1. San Joaquin Valley Winegrowers
Association – Annual Conference
Claudia Schubert, President Diageo Chateau & Estate Wines
Fresno, California
November 29, 2012

2. Wines Video
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3. Happy 10th to the SJVWA!
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4. Agenda
Introduction to DC&E
Trends we see
Opportunities for SJVWA
Q&A
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5. Who We Are – Diageo Chateau & Estate Wines
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6. Who We Are – Our Winery and Vineyard Footprint
Lake County
DC&E Wineries – North Coast
Napa Valley Acacia – Sonoma
Mendocino County
Sierra Foothills Sonoma Facility – Sonoma
Sonoma County Beaulieu Vineyard – Napa
Solano County
Marin County Provenance Vineyards – Napa
San Francisco Lodi Sterling Vineyards – Napa
Livermore Rosenblum Cellars – Alameda (SF)
Santa Cruz Central Valley
DC&E Wineries - Central Coast
Monterey County
Blossom Hill Winery – Central Coast
San Luis Obispo / Paso Robles
Chalone Vineyard – Monterey County
Santa Barbara South Coast
Los Angeles
San Diego
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7. Who We Are – Our Wine Portfolio
Highly acclaimed Top imports Fast growing portfolio
California portfolio of Lifestyle wines
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8. Who We Are – Our Growth Plans
HERITAGE WINES LIFESTYLE WINES
• We have a highly acclaimed portfolio of • We have an aggressive new product growth
heritage brands agenda targeting the “lifestyle segment”
• We are focusing our efforts on engaging • We are focusing on offering wines to
with high value wine consumers and consumers who are looking for an
trade gatekeepers approachable package & wine style
Driving quality and value – Launching several new brands
from vineyard to shelf nationally, including
Butterfly Kiss™,
Stark Raving Wines™,
Rose’N’Blum™
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9. Who We Are – DC&E is a Business Unit of Diageo
Who is
Diageo is the Great heritage Global presence: In the U.S., 3 In UK, Blossom Innovation a key
world’s leading brands across 24,000 people in core business Hill is the largest driver and core
premium drinks our entire about 180 units: U.S. wine brand. It is competence.
business. portfolio. countries Spirits, Diageo- sourced
around the Guinness USA primarily from
world. and Diageo Central Valley
Chateau & here in CA
Estate Wines.
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10. Industry Trend – Overall Wine Consumption
Wine Category Gaining
… As Wine Consumption Increases
TBA Value Share…
Value Share, P52W Per Capita Consumption Indexed to 2002
Beer, 61% +15%
Spirits, 23%
+14%
Wine, 16%
Annual Value Growth, P52W
Wine +5.6%
Spirits +5.3% (6%)
Beer +6.6% 2002 2010
IRI 11/4/12 release, 52 week data. Beverage Information Group.
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11. Industry Trend – Retail Pricing
Premium Wine Growing Strongly… …With Pricing Stabilizing
0.5
16%
0
-0.5
Avg. Retail v. LY (% change)
13% -1
-1.5
13%
10%
-2
6%
4% 6%
1% -2.5
-3
$7-10 $10-15 $15-25 $25+ $7+
IRI Price Tier Value Growth vs. LY
12 Week 52 Week
Outside of IRI, the $7+ category is growing 5-6% IRI 11/4/12 release, 52 week data.
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12. Industry Trend – Varietal Trends
Growth driven by select varietals… …indicative of change in consumer
Volume Growth vs. LY (% change) taste over last decade
Volume Share
Chardonnay 3.5%
30% 27% White Wine
Cab Sauv 6.8%
25% 2001
20%
Merlot 3.4% 20%
2012
Pinot Noir 8.2% 15%
10% 8%
Pinot Grigio 9.5%
3% 4% 3% 4%
5%
Sauv Blanc 12.0% 1%
0%
Muscat 27.1% Chardonnay Pinot Grigio Sauv Blanc Muscat White Blend
Zinfandel 0.2%
Riesling -4.7%
20% Red Wine
15%
15% 12%
Red Blend 24.0% 10%
10%
White Blend 25.6% 5%
4%
5% 3%
Total 2.5% 1% 1% 2%
0%
0%
-10% -5% 0% 5% 10% 15% 20% 25% 30% Cab Sauv Merlot Pinot Noir Zinfandel Syrah Red Blends
IRI 11/4/12 release, 52 week data. IRI data for 2001; 2012 data in 52wks 11/4/2012 release
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13. Industry Trend – Innovation is Key
New Products driving category growth
 3,000 new SKUs reported in IRI since 2009
 These products driving 30-40% of category growth
Lifestyle wines, wines with approachable packaging and wine
styles, are fueling the category growth
 7 of 10 fastest growing wines in $7-10 segment
 3 of 10 fastest growing wines in $10-15 segment
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14. Industry Trend – Wine Supply
After short V10/11, outlook for V12
….Grape Prices Increasing
more balanced…
CA Wine Supply and Demand 800
(Million of Tons)
700
4.0
600
3.5
3.0 500
2.5 400
2.0 300
1.5
200
1.0
100
0.5
0
0.0 2007 2008 2009 2010 2011 2012*est.
2009 2010 2011 2012E
White Grapes Red Grapes Total Grapes
Grapes Crushed Wine Shipped
Unified Symposium State of the industry 2012
California Grape Crush Reports (08-11)
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15. Opportunities for the SJVWA
These trends represent great opportunities but also challenges for
SJVWA members
1) Right supply of right varietals to fuel new product launches
 Increasing supply in high growth varietals
 Maintaining balanced supply of 3 Core Varietals
2) Right cost structure
 Retail pricing stabilizing but not increasing across the board
 Imports will impact domestic pricing
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16. Opportunities for the SJVWA and DC&E
We are pursuing an aggressive new product strategy
 30% of our requirement comes from Central Valley
 Envision our requirements to grow
 Quality ever more important
We are supporting Diageo Wines Europe with contracts for Blossom Hill
 UK’s leading wine brand in Blossom Hill – 6m cases: ½ billion glasses sold per
annum – 16 glasses every second!
 The top 3 selling sku’s in UK – the nation’s favorite
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17. Thank You and Q&A
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