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Suisun Valley Grape Growers Assn

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Suisun Valley Grape Growers Assn Suisun Valley Grape Growers Assn 2007 to 2011 Strategic Plan & Budget In keeping with defined initial goals, the Suisun Valley Grape Growers Association has developed forward strategic planning and budgets to cover 2007 and out to 2011. Based upon the changes in market during initial three years of Association presence, the plan sets direction for sustainable market performance into the future. Market Situation – Year End 2006 1. Winery consolidation has been highly focused to the commodity side of the wine business and has consolidated globally. Global commodity status has allowed major old line buyers to source freely at the bulk juice level globally on lowest price available, creating competitive disadvantage in California production costs 2. $10 and under commodity wines likely not competitively feasible in California vineyards on sustainable basis 3. Consolidated commodity wineries have significantly reduced numbers of grape buyers thus controlling commodity grape pricing. 4. Coastal appellations no longer regard commodity programs as sustainable 5. Wine quality levels continue to improve requiring more quality improvements in vineyards. 6. An explosion of small boutique up scale wineries with very different quality and quantity needs has surfaced 7. A major expansion of Midwest and East Coast wineries has occurred in US market, often focused to available hybrid local grapes but seeking more European varietals for their customer demands 8. Coastal premium growers have opted to custom crush over sell at distressed commodity levels, bringing high levels of new premium to luxury bulk wines into market for program acquisition by many previous winery grape buyers 9. Suisun Valley awareness levels and quality perceptions are being significantly elevated from non existent levels as results of multiple year effort by SVGGA. 10. Internal grape demand within Suisun Valley remains relatively flat and significantly out of balance to supply. 11. Political issues have clouded unified approach within Suisun Valley 12. Suisun Valley Fund is aging and moving into second half of its defined life. 13. Industry alliances have helped elevate the status and awareness of Suisun Valley AVA 14. Potential of expansion of “in-valley” wineries becomes more favorable with new players entering Suisun Valley. 15. Editorial by WineBusiness Monthly describes the status and imperative of ‘Regional Marketing” imperative as follows: Regional Marketing Will Drive Wine Sales 2006 was the year of regional marketing. This was the year when regional associations started trying to get control of their marketing processes. The proliferation of AVAs has made it more difficult for any region to become well known to consumers. There are now roughly 200 American Viticulture Areas (AVAs) in North America. Most consumers still barely know what an AVA is. Though consumers may have heard of Napa, or even of California, a surprising number of them (as a study from a couple of years ago demonstrated) assume "Robert Mondavi" is an AVA. Global competition has made it imperative that vintners and growers find a way to make their regions stand out. Associations will take the lead in explaining to consumers how the products from their region are different than the grapes and wines available from other regions. Associations are coordinating the marketing efforts of vintners and growers in each region to deliver a unified message. Regions trying to get control of these processes include Sonoma, Paso Robles and Mendocino. Growers in Sonoma County voted by an overwhelming margin this year for an assessment through which they will fund a new growers commission to boost the profile of Sonoma grapes. Regional marketing associations in several wine-producing states have reinvented themselves. From New York to Washington to California, many have new enthusiasm, momentum and leadership. We count nearly a dozen new executive directors of grower and vintner marketing organizations. Mendocino winegrape growers and vintners approved the implementation of the Mendocino County Winegrape and Wine Commission. Unlike the two other regional winegrape commissions currently operating in California, this commission has its own separate statute and will be funded by both growers and vintners instead of just growers alone. SWOT Analysis Strengths AVA Status North Coast Status Multiple micro climate zones Core group of progressive growers Emerging willingness of key press to type Suisun Valley with Napa Emergence of proven quality ratings by key influential types Short term available funding Weaknesses Very poor awareness of AVA Misperceptions on climate and soils by premium wineries Inability to continue in commodity arena due to costs Significant lack of internal AVA grape demand Limited appellated wines to create market presence for growers Lack of alternative processing facilities Lack of current long term sustainable funding to market Limited base of leadership Opportunities Emergence of notable recognition of Suisun Valley wines to build upon Effective utilization of available Public funding over next 4 years Potential changes in General Plan to open more market driven activities that support grape and wine sales Expanded strategic alliances within industry influential types Expansion of internal winery entities creating expanded internal grape demand Ability to define quality perceptions with positive efforts Threats SVF sunset is clearly on the horizon, loss of resource. Industry consolidation reducing sales opportunities Globalization at commodity pricing levels Changes in development pressures on Suisun Valley Poor vineyard management practices of some effect all Competitive development by other AVA groups further stratify barriers to cross AVA grape purchasing. Situation Conclusions The Association has demonstrated cohesiveness and viability that requires long term self sufficiency. Internal funding mechanisms of greater consequence must evolve. Growing of commodity oriented wine grapes is not long term economically viable within Suisun Valley; globalization of wine market at commodity level, direct operating expense issues of the region. A need for agricultural zoning and policy reform is critical to economic viability for many growers, allowing diversified marketing approaches to enhanced farm revenues. Expansion of appellated wines from Suisun Valley will be critical to gaining credibility for specialized grape demand on Suisun Valley. Evolution of such demand can be attained under significant quality requirement that will pay superior pricing. Market awareness is critical to grower success, agricultural branding of regions is a real competitive factor that must be pursued. Current AVA Position One of oldest awarded status areas since inception of AVA system in United States with current limited awareness of AVA status, founding entity status lost on market, capable of producing excellent luxury class wine grapes and appellated wines. Very current awakenings of market position being stimulated by increased observations of wine quality by market defining media sources in positive direction. A position yet encumbered with supply industry stereotyping to commodity side of market. SVGGA Desired AVA Position A Coastal appellation of it’s own character and value relationships in both contract wine grape supply and appellated ultra premium to luxury class wines capable of being considered within the top tiers of appellations in California. SVGGA Desired Position To be member self sufficient on long term basis Projecting efforts solely within Ultra Premium and Luxury Class wine segments Advocate of reformed Ag zoning and policy that supports conceptual Agricultural Enterprise Zone development and adoption upon agreeable plan Project defining leadership for agriculture in Suisun Valley SVGGA Goals and Objectives 2007-2011 1. To sustain wine grape production at commercially profitable levels for all growers with the Suisun Valley AVA. 2. To improve price per ton averages on annualized basis to maintain grower revenue in line with increased operating costs 3. To increase annual tonnage shipments from Suisun Valley to ultra-premium and luxury class North Coast wineries or wine programs. 4. To develop meaningful awareness within commercial markets of brand (AVA) orientation of Suisun Valley and position such awareness as high quality/high value. 5. To foster further winery development within the Suisun Valley AVA producing Suisun Valley appellated wines, growing internal demand of Suisun Valley grape growers. Strategies to Achieve Goals Financial Strategic Element Develop an internal grower annual assessment structure upon which sustainable future financing of SVGGA administration and programs can be accomplished. Initial roll out 2008, ramped up fashion to fully self sufficient assessments beginning 2011. Build budget based upon SVF grants during 2007 followed by integrated funding 2008 to 2010. Grower self assessment structure to be augmented by ancillary SVGGA wine auction. First wine auction to be staged in 2008. Industry Alliance Strategic Element Utilize the market presence of a highly regarded brokerage to provide market intelligence, periodic sales support and 'halo effect' market validation to AVA. Support primary industry alliance with tangent broad based organizational alliances with overview organizations such as Wine Institute, Family Winemakers of CA, Allied Grape Growers, California Association of Wine Growers. Assign Board members to manage relationships with each organizational
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