WORLD WINE SUPPLY OUTLOOK MARCH 5, 2017 THE VINEGAR INSTITUTE 2017 ANNUAL MEETING
DEDICATED BROKERS IN 8 COUNTRIES GLOBALLY BASED TO BUILD YOUR BUSINESS WORLDWIDE
INTRODUCTION - CIATTI COMPANY - BROKER PERSPECTIVE - INFO + DATA = MARKET INTELLIGENCE - TODAY S GOAL - PAST PRESENTATION 2011 & 2015 - ACREAGE / PRODUCTION / CONSUMPTION - 2017 WHAT S TRENDING TODAY
2014 WORLD WINE PRODUCTION: 270 M HL 80% OF THE WORLD S WINE IS PRODUCED BY TEN COUNTRIES
NORTHERN & SOUTHERN HEMPISHERE COMPARISON IN MILLIONS OF US TONS 40 35 30 25 20 15 10 5 0 Total Southern Northern 2010 2011 2012 2013 2014 2015 AVERAGE HARVEST YEAR
PLANTED SURFACE AREA vs WORLD WINE PRODUCTION Thousands of hectares 8,000 7,900 7,800 7,700 7,600 7,500 7,400 7,300 300 290 280 270 260 250 240 230 Millions of hectoliters Source: OIV Area Under Vines Production
GLOBAL ACREAGE TRENDS COUNTRY 2010-2015 % CHANGE PLANTING SPAIN 6 HIGHER PRODUCTIVITY FRANCE 2 REMOVED YIELD RESTRICTIONS ITALY 8 CHINA USA 42 4 CABERNET SAUVIGNON, CHARDONNAY, MERLOT REMOVAL OF GENERICS / PLANTINGS OF VARIETALS ARGENTINA 3 MALBEC Source: OIV CHILE 3 CABERNET SAUVIGNON, SAUVIGNON BLANC, MERLOT, PINOT NOIR AUSTRALIA 13 REMOVAL OF GENERICS SOUTH AFRICA GERMANY NEW ZEALAND 2 0 12 SAUVIGNON BLANC, PINOT NOIR
NORTHERN HEMPISPHERE ITALY FRANCE SPAIN
ITALY 12 13 14 15 16 6.9 M 8.2 M 6.8 M 7.5 M 7.2 M - LARGEST WORLD PRODUCER IN 2016 - PINOT GRIGIO MARKET BALANCED DOC - LOWER YIELDS, NO BLENDING OPTIONS - PROSECCO CONTINUES TO PERFORM - HOT ITEM - LARGEST EXPORTER TO THE WORLD
FRANCE 12 13 14 15 16 6.3 M 6.4 M 7.2 M 7.3 M 6.6 M - LOSING AT THE LOW PRICE END TO SPAIN - PROVENCE ROSE IS THE BRIGHT SPOT - BORDEAUX LARGE HARVEST - BURGUNDY TOUGH HARVEST - BOTTLED GROWTH TO USA - DECLINING DEMAND LOCALLY
SPAIN 12 13 14 15 16 4.7 M 6.9 M 6.7 M 6.4 M 6.4 M - SUBSIDIES ARE OVER FOR DISTILLATION / BIGGER CROPS DUE TO SUBSIDY PROGRAM - GENERIC VERSUS VARIETAL - POTENTIALLY OVERPLANTED GIVEN GENERIC DEMAND - CONTINUED OVERSUPPLY EXPECTED - EXPORTER OF PRODUCT FRANCE, GERMANY, & ITALY NOW CHINA
SOUTHERN HEMPISPHERE CHILE ARGENTINA SOUTH AFRICA AUSTRALIA
CHILE 12 13 14 15 16 1.9 M 2.0 M 1.5 M 2.0 M 1.58 M - FREE TRADE WITH MANY COUNTRIES: INCLUDING CHINA - QUALITY CONTINUES TO IMPROVE - LARGE RED WINE BULK SUPPLIERS / FOCUSED ON EXPORT - DIFFICULT 2016 HARVEST RAINS - STRONG PLAYER IN CS, ME, PN, & SB - DECADE OF VINEYARD MODERIZATION & PLANTING
ARGENTINA 12 13 14 15 16 2.5 M 3.0 M 2.9 M 2.6 M 1.9 M - BIG DOMESTIC MARKET / GRAPE CONCENTRATE - QUALITY IMAGE - MALBEC PRICES UP - GENERICS DOMESTIC - NEW GOVERNMENT IN 2016 - INFLATION AN ISSUE - 2016 ISSUES WITH QUALITY & QUANTITY 2017 BETTER
