Allied Grape Growers

1. SJVWA
Annual Meeting & Industry
Forum
Nat DiBuduo
Allied Grape Growers
December 5, 2013
Allied Grape Growers, 2013. All rights reserved.

2. Answering Some Key Industry Questions…….
Allied Grape Growers, 2013. All rights reserved.

3. Answering Some Key Industry Questions
Question#1: Just how big was this crop?
•Related Questions:
Are we in supply/demand balance?
Will our domestic supply depress imports?
Allied Grape Growers, 2013. All rights reserved.

4. Answering Some Key Industry Questions
Just how big was this crop?
Production Analysis
A regional look at production
Stated in tons crushed
Region
North Coast
Central Coast
Lodi/Clarksburg
Central Interior
Other
Total
Four-Year
Average
470,642
495,405
802,646
1,814,438
80,003
3,663,134
2012
579,852
548,444
916,138
1,884,293
89,510
4,018,237
2013
Estimate
525,000
500,000
920,000
2,000,000
80,000
4,025,000
Allied Grape Growers, 2013. All rights reserved.
% Above
Average
12%
1%
15%
10%
0%
10%

5. Answering Some Key Industry Questions
Just how big was this crop?
California Production
Allied Grape Growers, 2013. All rights reserved.

6. Answering Some Key Industry Questions
Question#1: Just how big was this crop?
•Related Questions:
Are we in supply/demand balance going forward?
Will our domestic supply depress imports?
Allied Grape Growers, 2013. All rights reserved.

7. Answering Some Key Industry Questions
Are we in supply/demand balance going forward?
California Wine Shipments 2005-2012,
with estimates and projections thru 2016
Millions
of Tons
5.0
Projected Need: 3.74 3.80 3.87 3.93
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Est.
Est.
Est.
Est.
California Wine Shipment Data Source:
The Gomberg Fredrikson Report
Updated March 2013
Allied Grape Growers, 2013. All rights reserved.

8. Answering Some Key Industry Questions
Are we in supply/demand balance going forward?
Crop
Year
Winegrape
Tons Crushed
or Projected
Bearing Winegrape Acres
Estimated by the State
(2012-2016 = AGG Est.)
2005
3,755,166
477,000
7.87
2006
3,136,000
480,000
6.53
2007
3,247,504
480,000
6.77
2008
3,014,769
482,000
6.25
2009
3,703,031
489,000
7.57
2010
3,588,985
497,000
7.22
2011
3,342,689
506,000
6.61
2012
4,018,237
520,000
7.73
2013
4,025,000
535,000
7.52
2014
3,932,500
550,000
7.15
2015
4,039,750
565,000
7.15
2016
4,248,000
590,000
7.20
Average per acre yield from 2005-2012:
Average
Winegrape
Yield
7.07
Allied Grape Growers, 2013. All rights reserved.

9. Answering Some Key Industry Questions
Are we in supply/demand balance going forward?
California Wine Shipments 2005-2012,
with estimates and projections thru 2016
Millions
of Tons
5.0
Projected Need: 3.74 3.80 3.87 3.93
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Est.
Est.
Est.
Est.
California Wine Shipment Data Source:
The Gomberg Fredrikson Report
Updated March 2013
Allied Grape Growers, 2013. All rights reserved.

10. Answering Some Key Industry Questions
Are we in supply/demand balance going forward?
California Wine Shipments 2005-2012,
with estimates and projections thru 2016
Millions
of Tons
5.0
4.5
2014-2016: The forecasted winegrape
crush less 220,000 tons for other uses
Balanced
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Est.
Est.
Est.
Est.
California Wine Shipment Data Source:
The Gomberg Fredrikson Report
Updated November 2013
Allied Grape Growers, 2013. All rights reserved.

11. Answering Some Key Industry Questions
Question#1: Just how big was this crop?
•Related Questions:
Are we in supply/demand balance going forward?
Will our domestic supply depress imports?
Allied Grape Growers, 2013. All rights reserved.

