The Silicon Valley Bank 2014 State of the Wine Industry Report identifies trends and addresses current issues facing the U.S. wine industry, offering data and observations that help that wineries can use to develop their business strategies.
Silicon Valley Bank's wine report is based on its in-house expertise as one of the largest bankers to the West Coast wine industry for nearly 20 years, a proprietary database of more than a decade of winery financials, ongoing research, and an annual survey of 450 West Coast wineries.
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SVB 2014 State of the Wine Industry Presentation
1.
2. Silicon Valley Bank Wine Report
SVB's Annual State of the Wine Industry Report addresses current trends, conditions and future views
on wine industry growth, consumer demand trends and winery financial performance.
Sales growth is expected to be the highest since the recession (6-10%), despite a tough economy.
Wine supply is in balance heading into 2014.
Stable pricing means good news for consumers.
For wineries, increased grape costs and flat pricing means lower profitability.
Read the full report: www.svb.com/wine-report
State of the Wine Industry Report 2014
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3. Global: Production vs. Consumption (million unit cases)
State of the Wine Industry Report 2014
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23. Direct to Consumer Shipments Value
State of the Wine Industry Report 2014
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24. Supply /
SUPPLYDemand Dynamics
/ DEMAND DYNAMICS
Short Term – “Hang Over”
Buyers
Source: Ciatti Company
State of the Wine Industry Report 2014
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25. Chardonnay - Global Market
California
$/ Gal
Availability
California
N. Coast
Napa/Son
$3.25 – 5.00
$8.00 – 12.00
$10.00 – 16.00
Long
Balanced/Long
Balanced/Long
Global
$/ Gal Dlvd
Availability
Chile
Australia
South Africa
$3.40 – 4.00
$2.50 – 3.00
$3.00 – 3.50
High
High
Moderate
Source: Ciatti Company
State of the Wine Industry Report 2014
#SVBWINE
26. Cabernet Sauvignon - Global Market
California
$/ Gal
Availability
California
N. Coast
Napa/Son
$5.50 – 8.00
$13.00 – 17.00
$18.00 – 33.00
Long/Balanced
Short
Balanced
Global
$/ Gal Dlvd
Availability
Chile
Australia
Spain
$2.90 – 3.90
$4.00 – 5.25
$4.50 – 4.85
High
Moderate
Moderate
Source: Ciatti Company
State of the Wine Industry Report 2014
#SVBWINE
27. Winegrape Demand - Steady
Buyers securing long-term grape supply
Contract activity strongest in Coastal Areas
Pricing should remain stable with a few exceptions
+/- 30,000 acres planted in last two years
2014 Crop size and Water concerns
Source: Ciatti Company
State of the Wine Industry Report 2014
#SVBWINE
28. Supply / Demand Dynamics
SUPPLY/DEMAND DYNAMICS
Longer Term - Balanced Market
Buyers
Buying
Sellers
Selling
Source: Ciatti Company
State of the Wine Industry Report 2014
#SVBWINE
29. 2013 Market Review
2013 Acquisitions of Notable U.S. Based Wineries and Brands
Target
Acquirer
Region
Comments
Alderbrook Winery
Bernie Orsi
Sonoma
Production capacity
Geyser Peak Wine Facility
Francis Ford Coppola
Sonoma
Production capacity
Sonoma Crush Facility
Carneros Vintners (The Vintners Group)
Sonoma
Production capacity
Rack & Riddle Facility
Duckhorn Wine Company
Mendocino
Production capacity
Yverdon Vineyard and Winery
Jackson Family Wines
Spring Mtn. (Napa)
Portfolio building
Viansa Winery
Vintage Wine Estates
Sonoma
Portfolio building
Clos Pegase Winery
Vintage Wine Estates
Napa
Portfolio building
Panther Creek Cellars
Bacchus Capital Management, LLC
Oregon
Portfolio building
Moraga Vineyards
Rupert Murdoch
Los Angeles
Lifestyle
Mayacamas Vineyards
Charles Banks and Jay Schottenstein
Napa
Lifestyle
Araujo Estate
Artemis Group (Owner of Chateau Latour)
Napa
Foreign buyer
Cleavage Creek
FCC North American Investment, LLC
Napa (Pope Valley)
Foreign buyer
Solena Winery
Jackson Family Wines
Oregon
Geographic expansion
Goosecross Cellars
Golden Equity Investments
Napa
Industry entrant
Silverado Hill Winery
Laird Family Estate
Napa
Opportunistic
Source: Zepponi & Company
State of the Wine Industry Report 2014
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30. 2012-2013 Winery Purchases of Vineyards
Vineyard
Gallo
3 Vineyards
Planted Acreage
Location
1,277± acres
Monterey
Paso Robles
Lake County
3 in Sonoma
2 in Mendocino
3 in Oregon
1 in South Australia
Jackson Family Wines
9+ vineyards
1,629± acres
Foley
2 vineyards
450± acres
1 in Sonoma
1 in Lake County
483± acres
4 in Sonoma
2 in Napa
