4. CONSUMPTION GREW RAPIDLY 2001-2007 Still Grew by 0.9% in 2008 Despite Recession Sources: Impact Databank 2008, 2009 Wine Handbook Millions of nine-liter cases 3
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6. (69.4 million none-liter case shipments = 100%) Source: Gomberg Fredrikson 2008 U.S. IMPORTS BY COUNTRY 4
7. SUMMARY 2007 VS. 2008 BOTTLED IMPORTED SHIPMENTS Volume and Average Price Increasing for Chile Argentina Growing Rapidly, Most Others Declining Source: Annual Gomberg Frederickson Report, December 2008 8 Country % Change Shipments in Cases % Change Value in Dollars France -12 % 6 % Italy -9 % 0 % Spain 2 % 4 % Germany -5 % 2 % Portugal 2 % 13 % New Zealand - 4 % -2 % South Africa - 18 % -10 % Argentina 31 % 32 % Australia -7 % -14 % Chile 2 % 4 % Total -5 % 0 %
8. SIX MONTHS ENDED 2009 vs. 2008 BOTTLED IMPORTED SHIPMENTS Global Pricing Chile: Volume Average Price Consumers Trading Down, New World Benefits Source: Annual Gomberg Frederickson Report, June 2009 = 10 Country % Change Case Volume YTD % Change Imported Value YTD France -7 % -31 % Italy -5 % -18 % Spain -7 % -23 % Germany -13 % -23 % Portugal 8 % -8 % New Zealand 9 % 9 % South Africa 17 % 1 % Argentina 37 % 32 % Australia -7 % -12 % Chile 26 % 26 % World Total -1 % -15 %
9. TOP STATES FOR CHILEAN WINES 1) New York 2) Florida 3) New Jersey 4) Texas 5) California 6
10. FASTEST GROWTH IN $3-7 SEGMENT After several years of $10+ growing faster than under $10, situation has reversed Source: Gomberg Frederickson Report, March 2009 13
13. U.S.THREE-TIER MARKET STRUCTURE 18 Source: The Business of Wine * In Some states, companies can act as importer and distributor Non-U.S. Producer * Importer On/Off Premise Trade Consumer 1st Tier 2nd Tier * Distributor 3rd Tier
14. U.S. WINE MARKET 50 Different Markets 50 Different Sets of Laws 19
16. MOST POPULAR VARIETALS IN U.S. FOOD STORES Chardonnay and Cabernet Continue to Grow From Large Base Merlot Remains #3 as Sales Stabilize 15
17. IMPORTED TABLE WINE CONSUMPTION BY VARIETAL 2001 VS. 2007 Source: Impact Databank 2008 Total Share of Top 9 Varietals Increases from 46% to 63% 41.9 million nine-liter cases= 100% 265 million nine-liter cases = 100% 14
18. GLOBAL VARIETIES & TOP ORIGINS IN U.S. MARKET Source: Gomberg/AC Nielsen 3-28-09
19. REGIONAL VARIETIES WITH DOMINANT ORIGINS IN U.S. MARKET (80% + Market Share)
20. DOMINANT REGION/COUNTRY IDENTIFICATIONS WITH GRAPE VARIETIES The New World Successes 23 ARGENTINA = Malbec AUSTRALIA = Shiraz NEW ZEALAND = Sauvignon Blanc (First Brand: Cloudy Bay) CALIFORNIA = Chardonnay & Cabernet
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22. WHAT IS THE POTENTIAL FOR CHILEAN CARMENERE? 24 AND HOW DO WE POSITION IT FOR THE U.S. & WORLD MARKETS?
