Global Wine Report SAN JOAQUIN VALLEY WINE GROWERS ASSOCIATION NOVEMBER 29, 2017 DEDICATED BROKERS IN 8 COUNTRIES GLOBALLY BASED TO BUILD YOUR BUSINESS WORLDWIDE 1
INTRODUCTION Ciatti Co à 8 Regional Offices Worldwide Wine, Grapes, & Concentrate John Fearless Hops Global Perspective World Approach Local Knowledge Today s Goal: Discuss World Wine Production & Usage OUTLINE World Production Wine Total & Acreage Europe Southern Hemisphere USA California, Other States Market Place USA Sales Domestic / Export Varietal Key 2017 Crop Estimates Closing Conclusions 2
GLOBAL ACREAGE TRENDS COUNTRY 2010-2015 % CHANGE PLANTING SPAIN 6 SOME REPLANTING FRANCE 2 REMOVED YIELD RESTRICTIONS ITALY CHINA 8 42 SOME VARIETALS GENERIC & TABLE USA 4 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 GLOBAL WINE PRODUCTION VINTAGE WORLD PRODUCTION 2017 247 MHL 2016 260 MHL 2015 275 MHL Italy 19% Total 30.1 Million Tons Spain 16% USA 11% Rest of World France 7% 17% Argentina 6% Germany 4% Australia 7% New Zealand 1% So. Africa 5% Chile 4% Portugal 3% 3
NORTHERN HEMISPHERE EUROPE ITALY FRANCE SPAIN ITALY History: Crush Tonnages (million US Tons) 12 13 14 15 16 17 Est. 6.9 8.2 6.8 7.5 7.2 6.0 Key Varietals: Pinot Grigio, Prosecco Tight Inventory Effects Everyone Buyer? Vine Acreage: 2000 2012 2016 850,000 hectares 769,000 hectares 680,000 hectares (2.10 million acres) (1.90 million acres) (1.68 million acres) 4
FRANCE History: Crush Tonnages (million US Tons) 12 13 14 15 16 Key Varietals: Rosé, Sparkling Declining Demand Locally Export Growth to U.S. & China Vine Acreage: 2000 2012 2016 900,000 hectares 800,000 hectares 780,000 hectares (2.23 million acres) (1.98 million acres) (1.93 million acres) 17 Est. 6.3 6.4 7.2 7.3 6.6 5.6 SPAIN History: Crush Tonnages (million US Tons) 12 13 14 15 16 17 Est. 4.7 6.9 6.7 6.4 6.4 5.1 Key Varietals: Cheap Generics & Concentrate Export to Europe & China Vine Acreage: 2000 2012 2016 1,200,000 hectares 1,000,000 hectares 1,000,000 hectares (2.96 m acres) (2.47 m acres) (2.47 m acres) 5
12/11/17 EUROPEAN OUTLOOK Exports to The World Italy & France Casegoods Spain Bulk Supply Support & Subsidize Marketing Huge Consumer But Declining Consumption Regulations & Taxes SOUTHERN HEMISPHERE CHILE ARGENTINA AUSTRALIA SOUTH AFRICA 6
SOUTHERN HEMISPHERE Varietal Leader Market Driven Productive Newer Vines Exports Required Population Lacking Global Players Personality ARGENTINA History: Crush Tonnages (million US Tons) 12 13 14 15 16 17 2.5 3.0 2.9 2.6 1.9 1.8 Key Varietals: Malbec Cheap Generics / Concentrate - White Large Domestic Market Tight Supply Today Government & Inflation Vine Acreage: 2000 2012 2016 240,000 hectares 221,000 hectares 225,000 hectares (593,000 acres) (546,000 acres) (556,000 acres) 7
CHILE History: Crush Tonnages (million US Tons) 12 13 14 15 16 17 1.9 2.0 1.5 2.0 1.6 1.5 Key Varietals: Cabernet Sauvignon, Pinot Noir Sauvignon Blanc, Pisco Free Trade Agreements Vineyard Modernization Quality Vine Acreage: 2000 2012 2016 170,000 hectares 205,000 hectares 210,000 hectares (420,000 acres) (494,000 acres) (519,000 acres) AUSTRALIA History: Crush Tonnages (million US Tons) 12 13 14 15 16 17 1.8 2.0 1.9 1.8 2.0 2.1 Key Varietals: Chardonnay, Pinot Grigio Net Exporter China Big Market US & UK Balanced Market Today Vine Acreage: 2000 2012 2016 180,000 hectares 169,000 hectares 150,000 hectares (445,000 acres) (418,000 acres) (370,000 acres) 8