12. Answering Some Key Industry Questions
Will our domestic supply depress imports?
Exchange Rates (Value to $1 U.S.), January 2008 - December 2013
Chilean
Peso
Aust $
Arg Peso
Euro & Pound
1200
6.00
1100
5.50
1000
5.00
900
4.50
800
4.00
700
3.50
600
3.00
500
2.50
400
2.00
300
1.50
200
1.00
100
0.50
0
Jan 08
Jul 08
Jan 09
Chilean Peso
Jul 09
Jan 10
Jul 10
Argentine Peso
Jan 11
Jul 11
Jan 12
Australian Dollar
Jul 12
Euro
Jan 13
Jul 13
0.00
Dec 13
British Pound
Allied Grape Growers, 2013. All rights reserved.

13. Answering Some Key Industry Questions
Will our domestic supply depress imports?
Imported Wine - Bottled and Bulk
(In Millions of Cases)
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Total
+12%
Total
-1%
-2%
-5%
Total
+0%
+7%
Total
+7%
Total
+16%
+3%
Total
-4%
-2%
+7%
+71%
-23%
+92%
-20%
+26%
+27%
2008
2009
Data obtained via the Gomberg Fredrikson Report
2010
2011
Bottled Imports
2012
Bulk Imports
Allied Grape Growers, 2013. All rights reserved.
2013 Tracking

14. Answering Some Key Industry Questions
Will our domestic supply depress imports?
Millions
of Tons
California Grapes Crushed for Wine vs. California Wine Shipments
2005-2012
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2005
2006
California Wine Shipment Data Source:
The Gomberg Fredrikson Report.
2007
2008
2009
2010
Grapes Crushed for Wine
2011
2012
Wine Shipments
Allied Grape Growers, 2013. All rights reserved.

15. Answering Some Key Industry Questions
Will our domestic supply depress imports?
Imported Wine - Bottled and Bulk
(In Millions of Cases)
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Total
+12%
Total
-1%
-2%
-5%
Total
+0%
+7%
Total
+7%
Total
+16%
+3%
Total
-4%
-2%
+7%
+71%
-23%
+92%
-20%
+26%
+27%
2008
2009
Data obtained via the Gomberg Fredrikson Report
2010
2011
Bottled Imports
2012
Bulk Imports
Allied Grape Growers, 2013. All rights reserved.
2013 Tracking

16. Answering Some Key Industry Questions
Will our domestic supply depress imports?
Millions
of Tons
California Grapes Crushed for Wine vs. California Wine Shipments
2005-2012
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2005
2006
California Wine Shipment Data Source:
The Gomberg Fredrikson Report.
2007
2008
2009
2010
Grapes Crushed for Wine
2011
2012
Wine Shipments
Allied Grape Growers, 2013. All rights reserved.

17. Answering Some Key Industry Questions
Will our domestic supply depress imports?
Imported Wine - Bottled and Bulk
(In Millions of Cases)
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Total
+12%
Total
-1%
-2%
-5%
Total
+0%
+7%
Total
+7%
Total
+16%
+3%
Total
-4%
-2%
+7%
+71%
-23%
+92%
-20%
+26%
+27%
2008
2009
Data obtained via the Gomberg Fredrikson Report
2010
2011
Bottled Imports
2012
Bulk Imports
Allied Grape Growers, 2013. All rights reserved.
2013 Tracking

18. Answering Some Key Industry Questions
Will our domestic supply depress imports?
Millions
of Tons
California Grapes Crushed for Wine vs. California Wine Shipments
2005-2012
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2005
2006
California Wine Shipment Data Source:
The Gomberg Fredrikson Report.
2007
2008
2009
2010
Grapes Crushed for Wine
2011
2012
Wine Shipments
Allied Grape Growers, 2013. All rights reserved.

