A key report by Rob McMillan from SVB about the wine industry where he surveyed 598 wineries from their portfolio.
For more information about the report -
Email: Rob McMillan
Twitter: @svbwine
RMcMillan@svb.com
707-967-1367
If you tweet about this report, please use #SVB
3. What We Predicted for 2010 ….
• Trading-Down will end but Profitability Impacted
• “L” Shaped Recovery
• Discounting into the fall
• Improving Affluent Consumption – with a continuing gulf
• Price Pressure on wines in Distribution
• Slightly too much inventory. Growers will be impacted.
• Modest Improvement in Restaurant Sales
• Distribution continues ambivalent toward small wineries
• Sales growth in the 8% - 12% range overall for Fine Wine
3
4. Economic Opportunity and Obstacles
o Factories Producing More
o Consumers Spending More – Going Out More
o Companies Hiring More
o Stability of the Tax System/Rates
o Improved Consumer and Business Sentiment ….. But
o Lower Home Prices & Unsold Home Inventory
o Higher Commodity Prices
o Fed Has to Remove Stimulus
o Walking Zombie States and Municipalities
o Sovereign Debt Defaults (PIIGS)
o Higher Interest Rates ( …. Higher home and US Debt payments)
o Non-Functioning Asset Backed Debt System
4
32. 2010 Will be ………….
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
The best year in our One of our better A good year A year in which we A disappointing One of our most The most difficult
history years will be pretty much year challenging years year in our history
treading water
Source: Silicon Valley Bank Proprietary Research 32
35. Grape Purchases vs. Price in 2011
60 % Expect to buy more 65% Expect to spend less
35
36. Early Predictions for 2011
• Slowly Improving Restaurant Sales
• Slowly Improving Economy with a Hangover
• Continued Distribution Issues
• Large Euro and US Economic Challenges
• High Costs to Produce Wines with Lowed Price Points
• Inventory Closer to Balanced than most think
• Improving Consumer Economy with Hangover
• Flat Pricing on Grapes except in Best Properties
• Double Digit Growth in Fine Wine Sales and Flat Profit
36
37. Presentation or Banking Questions:
Email: Rob McMillan
Twitter: @svbwine
RMcMillan@svb.com
707-967-1367
If you tweet about this report, please use
#SVB
37