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THE VINEGAR INSTITUTE 2015 ANNUAL MEETING MARCH 15, 2015 INTRODUCTION • Ciatti Co  8 Regional Offices Worldwide

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THE VINEGAR INSTITUTE 2015 ANNUAL MEETING MARCH 15, 2015 INTRODUCTION • Ciatti Co  8 Regional Offices Worldwide Global Grape & Wine Update THE VINEGAR INSTITUTE 2015 ANNUAL MEETING MARCH 15, 2015 INTRODUCTION • Ciatti Co 8 Regional Offices Worldwide • Global Perspective • World Approach – Local Knowledge • Information & Data = Market Intelligence • Today’s Goal: Discuss World Acreage – Production & Usage Be Informative & Interesting OUTLINE • Vine Acreage & World Production • Europe – France, Italy, Spain, Germany • Southern Hemisphere – S. Africa, Argentina, Chile, Australia, New Zealand • USA – California, Other States • Consumption Trends • Sales US & World • Competition & Emerging Markets & Demographics • Closing - Conclusions GLOBAL VINE ACREAGE • Decade of Transition – Around the World • Generic vs. Varietal • Wine grapes • Table/Juice/Raisins/Generics • Old World - Down • Europe uprooting – Huge Removals • New World - Up • Planting Varietals – Vineyard Transition • Total: 7.5 million hectares (was 8.0m) GLOBAL ACREAGE TRENDS 2008 - 2012 COUNTRY Hectares PLANTING % CHANGE Spain 1.018 - 13 % Many low yielding vines France 800 - 7 % All for wine products Italy 769 - 7 % All for wine products China 570 + 19 % Little wine – Juice & Table USA 407 + 1 % Wine, Table Raisins & Juice Argentina 221 - 2 % Wine & Juice Chile 205 + 4 % Wine & Table Australia 169 - 2 % Wine & Table South Africa 131 - 1 % Wine Germany 102 -2 % Wine New Zealand 37 + 12 % Wine Source: TDA OIV GLOBAL WINE PRODUCTION China Argentina 4% USA 10% 5% WORLD : Spain Germany 6.0 Billion Gallons 12% 3% (34 Million Tons) Australia 5% USA : Italy So. Africa 10% of Production, 18% 3% 5% of Vine Acres Portugal Rest of World 3% France 16% 18% Chile 3% WORLD PRODUCTION 60 50 40 30 MHL 20 10 0 2012 2013 2014 COMMODITIZATION OF WINE Global Sourcing Carbon Footprint Currency Variations Source: Rabobank analysis based on various industry reports, 2012 EUROPE • Big Gorilla POPULATIONS • Today = 60% vs. 2000 = 73% • Germany 81 million • Shrinking Consumption, Aging population • France 64 million • Vine Removal – Agr. Policy to Uproot • UK 65 million • Legal Restrictions • Spain 46 million • Export to World • Italy 61 million • Currency Weakening Euro _________________________________________________________________________________________________ • Growth Items TOTAL: 740 million • Sparkling • Rose • Sangria/Fruit • Traditional Wine FRANCE FRANCE History: Crush Tonnages (million US Tons) ’09 ’10 ’11 ’12 ’13 ’14 7.6 7.1 7.8 6.1 6.8 7.2 • Key Varietals: • Chardonnay, Sauvignon Blanc • Merlot, Cabernet Sauvignon, Pinot Noir • Vine Acreage: 2000 2012 900,000 Hectares 800,000 Hectares (2.23 million Acres) (1.98 million Acres) ITALY ITALY History: Crush Tonnages (million US Tons) ’09 ’10 ’11 ’12 ’13 ’14 8.2 7.6 6.6 6.7 6.8 6.3 • Key Varietals: • Pinot Grigio, Chardonnay • Cabernet Sauvignon, Sangiovese, Merlot, Pinot Noir • Vine Acreage: 2000 2012 850,000 Hectares 769,000 Hectares (2.10 million Acres) (1.90 million Acres) SPAIN SPAIN History: Crush Tonnages (million US Tons) ’09 ’10 ’11 ’12 ’13 ’14 6.1 6.1 6.2 5.3 7.2 6.7 • Key Varietals: • Cheap Generics & Concentrate • Tempranillo, Grenache • Vine Acreage: 2000 2012 1,200,000 Hectares 1,000,000 Hectares (2.96 million Acres) (2.47 million Acres) GERMANY GERMANY History: Crush Tonnages (million US Tons) ’09 ’10 ’11 ‘12 ‘13 ’14 est. 1.4 1.0 1.4 1.3 1.3 1.4 • Key Varietals: • White Grapes – Riesling: Muller-Thurgau • Red Grapes – Pinot Noir: Dornfelder • Vine Acreage: 2000 2012 100,000 Hectares 102,000 Hectares (247,000 Acres) (252,000 Acres) EUROPEAN OUTLOOK • Exports • Italy – Largest Exporter • France & Spain • Support & Subsidize – Marketing • Huge Consumer (234 million hl) • 60% of all wine consumed in Europe • Regulations & Taxes SOUTHERN HEMISPHERE • 100-yr History – European Roots • Continued Growth • Varietal Leader • Market Driven – Newer Vines • Exports Required • Population Lacking • Global Players - Personality SOUTH AFRICA SOUTH AFRICA Population: 54m History: Crush Tonnages (million US Tons) ’09 ’10 ‘11 ‘12 ’13 ’14 1.5 1.4 1.4 1.4 1.6 1.7 • Key Varietals: • Chardonnay, Chenin Blanc • Pinotage, Cabernet Sauvignon, Merlot, Syrah • Vine Acreage: 2000 2012 100,000 Hectares 131,000 Hectares (240,000 Acres) (323,000 Acres) ARGENTINA ARGENTINA Population: 43m History: Crush Tonnages (million US Tons) ’09 ’10 ‘11 ‘12 ’13 ’14 2.4 2.9 3.2 2.5 3.0 2.9 • Key Varietals: • Malbec • Cheap Generics • Concentrate - White • Vine Acreage: 2000 2012 240,000 Hectares 221,000 Hectares (593,000 Acres) (546,000 Acres) CHILE CHILE Population: 18m History: Crush Tonnages (million US Tons) ’09 ’10 ‘11 ‘12 ’13 ’14 1.6 1.4 1.7 1.9 2.0 1.5 • Key Varietals: • Cabernet Sauvignon • Chardonnay, Sauvignon Blanc • Vine Acreage: 2000 2012 170,000 Hectares 205,000 Hectares (420,000 Acres) (494,000 Acres) AUSTRALIA AUSTRALIA Population: 23m History: Crush Tonnages (million US Tons) ’09 ’10 ‘11 ‘12 ’13 ’14 1.9 1.8 1.8 1.8 2.0 1.9 • Key Varietals: • Chardonnay, Pinot Gris • Shiraz, Cabernet Sauvignon, Merlot • Vine Acreage: 2000 2012 180,000 Hectares 169,000 Hectares (445,000 Acres) (418,000 Acres) NEW ZEALAND NEW ZEALAND Population: 4.5m History: Crush Tonnages (in US Tons) ’09 ’10 ‘11 ‘12 ’13 ’14 313,000 293,000 361,000 331,000 380,000 485,000 • Key Varietals: • Sauvignon Blanc – 70% Total • Pinot Noir - New • Vine Acreage: 2000 2012 20,000 Hectares 35,500 Hectares (50,000 Acres) (88,000 Acres) ASIA • China: Population 1.4 billion • 800,000 1 million acres • Mainly Generic • All Internal, Not Seller • Growing Wine Consumer, but Austerity • Turkey / Iran: Food – No Alcohol • Russia & Eastern Block: Cheap Buyer Embargo – Agriculture Politics USA USA – Total Country History: Crush Tonnages (million US Tons) – All Grapes ’09 ’10 ‘11 ‘12 ’13 ’14 4.3 4.3 4.1 4.7 5.0 4.8 • Domestic – 85% • Export – 15% • Europe • Canada • Japan/Asia • Vine Acreage : 2000 2012 410,000 Hectares 407,000 Hectares (1,013,000 Acres) (1,005,000 Acres) CALIFORNIA 90% of US Production • Wine Grapes – Coast vs. Valley • Table & Raisin – Valley • Grape Concentrate & Alcohol – Food/Beverage • Current Trends • Drought – affects? • 3 Large Harvests • Value Wines = Decline vs. Premium Wines = Growth • Wine Tourism – Profitable • Planting - Again CALIFORNIA WINE GRAPE PLANTINGS Bearing Acres Bearing Non-Bearing • Other Grape 2012 530,000 50,000 • Vine Removal 2013 545,000 75,000 • Thompson Out 2014 550,000 90,000 • Table & Raisin • Nuts & Fruit Vines Sold • Big Competition 2012 25 Million Wine Grape Vines 2013 29 Million Wine Grape Vines 2014 ??? Source: Allied Grape Growers 2013 WINEGRAPE VINES SOLD BY CA. NURSERIES 29% White 71% Red Source: Allied Grape Growers OTHER STATES • Washington - 2014 • Wine grapes – 227,000 Tons • Juice – 285,000 Tons • Oregon • Wine grapes – 60,000 Tons • New York • Wine & Juice – 200,000 Tons CONSUMPTION • World • USA: Long-term Growth • Europe: Declining Consumption & Production - Sad • Emerging Markets: China & Asia - Future • Other Beverages – Today’s Consumption • Beer – Craft Beer • Spirits – Craft & Flavored • Cider – Younger Consumer • Consumer Choice – Share of Palate - Options US DRINKING TRENDS Varietal Craze Boomers Coolers 60-minutes French Paradox Source: SVB State of the Wine Industry Report 2014 Slide 38 LM1 Lindsay MacLean, 3/5/2015 US DRINKING TRENDS Source: SVB State of the Wine Industry Report 2014 SALES 2014 (YEAR-END) • US Wine Market • California Sales (Domestic & Export) = + 5% • Imports (Total) = -6% • Case Goods (- 1%) • Bulk (-20%) • Total (ALL) • US & Import = + 1% (2.6 million cases) • Craft Beer = + 18% (20 million cases) • Cider = + 50% (4 million cases) CRAFT BEER FACTS & FIGURES • 1,500 more Breweries in application • Craft Distillers: Today = 600 Producers; 400 more in application Source: Brooklyn Brewery & Smoke CLOSING • A Lot of Stuff!! • Wine is now a Global Market – Making Better Wine • Commodity Cycles – Always Changing • Thanks for the Opportunity to Share Thank You! WWW.CIATTI.COM CIATTI-WORLD REPORT.
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