19. Answering Some Key Industry Questions
Will our domestic supply depress imports?
Imported Wine - Bottled and Bulk
(In Millions of Cases)
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Total
+12%
Total
-1%
-2%
-5%
Total
+0%
+7%
Total
+7%
Total
+16%
+3%
Total
-4%
-2%
+7%
+71%
-23%
+92%
-20%
+26%
+27%
2008
2009
Data obtained via the Gomberg Fredrikson Report
2010
2011
Bottled Imports
2012
Bulk Imports
Allied Grape Growers, 2013. All rights reserved.
2013 Tracking

20. The Answers:
Question#1: Just how big was this crop?
BIG….. About 10% above recent history
•Related Questions:
Are we in supply/demand balance?
YES
Will our domestic supply depress imports?
YES – it should based on inventory and
exchange rates, but the timing on bulk and
vs. bottled may be different.
Allied Grape Growers, 2013. All rights reserved.

21. Answering Some Key Industry Questions
Question#2: What are current planting trends?
•Related Questions:
What varieties are hot?
What areas are being planted?
Are we over-planting?
Allied Grape Growers, 2013. All rights reserved.

22. Answering Some Key Industry Questions
Each January, Allied Grape Growers conducts a confidential &
voluntary survey of California grapevine nurseries to
determine up-to-date planting trends.
Data is aggregated for the purpose of identifying what is
being planted, how much, and where.
Allied Grape Growers, 2013. All rights reserved.

23. Answering Some Key Industry Questions
Question#2: What are current planting trends?
•Related Questions:
What varieties are hot?
What areas are being planted?
Are we over-planting?
Allied Grape Growers, 2013. All rights reserved.

24. Answering Some Key Industry Questions
What varieties are hot?
Annual Vine Sales Leaders, Based on AGG Nursery Surveys:
•2012 - Cabernet Sauvignon, then French Colombard
•2011 - Muscat of Alexander, then Cabernet Sauvignon
•2010 - Cabernet Sauvignon, then Chardonnay & Rubired
•2009 - Chardonnay, then Cabernet Sauvignon
•2008 - Pinot Noir, then Chardonnay
Allied Grape Growers, 2013. All rights reserved.

25. Answering Some Key Industry Questions
39%
White
What varieties are hot?
2012 Winegrape Vines Sold by California Nurseries
French Colombard
13%
Cabernet
Sauvignon
25%
Chardonnay
Other Whites Include: 10%
Gewurztraminer
Riesling
Viognier
Sauvignon Blanc
Other Reds Include:
Grenache
Petite Verdot
Cab Franc
Rubired
Syrah
Barbera
Pinot Noir
10%
Ruby Cab
Tempranillo
Muscat of
Alexander
7%
Muscat Canelli
1%
Pinot Grigio
3%
Other White
Varieties
5%
Other Red
Varieties
9%
61%
Red
Zin/Primitivo
6%
Malbec
4%
Merlot Petite Sirah
3%
4%
Allied Grape Growers, 2013. All rights reserved.

26. Answering Some Key Industry Questions
Question#2: What are current planting trends?
•Related Questions:
What varieties are hot?
What areas are being planted?
Are we over-planting?
Allied Grape Growers, 2013. All rights reserved.

27. Answering Some Key Industry Questions
What areas are being planted?
Categorical Allocation of Vines
Sold by California Nurseries, 2011
High
Mid
Value
Note the amount of
green on this chart
vs. burgundy or gray.
Allied Grape Growers, 2013. All rights reserved.

28. Answering Some Key Industry Questions
What areas are being planted?
Regional Allocation of Major Winegrape Vines Sold, 2012
Cabernet
Sauvignon
High End
Mid Range
Value
Vine sales began trending toward the coast in 2012
French
Colombard
Pinot
Noir
Chardonnay
Muscat
Alexander
Zinfandel/
Primitivo
Merlot
Malbec
Pinot
Grigio
Muscat
Canelli
Allied Grape Growers, 2013. All rights reserved.

29. Answering Some Key Industry Questions
Question#2: What are current planting trends?
•Related Questions:
What varieties are hot?
What areas are being planted?
Are we over-planting?
Allied Grape Growers, 2013. All rights reserved.