AUSTRALIA 12 13 14 15 16 1.8 M 2.0 M 1.9 M 1.8 M 2.0 M - REDS, CHARDONNAY & PINOT GRIGIO ARE STRENGTHS - ACRES MOVING INTO ALMONDS / DISAPPEARING GRAPE ACREAGE - UK, USA, CANADA ARE TRADITIONAL MARKETS - CHINA MAKES ALL THE DIFFERENCE / FREE TRADE
SOUTH AFRICA 12 13 14 15 16 1.5 M 1.6 M 1.7 M 1.6 M 1.5 M - DEMAND UK/GERMAN DRIVEN - STEADY PRODUCTION FOR YEARS - DRY WHITE, CHARDONNAY, MERLOT, ROSÉ - MARKET SLUGGISH OVERALL - CURRENCY / EXCHANGE
NEW ZEALAND 12 13 14 15 16 296,000 380,000 490,000 359,000 480,000 - PREMIUM PRICING SB & PN - LIMITED PRODUCTION NEED PLANTABLE ACRES - BIG HARVEST BIG DEMAND - USA LARGEST MARKET - RECENT EARTHQUAKE
USA
USA CALIFORNIA 12 13 14 15 16 4.0 M 4.2 M 3.9 M 3.7 M 4.0 M - VINEYARD ACRES IN TRANSITION - GROWTH OF PREMIUM SEGMENT - DECLINE OF VALUE BRANDS - CONSOLIDATION BIG GET BIGGER
USA - WASHINGTON 270,000 TONS - OREGON 80,000 TONS - NEW YORK 40,000 TONS - BONDED WINERIES 9,000 TOTAL - PREMIUM FOCUS VARIETALS - SUPPLIERS TO DOMESTIC MARKET
US MARKET WINERIES LARGEST - TOP 10: - GALLO 75M - THE WINE GROUP 57M - CONSTELLATION 51M - TRINCHERO 19M - TREASURY 15M - BRONCO 10M - DELICATO 9M - STE. MICHELLE (WA) 9M - JACKSON FAMILY 6M - FETZER-CONCHA 3M ALL OTHER = 15% 85% - TOP BRANDS: - BOGLE - FRANCIS FORD COPPOLA - J. LOHR - JOSH - APOTHIC - MICHAEL DAVID - NAKED - BAREFOOT - MEIOMI - BOTA BOX / BLACK BOX - DUCKHORN - JOEL GOTT
SALES & CONSUMPTION
SALES & CONSUMPTION - WORLD OLD WORLD VS NEW WORLD - USA - GROWTH BIGGEST & BEST MARKET - PREMIUMIZATION - STRONG ECONOMY - DISTRIBUTION SYSTEM DIRECT TO CONSUMER - CHAIN STORE SALES - PACKAGING OPTIONS
Source: OIV TOP 10 WINE CONSUMERS
USA TIMES ARE GOOD!! TOTAL GROWTH 4.3% GROWTH + 11.0% + 7.5% - 2.0% Ultra Premium ($15 plus) Premium ($9-15) Value ($2-9) % OF MARKET 15.5% 37.0% 47.5%
USA NIELSEN HIGHLIGHTS - GLASS 750 ML + 5% - PREMIUM BOX 3L + 14% - RED WINE + 6% - BLUSH = ROSE + 6% IMPORTS - ITALY + 6% - FRENCH + 15% - NEW ZEALAND + 15% VARIETIES - CHARDONNAY + 2.8% - CABERNET SAUVIGNON + 7.3% - RED BLENDS + 11.2% - SWEET RED + 12.5% - PINOT NOIR + 9.4% - SAUVIGNON BLANC + 12.1%
TRENDS & FUTURE OUTLOOK - M + A BRANDS & LANDS - GLOBAL ACREAGE CHANGING - MILLENNIALS OUR FUTURE - COMPETITION SHARE OF MOUTH - CHINA THE GREATEST UNKNOWN?? - FUTURE LOOKS GOOD
LASTLY CIATTI CRAFT BEVERAGES JOHN FEARLESS - BEER MARKET DECLINING OVERALL - PREMIUM GROWTH (+8%) 26M BARRELS - CRAFT BEERS HOPS DRIVEN - MEXICAN BREWS STEADY GROWTH - CONSUMER - YOUNG & CURIOUS - EXPLORERS - 5,000 BREWERIES IN US - TASTING
THANK YOU FOR YOUR TIME AND ATTENTION John Ciatti john@ciatti.com 415.264.0762