Sonoma County Winegrape Commission Dollars & $ense Seminar Market Prospects for 2011 Information Provided By:
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Statewide Grape Crush 2000 2010 Est. Source: Calif. Dept. of Food & Ag Final Grape Crush Reports
Sonoma County White Grape Tonnages 2004 2010 Est. Tons 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 73,100 13,841 1,921 Chardonnay Sauv Blanc Pinot Grigio 2004 2005 2006 2007 2008 2009 2010 Est.
Sonoma County Red Grape Tonnages 2004 2010 Est. Tons 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 41,140 31,961 16,506 15,637 Cab Sauv Merlot Zinfandel Pinot Noir 2004 2005 2006 2007 2008 2009 Est. 2010
Sonoma Winegrape Acreage 2009 vs 2002 2009 Rptd N-B Total Rptd N-B % Chard 785 15,105 5% Cab Sauv 224 10,932 2% Merlot 21 6,259.3% Zinfandel 99 5,189 2% Sauv Blanc 132 2,455 5% Pinot Noir 521 11,154 5% Syrah 78 1,970 4% Pinot Gris 17 450 4% Others 256 3,789 7% Total 2,133 57,303 4% 2002 Total Rptd N-B % 15,571 11% 11,798 25% 7,311 8% 5,052 16% 2,100 22% 10,052 35% 1,726 41% 364 32% 3684 16% 57,658 20%
2010 Harvest Season Challenging Year Late Spring Rains Mildew and Rot Issues Burn Late in Season Late 2-3 weeks behind Harvest Rain Compromised Maturities Not Quite But Felt like 1989!!!! Compacted Crush 6 Week Harvest Season Impacted Grape Market
2010 Grape Market Buyers Cautious Like 2009 would not buy unless sure they needed it Greater percentage non-contracted than past years Growers were ready to sell no offers Activity in premium areas Rutherford, Hillside CS AV etc Most buying activity at end of year CS/ME/ZN/SB CH never really developed Growers left with few choices some decided to custom crush vs taking prices
2010 Spot Market Grape Pricing Sonoma Napa Coastal Chard $800 1,400 $900-1,600 $350 800 Sauv Blanc $850 1,300 $1000 1,600 $350-700 Cab Sauv $700 1,400 $1,200 2,800 $500-900 Pinot Noir $1,600 2,600 $1,500 2,200 $800 1,300 Merlot $500 1,000 $800 1,300 $500 800 Zinfandel $1,300 2,200 $1,500-2,000 $500-800
2011 Grape Market Earlier buying activity especially CS/PN/ZN. Even ME turning corner CH should show better demand 2009 Hang Over Question still of who buyers will be and will changes taking place make them slower to act For market to stabilize larger buyers will need to enter Measured improvement expected for 2011 Grape Market but it will take time Potential price ceiling - unless consumers willing to trade up
California Bulk Market Review
Coming into Balance Current Bulk Market CH Long SB Balanced/Long CS Balanced/Short ME Balanced ZN Balanced/Short SY Long PN Balanced Sonoma/Napa/Coastal Bulk Market Besides CH Inventories in relatively good position Napa CS and ME are in high demand Strong Negotiant Activity Coastal Demand still lagging behind
Bulk Market Activity Buyers Buyers California Coastal Sonoma Napa High End California and Napa Negotiant Buying Strong Opportunities in Coastal/Sonoma and Extreme High End Waiting for Traditional Buyers to Enter
Bulk Market Pricing 09/ 10 Vintage Sonoma Napa Coast Chard $7-12 $7-12 $4 7 Sauv Blanc $8 12 $8 12 $4-7 Cab Sauv $12-16 $17-25 $7 10 Pinot Noir $15-21 $15-21 $8-13 Merlot $9 14 $10-15 $6 8 Zinfandel $12-17 $11 15 $6-8 Syrah $7-11 $9 14 $5 7
Global Picture
Global Summary Wine companies less committed to conventional regions/areas Focus on price point, margins, consumer acceptance Shorter Crops worldwide and a relatively stable dollar has caused producers to come back to the U.S. especially for CH/PN Imports are still 32% of total U.S. market Bulk Imports -23%; Bottled +8%; Overall +1% Global Market here to stay
History: Crush Tonnages CHILE 07 08 09 2010 1.30 M 1.36 M 1.58 M 1.39 M Pricing: US$/ltr Comments/Trends: Domestic demand for Grapes looks to be strong. The Chilean peso remains strong against the dollar 2011 grape prices and crop size remain undetermined. Trend Cabernet Sauvignon $0.95 1.20 Merlot $1.10 1.30 Carmenere $1.00 1.10 Sauvignon Blanc $0.95 1.20 Chardonnay $1.20 1.35
History: Crush Tonnages Pricing: AUSTRALIA 07 08 09 2010 1.56 M 2.00 M 1.90 M 1.68 M AUD/liter Cabernet Sauvignon 0.95 1.10 Shiraz 0.85 0.95 Merlot 0.85 1.00 Chardonnay 0.70 0.75 Sauvignon Blanc 0.90 1.20 Trend Comments/Trends: The AUD has reached a new high against the USD, hitting the $1.00 mark. Premium Areas having biggest Challenges Weather/Floods could have affects on 2011 crop
SPAIN History: Crush Tonnages Pricing: 07 08 09 2010(est.) 5.84 M 6.00 M 5.74 M 6.71M Euros/ltr Dry White 0.25 0.27 Sauvignon Blanc 0.50-0.60 Dry Red 0.27 0.29 Trend Tempranillo 0.33 0.36 Cabernet Sauvignon 0.40 0.42 Merlot 0.40 0.42 Comments/Trends: Lots of International activity. The new age Australia / Argentina. Cabernet Sauvignon and Merlot have the most interest, but have style issues. Supplier for US Concentrate Market.
Supply / Demand Dynamics Almost Balanced Market Napa/Sonoma Premium Segments Demand Improving Reds Stronger; Whites still issue Buyers Buyers
Questions and Comments Will consumers permanently change there buying habits or go back to pre-recession? New Age of Thrift Sustainable Profitability for both Growers/Wineries has to be achieved New Premium Production Models? Tons/Ac, Mechanization, Winemaking Techniques Who will be the buyers? Are wineries going to get bigger or smaller?
Parting Thoughts Market should strengthen long term Growing Demand/Limited New Acres Supply no longer a dirty word Signs of strengthening market exist but there are still holes 2011 Crop Size, Economic Recovery, Consumer expectations, all risks to be aware of
It is getting better!! But it will take time
Thank You For your Time and Attention Glenn Proctor glenn@ciatti.com 415 458 5150