est.
Domestic Picture
Inventories – moving towards
balance
Older Reds still in system, whites
better
Grape Pricing slow to improve
Grape Concentrate options not as
competitive as raisins
Smaller 2007 Vintage should
increase optimism for 2008
USA
8% of
Production
USA vs. World
China
4%
USA
8%
Spain
14%
Italy
18%
USA
5% of Vine Acres
France
20%
Rest of World
15%
7.66B Gals (45M tons)
•Source: OIV
Argentina
5%
Germany
3%
Australia
5%
So. Africa
3%
Portugal
3%
Chile
2%
Global Winegrape Production 2006 vs 2007
9
I
n
M
i
l
l
i
o
n
s
o
f
Long
Balanced
Short
8
U
.
S
.
7
T
o
n
s
4
6
5
3
2
1
0
Italy
France Spain Germany U.S. Australia Chile Argentina South New
Africa Zealand
California Exports
In Millions of Gallons
70
60
540,000 Tons
440,000 Tons 94.13M Gals
76.46M Gals
520,000 Tons
91.27M Gals
50
525,000 Tons
91.85M Gals
565,000 Tons
99.3M Gals
40
30
20
10
0
2003
2004
2005
Bulk
Case
Source: Gomberg Fredrikson Report; State Board of Equalization
2006
2007 Est
SJV Export Strengths
White Zinfandel
Zinfandel
Ruby Cabernet
Colombard/Whites
Competitive Varietals
Dry White Wine
2006
2.50
$2.10
$1.85
U.S. $ per Gal
2.00
$1.50
$1.45
1.50
$1.00
1.00
$0.76
0.50
0.00
Argentina Australia
Calif.
Chile
Europe
S. Africa
Dry White Wine
’06 vs. ‘07
3.50
$3.25
U.S. $ per Gal
3.00
2.50
$2.10
$2.10
$2.00
2.00
$1.90
1.50
$1.05
1.00
0.50
0.00
Argentina Australia
Calif.
Chile
Europe
S. Africa
Dry Red Wine
2006
2.50
$2.25
U.S. $ per Gal
2.00
$1.70
$1.50
$1.30
1.50
$1.00
$0.95
1.00
0.50
0.00
Argentina Australia
Calif.
Chile
Europe
S. Africa
Dry Red Wine
’06 vs ‘07
3.50
$3.25
U.S. $ per Gal
3.00
2.50
$2.25
$1.95
2.00
1.50
$2.00
$1.70
$1.15
1.00
0.50
0.00
Argentina Australia
Calif.
Chile
Europe
S. Africa
Cabernet Sauvignon Wine
2006
$2.50
2.50
U.S. $ per Gal
2.00
$2.00
$1.85
Europe
S. Africa
$1.70
$1.50
1.50
$1.10
1.00
0.50
0.00
Argentina Australia
Calif.
Chile
Cabernet Sauvignon Wine
’06 vs ‘07
$6.00
6.00
U.S. $ per Gal
5.00
4.00
2.00
$2.85
$2.70
3.00
$2.10
$1.70
$1.90
1.00
0.00
Argentina Australia
Calif.
Chile
Europe
S. Africa
Chardonnay Wine
2006
3.00
$2.65
$2.50
$2.75
$2.50
$2.50
U.S. $ per Gal
2.50
2.00
$1.45
1.50
1.00
0.50
0.00
Argentina Australia
Calif.
Chile
Europe
S. Africa
Chardonnay Wine
’06 vs ‘07
$4.25
4.50
$3.80
4.00
$3.50
U.S. $ per Gal
3.50
3.00
$3.10
$2.85
$2.65
2.50
2.00
1.50
1.00
0.50
0.00
Argentina Australia
Calif.
Chile
Europe
S. Africa
Major Export Mkts for SJV Wines
• Canada
• Germany
• Scandinavia
• UK
• Asia
Imports
Key Varieties
Pinot Grigio, Pinot Noir, Riesling, Traditional
Varieties
Worldwide inventories move toward
balance due to 2007 crop
US Mkt is the most attractive & best Mkt in
World
Today consumer is exploring and finding
options for purchase
Currency & Freight
Currency Exchange Rates
AUD 1.00 = US
EURO 1.00 = US
2001 $0.52
2001 $0.90
2002 $0.56
2002 $0.99
2003 $0.72
2003 $1.20
2004 $0.77
2004 $1.33
2005 $0.74
2005 $1.18
2006 $0.78
2006 $1.32
2007 $0.87
2007 $1.48
Cost of Ocean Freight
Approx. US$0.80 per gal
What the future holds
U.S. & World has thirst for Calif Wines
Market continues to grow, support it
Activity on grapes should accelerate on
demand varieties
Consolidation will continue – Global Market
We must continue to be competitive to survive
Quality is the best option – deliver depth &
flavor not sugar
Brand Proliferation & Growth
Thank You for your time
and Attention
John Ciatti
Managing Partner, Ciatti Company
T.415/458-5150
www.ciatti.com