30. Answering Some Key Industry Questions
Are we over-planting?
Estimated California Bearing Winegrape Acres
From 1990 with projections
700,000
600,000
500,000
400,000
Growing
Demand;
Demand Good, stalls;
Acreage
but Acreage
Oversupply Moderate
Growing
Peaks; Chronic Expansion
Demand, but
Oversupply
Rapid
Growing
Expansion
Demand;
No Growth
Moderate
from the
Expansion
1980s
300,000
200,000
100,000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
Allied Grape Growers, 2013. All rights reserved.

31. Answering Some Key Industry Questions
Are we over-planting?
Estimated California Bearing Winegrape Acres
From 1990 with projections
Growing
Demand;
Moderate
Expansion
700,000
600,000
500,000
400,000
Growing
Demand;
Moderate
Expansion
300,000
200,000
100,000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
Allied Grape Growers, 2013. All rights reserved.

32. Answering Some Key Industry Questions
Are we over-planting?
Estimated California Bearing Winegrape Acres
From 1990 with projections
700,000
600,000
Growing
Demand; Rapid
Expansion
500,000
400,000
300,000
200,000
100,000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
Allied Grape Growers, 2013. All rights reserved.

33. Answering Some Key Industry Questions
Are we over-planting?
Estimated California Bearing Winegrape Acres
From 1990 with projections
700,000
600,000
CAUSED
500,000
THIS
400,000
300,000
200,000
100,000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
Allied Grape Growers, 2013. All rights reserved.

34. Answering Some Key Industry Questions
Are we over-planting?
Estimated California Bearing Winegrape Acres
From 1990 with projections
700,000
600,000
THIS
CAUSED
500,000
THIS
400,000
300,000
200,000
100,000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
Allied Grape Growers, 2013. All rights reserved.

35. Answering Some Key Industry Questions
Are we over-planting?
Estimated California Bearing Winegrape Acres
From 1990 with projections
700,000
600,000
Growing
Demand; Rapid
Expansion
Are we Entering
a Period of
Rapid
Expansion?
500,000
400,000
300,000
200,000
100,000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
Allied Grape Growers, 2013. All rights reserved.

36. Answering Some Key Industry Questions
Are we over-planting?
Estimated California Bearing Winegrape Acres
From 1990 with projections
700,000
600,000
Growing
Demand; Rapid
Expansion
We know this is coming
for 2015 & 2016, but is it
rapid expansion?
500,000
400,000
300,000
200,000
100,000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
Allied Grape Growers, 2013. All rights reserved.

37. Answering Some Key Industry Questions
Are we over-planting?
Estimated California Bearing Winegrape Acres
From 1990 with projections
Only if we
700,000
600,000
Continue the
Recent Planting
Trend
500,000
400,000
300,000
200,000
100,000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
Allied Grape Growers, 2013. All rights reserved.

38. Answering Some Key Industry Questions
Are we over-planting?
Estimated California Bearing Winegrape Acres
From 1990 with projections
Moderate
700,000
600,000
Moderate Planting Defined:
+/-15,000 NET new acres per year
Planting
Matches the
Trend
500,000
400,000
300,000
200,000
100,000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
Allied Grape Growers, 2013. All rights reserved.

39. The Answers:
Question#2: What are current planting trends?
Cab in the coast and slowing in the interior
•Related Questions:
What varieties are hot?
Cabernet Sauvignon and some SJV generics
What areas are being planted?
Previously the interior, now the coast
Are we over-planting?
Coast – not likely; Interior – possibly
Allied Grape Growers, 2013. All rights reserved.

40. Answering Some Key Industry Questions
Question#3: What does the future hold?
•Related Questions:
Will California winegrape prices be stable?
What happened to Thompsons?!?!
Will today’s higher grape prices slow sales?
Allied Grape Growers, 2013. All rights reserved.