6 vineyards, bought by:
Others
Duckhorn
Paul Hobbs
Bill Price
TGIC
Ledson
Frank Family
Source: Zepponi & Company
State of the Wine Industry Report 2014
#SVBWINE
31. 2012-2013 Winery Purchases of Vineyards
Largest Acquisitions
(by planted acreage)
Most Desired Areas
(by planted acreage)
Other
Other
Sonoma
Foley
Gallo
Lake County
Napa
Jackson
Family Wines
Central Coast
Mendocino
Oregon
Source: Zepponi & Company
State of the Wine Industry Report 2014
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32. The Future is NOW
Source: VinTank
State of the Wine Industry Report 2014
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33. And It’s SUPER HARD aka
Welcome To The Most Competitive Wine Market in Human History
Source: VinTank
State of the Wine Industry Report 2014
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34. And It’s Super Confusing and Demands Incredible
Amounts of Time (Learning & Usage)
Source: VinTank
State of the Wine Industry Report 2014
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35. Even The Way We Define Relationships is Changing
Customer Relationships (past)
New Types of Customer
Relationships
Source: VinTank
State of the Wine Industry Report 2014
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36. Some hard hittin’ social media stats
An average of 1.5 million organic conversations about wine EVERY
DAY across ALL primary social media channels
450K new people talking about wine on social media EVERY month
Over 80% of those go unanswered by wine brands.
Over 60M “quality” conversations about wine on SM in the last 5 years
from 600 million analyzed conversations
Over 16 million people profiled that mentioned wine at least 1x on SM
Source: VinTank
State of the Wine Industry Report 2014
#SVBWINE
37. Yes, Everything Digital is Growing
Mobile traffic (Phone only, not tablet) is increasing to a meaningful
percentage - 2013 was the first year it topped 25% of traffic.
E-com sales year over year were up 44% percent. Top 10% Vin65
customers had increases of at least 140%
One large driver of sales was "shipping included". Shipping Included
outperformed 20% off in A/B tests
Source: VinTank
State of the Wine Industry Report 2014
#SVBWINE
38. Looking into 2014 for Digital & DTC + Wine
Year of the mobile everything.
Digital will become a viable alternative to traditional distribution for certain
brands.
The DTC divide for wineries is maturing already.
2014 will be the year of digital divide for wineries.
Expect an increase in consolidation/attrition at the wine/tech vendor level.
Location tools will be key assets for acquiring new business for wineries
with tasting rooms.
State of the Wine Industry Report 2014
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39. Recommended Reading
Mary Meeker’s Tech Predictions for 2013 - http://www.slideshare.net/kleinerperkins/kpcbinternet-trends-2013
The Age of Context by Shel Israel and Robert Scoble - http://amzn.com/1492348430
Your Brand, The Next Media Company by Michael Brito - http://amzn.com/0789751615
Source: VinTank
State of the Wine Industry Report 2014
#SVBWINE
40. About the Report: The report is based on SVB's in-house expertise as one of the largest bankers to the West Coast wine
industry, a proprietary database of more than a decade of winery financials, ongoing research, and an annual survey of 650
wineries.
About Silicon Valley Bank’s Wine Division: Silicon Valley Bank’s Wine Division specializes in commercial banking for
premium wineries and vineyards and the industries that support them. SVB has the largest team of commercial bankers
dedicated to the wine industry of any bank nationwide. Founded in 1994, SVB’s Wine Division has offices in Napa and
Sonoma counties and serves clients focused in the fine wine producing regions of California, Oregon and Washington. By
virtue of its dedication to the wine industry, Silicon Valley Bank is able to support its clients consistently through economic
and growth cycles, and offer guidance on many aspects of their business, beyond traditional banking services. Silicon Valley
Bank is a member of global financial services firm SVB Financial Group (Nasdaq: SIVB), with SVB Analytics, SVB Capital
and SVB Private Bank. More information on the company can be found at www.svb.com/winedivision.
Contact Us: For more information about this report or Silicon Valley Bank’s Wine Division, please contact us:
Rob McMillanEVP & Founder Phone 707.967.1367, rmcmillan@svb.com
Bill Stevens Division Manager Phone 707.967.1373, wstevens@svb.com
State of the Wine Industry Report 2014
#SVBWINE