23. Wine Style/Quality: Needed Improvement Majority were overly herbaceous for U.S. consumers. Sales: Very low Less than 50,000 cases Image & Awareness: None Unknown but had a great story to tell. Identity Within Chile: Controversial Is Carmenere Chile’s signature grape variety? CARMENERE’S POTENTIAL FOR THE U.S. 2005 26
24. 25 Wine Style/Quality: Significant improvement. More to do. Majority exported have crossed critical fruit/ripeness frontier. Sales: Increasing rapdly. +69% Projected to be approximately 300,000 cases in 2009 Image & Awareness: Still Low But gaining rapidly with trade and media influencers Identity within Chile: Clearer and More Confident Carmenere is Chile’s signature variety and offers Chile the best opportunity to establish a clear identity in the global wine market. CARMENERE’S POSITION IN THE U.S. 2009
25. CHILEAN EXPORTS TO U.S. BY VARIETY Cabernet Sauvignon and Sauvignon Blanc Still King & Queen Carmenere Fastest Growing Varietal: +69%
27. CARMENERE IN THE U.S. MEDIA INCREASED VOLUME OF MENTIONS 2004-2009 Source: Dow Jones Factiva Database of Daily Newspapers
28. CARMENERE IN THE U.S. MEDIA Significant Increase in Positive Feature Stories
29. CARMENERE IN THE U.S. MEDIA Significant Increase in Positive Feature Stories “ Top Chilean vintners are still producing outstanding Cabernet Sauvignon and Carménère….” -Wine Spectator , May 15, 2007 “ From Chile, History in a Bottle: …perhaps a key to Chile’s future success is Carmenere” - New York Times , November, 2007 “ Wine Spectator’s #1 Wine of the Year, Casa Lapostolle Clos Apalta” -Wine Spectator, December, 2008
30. CARMENERE IN THE U.S. MEDIA Significant Increase in Positive Feature Stories “ The Next Grape Superstar?: Carmenere, a neglected grape in France that is thriving in Chile, may be the next big thing in wine.” - Chicago Tribune, March 25, 2009 “ Late Bloomer: In Chile, a long-lost grape is finally getting the attention it deserves” -Saveur, November 2009 “ Carmenere: A Great Value Facing Risks” -Wall Street Journal, November 22, 2009
31. CARMENERE’S IMAGE WITH SOCIAL MEDIA INFLUENCERS “ I love the idea of this grape, the story of Carmenere – it’s the stuff of which wine legends are made….So what’s the trouble? The tale spun about the lost grape Carmenere is a lot more compelling than the wine it is producing…” I’ve been critical of Chile’s ability to deliver on the potential of the grape as they’d yet to get pyrazine under control and balanced with the grape’s dark fruit flavors…. So, how were the wines? In summary: a mixed bag…” - 1WineDude , Joe Roberts, November 2009
33. CARMENERE - TOP OF MIND WITH TRADE “ Interesting & Different”
34. CARMENERE’S IMAGE WITH U.S. TRADE INFLUENCERS “ As Piedmont has Nebbiolo, the Russian River Valley in Sonoma has Pinot Noir, and Argentina has Malbec, Carmenere seems to be the best varietal for Chile to identify itself as a serious wine producing country, to differentiate itself from the rest, and also to show its quality potential. Carmenere makes the most sense for several reasons: it can make wine in a wide range of pricing and styles , has ageing potential , is collectable, and is not per se the “specialty” of many other wine regions.” -Belinda Chang, Master Sommelier & Wine Director The Modern Restaurant, New York
35. CARMENERE’S IMAGE WITH U.S. TRADE INFLUENCERS “ I went to Chile last year and was really big on Carmenère . I was offering two Carmenères by the glass. I like featuring everything but the usual grapes. It starts conversations.” -Fernando Beteta, Master Sommelier & Wine Director Hyatt Chicago's NoMi Restaurant Wine Spectator Interview, June 2009
Starting in 2001, wine consumption in the U.S. has been steadily growing, making the U.S. the projected #1 wine consuming country in the world.
Imports control 31% of the US wine market as of the beginning of 2008, however with the declining value of the U.S. Dollar, domestic wines are expected to recapture 1-3% of the market by 2009. From 2006 to 2007, volume rates of New World and Old World wines grew at an equal pace (+8%), while the value of New World wines (+13%) grew 2% more than Old World wines (+11%)
These are the total amounts of bottled table wine being brought into the US by each country over the past two years.
Fluctuation is normal, as long as there is balance. There are many factors that go into how well a country is doing, such as distribution, local weather/natural disasters, and the market. Right now the market is very hesitant to buy luxury goods, as the U.S. economy is in a recession. Through these slides you will see value in European countries go up, however this is slightly misleading. As compared to the Euro, the value has gone down steeply. A main reason why Australia is so far down is the heavy drought that is affecting the country. The Australian dollar has also grown in value as compared to the U.S. dollar, making wine more expensive.
The $10 and over category is the largest growing segment of the U.S. market. More people are buying higher priced, better quality wines. Taken together the wines bought in the $10 and over range account for only 10% of the volume of wine purchased in the U.S. but have the highest potential for continued growth.
These are the red wines that are most consumed in the U.S.