41. Answering Some Key Industry Questions
What does the future hold?
Allied Grape Growers, 2013. All rights reserved.

42. Answering Some Key Industry Questions
What does the future hold?
Allied Grape Growers, 2013. All rights reserved.

43. Answering Some Key Industry Questions
Question#3: What does the future hold?
•Related Questions:
Will California winegrape prices be stable?
What happened to Thompsons?!?!
Will today’s higher grape prices slow sales?
Allied Grape Growers, 2013. All rights reserved.

44. Answering Some Key Industry Questions
Will California winegrape prices be stable?
Three major factors
driving price (demand) over the last 2-3 years.
#3: The relatively weak dollar
#2: Competition from alternative crops (nuts)
#1: Supply planning for future (shortage)
Allied Grape Growers, 2013. All rights reserved.

45. Answering Some Key Industry Questions
Question#3: What does the future hold?
•Related Questions:
Will California winegrape prices be stable?
What happened to Thompsons?!?!
Will today’s higher grape prices slow sales?
Allied Grape Growers, 2013. All rights reserved.

46. Answering Some Key Industry Questions
What happened to Thompsons?!?!
Allied Grape Growers, 2013. All rights reserved.

47. Answering Some Key Industry Questions
What happened to Thompsons?!?!
Major factors driving Thompson price
#4: Winery use – Wine, Brandy, Alcohol
#3: Concentrate (Demand and Inventory)
#2: Crop size
#1: Raisin industry demand
Allied Grape Growers, 2013. All rights reserved.

48. Answering Some Key Industry Questions
Question#3: What does the future hold?
•Related Questions:
Will California winegrape prices be stable?
What happened to Thompsons?!?!
Will today’s higher grape prices slow sales?
Allied Grape Growers, 2013. All rights reserved.

49. Answering Some Key Industry Questions
Will today’s higher grape prices slow sales?
Every $100 in grape value = $.12 in the bottle
Chard - Sonoma
Chard - Monterey (Dist 7)
Chard - Lodi
Chard - SJV (Dist 13)
Muscat - SJV ( Dist 13)
Cab Sauv - Napa
Cab Sauv - Paso (Dist 8)
Cab Sauv - Lodi
Cab Sauv - SJV (Dist 13)
Pinot - Santa Barb (Dist 8)
Pinot - Mendocino
Zinfandel (Red) - Lodi
All Winegrapes Statewide
Average
Price
2010
$
1,808
$
894
$
451
$
333
$
361
$
4,242
$
924
$
511
$
357
$
2,539
$
2,300
$
658
$
582
Average
Price
2011
$
1,828
$
1,068
$
524
$
408
$
398
$
4,518
$
1,072
$
633
$
486
$
2,709
$
2,412
$
760
$
640
Average
Estimated Bottle
Price
Price Addition:
2012
Grape Cost Only
$
1,874 $
0.08
$
1,141 $
0.30
$
568 $
0.14
$
473 $
0.17
$
400 $
0.05
$
5,067 $
0.99
$
1,276 $
0.42
$
738 $
0.27
$
542 $
0.22
$
2,638 $
0.12
$
2,500 $
0.24
$
940 $
0.34
$
772 $
0.23
Allied Grape Growers, 2013. All rights reserved.

50. The Answers:
Question#3: What does the future hold?
No immediate shortage of wine
Related Questions:
Will California winegrape prices be stable?
Mostly yes, but spot market softening
What happened to the Thompsons?!?!
Premature speculation of a low raisin price
Will today’s higher grape prices slow sales?
Not necessarily, but it may mean lower
winery margins
Allied Grape Growers, 2013. All rights reserved.

51. Closing Thoughts
• Global market is ever-changing in quality/quantity
-Need for California research and outreach
• State of the Industry - Healthy, Growing & Stable
• Sustainability’s role in the future success of the
SJV wine industry
• SJV - Major supply contributor to California wines
-At various price points
Allied Grape Growers, 2013. All rights reserved.

52. Quality, proper planning and
economic sustainability will
keep our industry strong and
successful into the future.
Allied Grape Growers, 2013. All rights reserved.

53. Questions?
Allied Grape Growers, 2013. All rights reserved.