SOUTH AFRICA History: Crush Tonnages (million US Tons) 12 13 14 15 16 17 1.4 1.6 1.7 1.5 1.5 1.6 Key Varietals: Chardonnay, Chenin Blanc, Brandy Demand From Europe Currency Fluctuates Vine Acreage: 2000 2012 2016 100,000 hectares 131,000 hectares 130,000 hectares (240,000 acres) (323,000 acres) (321,000 acres) ASIA China: Population 1.4 billion Plantings à 1 million acres à 1.2m Mainly Generic & Table All Used Internally World Buyer Growing Wine Consumer Japan/Korea/Hong Kong Potential Growth - TPP Russia Cheap Buyers 9
USA USA SALES - 2017 Overall Flat (+0%) (Last 12 Months) - Domestic (+1%) (+2.9 M/Cases) - Exports (-16%) (-3.6 M/Cases) - Imports (YTD) - Casegoods (+4%) (+2.3M/Cases) - Bulk (+20%) (+3.0M/Cases) - Total US Market (YTD) - Import & Domestic (+3%) (+6.6 M/Cases) Source: Gomberg-Frederickson 10
CALIFORNIA Challenging Vintage Premiumization High Prices Today 2017 Tonnage 3.9 Million CHARDONNAY Trend Inventory Tight Aging Acreage Plantings Needed?? 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 655,000 Bulk Wine California = $6.50 8.00 International = $3.00 5.00 Acreage 2007 2012 2016 91,300 93,100 91,300 11
PINOT GRIGIO Trend 2016 Large Harvest California Grown 250,000 200,000 150,000 100,000 230,000 50,000 0 Bulk Wine California = $6.00 7.00 International = $5.00 7.00 Acreage 2007 2012 2016 7,300 12,400 13,700 SAUVIGNON BLANC Trend New Zealand Style Planting Needed for Growth Bulk Wine California = $7.00 10.00 International = $4.50 7.00 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 Acreage 90,000 2007 2012 2016 14,300 14,900 14,300 12
OTHER WHITES Generics Colombard Chenin Blanc Florals Table & Raisin Thompson Seedless White Concentrate - $8.50 - $10.00 Bulk CABERNET SAUVIGNON Trend Sales Growth Continues Acreage Matures Removals vs Plantings International Options 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 620,000 Bulk Wine California = $6.00 9.00 International = $4.50 5.50 Acreage 2007 2012 2016 74,600 76,700 84,600 13
MERLOT Trend Less Demand Stable Inventory Red Blends Help? Bulk Wine California = $6.00 8.00 International = $4.00 6.00 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 Acreage 2007 2012 2016 48,600 45,300 40,600 255,000 PINOT NOIR Trend Domestic Demand Consumer Driven More Needed?? Bulk Wine California = $7.00 9.00 International = $5.00 7.00 300,000 250,000 200,000 150,000 100,000 50,000 0 Acreage 235,000 2007 2012 2016 24,400 38,000 41,300 14
OTHER REDS Zinfandel & White Zinfandel Blending Reds Rosé - Dry Rubired - Color Red Concentrate - $10.50 13.00 -High Color CLOSING Inventory Stable but Changing Who s Selling? Buyers Needed!!! Capacity Timing of Harvest Storage & Processing Quality Ultimate Key Sell Up Competition Other Beverages Land Commodity Cycles Always Change 15
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