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Winegrape Issues A California & International Perspective Nat DiBuduo Allied Grape Growers Valent: Grape & Fruit Symposium November 5, 2013 PowerPoint PPT Presentation


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Winegrape Issues A California & International Perspective Nat DiBuduo Allied Grape Growers Valent: Grape & Fruit Symposium November 5, 2013. Allied Grape Growers was formed on 1951 by 230 growers representing 50,000 tons Sold off all wineries in 1987 and switched to todays business plan

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Winegrape Issues A California & International Perspective Nat DiBuduo Allied Grape Growers Valent: Grape & Fruit Symposium November 5, 2013

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Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

Winegrape Issues

A California & International Perspective

Nat DiBuduo

Allied Grape Growers

Valent: Grape & Fruit Symposium

November 5, 2013


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

Allied Grape Growers was formed on 1951 by 230 growers representing 50,000 tons

Sold off all wineries in 1987 and switched to todays business plan

2001 AGG Represented 500 growers and 150,000 tons with a grape value in $34 m

Today AGG represents 600 growers from Kern County to Lake County of 285,000 tons with a value in 2012 over $100 millon.

Allied Grape Growers is a grape marketing cooperative that believes there is strength, efficiency and benefit in numbers.

What is Allied Grape Growers?


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

How does California Winegrape

Acreage, Production & Value Compare?


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

Winegrape Acreage


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

2012 Winegrape Volume


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

2012 Winegrape Value


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

Wine Shipments

Opening Excerpt from the

Gomberg Fredrikson 2012 Annual Wine Industry Review

“Following and explosive industry growth year in 2011, the pace of wine shipments slowed in 2012, partially as a result of wine supply shortages……In an extraordinary development, 2012 wine demand exceeded the available California wine supply…”


Thompson seedless and rubired usage concentrate markets

Thompson Seedless and Rubired Usage & Concentrate Markets


Thompson seedless and rubired usage concentrate markets1

Raisin Industry: Sales for the 2012-2013 marketing year were off by a total of 3%

Domestic shipments were flat

Export shipments were down by 9% from the previous year

Field Price negotiations for the 2013 crop are underway.

Thompson Seedless has alternative

Brandy and other alcohol based products

Dry white wine or wine stock for sparkling wines

Rubired grapes are used for red wine but predominantly used for quality red concentrate: Coloring for wine and other products

Demand for both white and red concentrate have been at higher than expected prices

White Concentrate has been $10-$12

Red Concentrate has been trading at $12-$15

Thompson Seedless and Rubired Usage & Concentrate Markets


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

Part 1:

Today’s Planting Trends


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

2013 Nursery Survey

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


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

2013 Nursery Survey

Vine sales began trending toward the coast in 2012


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

2013 Nursery Survey

Are we over-planting…..again?


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

California Acreage Trends

Only if we Continue the Recent Planting Trend


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

California Acreage Trends

Moderate Planting Matches the Trend

Moderate Planting Defined:

+/-15,000 NET new acres per year


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

Part 2:

Production& Supply


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

California Production


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

Are we in balance now,

and in the immediate future?


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

California Shipments

3.93

3.87

3.80

3.74

Projected Need:


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

California Production


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

California Shipments

For 2014-2016, take the

forecasted winegrape crush

and deduct 220,000 tons for other uses

Balanced


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

Part 3:

The Market


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

The Winegrape Market

Are today’s grape prices here to stay?


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

The Winegrape Market

What were the driving factors behind the healthier grape prices of the last few years?

We have identified major factors

driving price now, and likely in the future


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

The Winegrape Market

What were the driving factors behind the increased grape prices of the last two years?

  • #4: Competition from alternative crops

    • Almonds primarily, but all ag crops in general

    • Outlook:

      • Can you say $3/pound? For how long?

      • Many market forecasts from the almond industry point toward unfilled market capacity in the short term.


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

The Winegrape Market

What were the driving factors behind the increased grape prices of the last two years?

  • #3: Forethought by buyers

    • Buyers have needed to secure mid-term supply as inventories balanced

    • Translates into competition for existing grapes

    • Outlook:

      • Price is now stabilizing based on supply/demand factors.


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

The Winegrape Market

What were the driving factors behind the increased grape prices of the last two years?

  • #2: The re-establishment of the “mid-market” following the recession

    • Wineries depleted inventories in response to the recession.

    • Consumers moved down the price chain, but that trend seems to be slowly reversing.

    • Outlook:

      • Sufficient Lodi and Coastal inventories will help supply the > $7 programs in the immediate future. Demand for interior fruit will come in the interest of averaging down price, not in the interest of filling supply shortage.


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

The Winegrape Market

What were the driving factors behind the increased grape prices of the last two years?

  • #1: Overall supply “shortage”

    • Not only domestically, but globally.

      • California has only added acreage at a moderate pace in recent years

    • Outlook:

      • Planting will continue. Speculative planting will be at a minimum, while contracted planting should be “controlled.”

      • With the exception of a few “smaller” world producers, most winegrowing regions are not expanding their acreage.


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

The Winegrape Market

Will rising grape prices slow wine sales?


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

The Winegrape Market

Every $100 in grape value = $.12 in the bottle


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

California and International Wine Market

Source: Morgan Stanley Research


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

California and International Wine Market

Source: Morgan Stanley Research


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

International Wine Market

Share of Production, by Country

Source: Wine Institute/Trade Data and Analysis


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

International Wine Market

Percent of World Export Volume, by Country

Source: Wine Institute/Trade Data and Analysis


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

International Wine Market

Percent of World Export Value, by Country

Source: Wine Institute/Trade Data and Analysis


Cabernet sauvignon global market

Cabernet Sauvignon- Global Market

California

Global

Source: Ciatti Company


Chardonnay global market

Chardonnay - Global Market

California

Global

Source: Ciatti Company


Pinot noir global market

Pinot Noir - Global Market

California

Global

Source: Ciatti Company


Winegrape issues a california international perspective nat dibuduo allied grape growers valent grape fruit symposium november 5 2013

Take Home Message

The underlying factors that create a stable market look to exist, at least for the foreseeable future, but we must maintain quality grapes/wine and offer value in order to remain successful.


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