CHANGE IS HERE A NEW MARKET PARADIGM Intelligence is the ability to - - PowerPoint PPT Presentation
UNIF NIFIE IED D WINE INE AND ND GR GRAPE SYMP MPOSIU IUM JA JANUARY 30, 2019 CHANGE IS HERE A NEW MARKET PARADIGM Intelligence is the ability to adapt to change - Stephen Hawking PROFESSIONAL BROKERS IN 9 COUNTRIES LOCALLY
“Intelligence is the ability to adapt to change”
JA JANUARY 30, 2019
PROFESSIONAL BROKERS IN 9 COUNTRIES
LOCALLY BASED TO HELP BUILD YOUR BUSINESS WORLDWIDE
v SLUGGISH SALES GROWTH v HISTORIC 2018 CROP v BULK MARKET ACTIVITY SLOW v BULK INVENTORIES INCREASING
vMA
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1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000
BULK GALLONS AVAILABLE CABERNET SAUVIGNON CHARDONNAY MERLOT PINOT NOIR ZINFANDEL
CIATTI
$0.00 $2.00 $4.00 $6.00 $8.00 $10.00
500,000 1,000,000 1,500,000 2,000,000 2,500,000
PRICE PER GALLON BULK GALLONS AVAILABLE Bulk Chardonnay Bulk Cabernet Sauvignon Bulk Merlot Price Per Gallon CH Price Per Gallon CS Price Per Gallon ME
CIATTI
BULK CHARDONNAY PRICE PER GALLON CH PRICE PER GALLON CS PRICE PER GALLON ME BULK MERLOT BULK CABERNET SAUVIGNON
$0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 $22 $24 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000
PRICE PER GALLON BULK GALLONS AVAILABLE
Bulk Chardonnay Bulk Cabernet Sauvignon Bulk Pinot Noir Price Per Gallon CH Price Per Gallon CS Price Per Gallon PN
CIATTI
BULK CHARDONNAY PRICE PER GALLON CH BULK CABERNET SAUVIGNON PRICE PER GALLON CS BULK PINOT NOIR PRICE PER GALLON PN
$0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 $22 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000
PRICE PER GALLON BULK GALLONS AVAILABLE
Bulk Chardonnay Bulk Cabernet Sauvignon Bulk Merlot Price Per Gallon CH Price Per Gallon CS Price Per Gallon ME
CIATTI
BULK CHARDONNAY PRICE PER GALLON CH BULK CABERNET SAUVIGNON PRICE PER GALLON CS BULK MERLOT PRICE PER GALLON ME
$0 $4 $8 $12 $16 $20 $24 $28 $32 $36 $40 $44 $48 $52 $56 100,000 200,000 300,000 400,000 500,000 600,000
PRICE PER GALLON BULK GALLONS AVAILABLE
Bulk Chardonnay Bulk Cabernet Sauvignon Bulk Merlot Price Per Gallon CH Price Per Gallon CS Price Per Gallon ME
CIATTI
BULK CHARDONNAY BULK CABERNET SAUVIGNON PRICE PER GALLON CS BULK MERLOT PRICE PER GALLON ME PRICE PER GALLON CH
$0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 $22 $24 $26 $28 $30 $32 100,000 200,000 300,000 400,000 500,000 600,000
PRICE PER GALLON BULK GALLONS AVAILABLE
Bulk Chardonnay Bulk Cabernet Sauvignon Bulk Merlot Price Per Gallon CH Price Per Gallon CS Price Per Gallon ME
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PRICE PER GALLON PN BULK PINOT NOIR BULK CHARDONNAY PRICE PER GALLON CH BULK CABERNET SAUVIGNON PRICE PER GALLON CS
v SLOW ACTIVITY WITH WEAKENING PRICING v BUYERS LOOKING FOR DEALS, SELLERS STARTING TO
REALIZE NEW MARKET
v COASTAL MARKET MORE AFFECTED THAN CENTRAL VALLEY v RENEWED NEGOTIANT ACTIVITY v WINERIES ALSO LOOKING TO MOVE EXCESS INVENTORY
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v LARGE 2018 HARVEST CHANGED MARKET BACK QUICKLY! v 2017
– VERY SMALL 2017 HARVEST CAUSED MARKET TO TIGHTEN – DEMAND/PRICES INCREASED
v 2018
– YIELDS UP 13% – PRICES AND DEMAND FOR BULK WINE HAVE DECLINED IN ALMOST ALL
REGIONS
v BACK
BACK TO TO NORMAL AL?
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210 220 230 240 250 260 270 280 290 300 2011 2012 2013 2014 2015 2016 2017 2018
WINE PRODUCTION WINE CONSUMPTION
MILLION hL VINTAGE
Source: OIV 2018, Ciatti Estimates
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Source: OIV 2018, Ciatti Estimates
200 400 600 800 1,000 1,200 1,400 1,600 France Italy Spain Argentina Australia Chile China South Africa USA 2011 2012 2013 2014 2015 2016 2017 2018 2011 – 2016
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MILLION GALLONS
Source: OIV 2018
7. 7.5 5 MILLION HA HA
CIATTI (1 (18.5 millio illion acres)
Source: OIV 2018
COUNTRY 2013-17 % ∆ COMMENTS
SPAIN
HIGHER PRODUCTIVITY
FRANCE
REMOVED YIELD RESTRICTIONS – VDF APPELLATION
ITALY
CHINA +15%
WINE GRAPE PLANTING SLOWING 11% GRAPE VARIETIES
USA
ARGENTINA
MORE REMOVALS EXPECTED
CHILE +4%
CABERNET SAUVIGNON, SAUVIGNON BLANC, MERLOT, PINOT NOIR
AUSTRALIA
TREND COULD REVERSE GIVEN DEMAND?
SOUTH AFRICA
DROUGHT ISSUES
NEW ZEALAND +4%
SAUVIGNON BLANC, PINOT NOIR
CIATTI
Source: OIV 2018
CIATTI
5 10 15 20 25 30 35 USA France Italy Germany China UK Spain Argentina Russia Australia Chart Title 2010 2011 2012 2013 2014 2015 2016 2017 2010 – 2016
MILLION hL
vQUALITY CONTINUES TO IMPROVE,
ESPECIALLY ON THE HIGH END
v STRONG PLAYER IN CS, ME, PN, AND SB FOR US MARKET
v FREE TRADE WITH MOST COUNTRIES
14 15 16 17 ’18 1.5 M 2.0 M 1.5 M 1.4 M 2.0 M $ / GAL. DLVD TREND CABERNET SAUVIGNON $3.00 – 4.10 ↓ MERLOT $3.10 – 4.20 ↓ CHARDONNAY $3.60 – 4.20 ↓ PINOT NOIR $4.10 – 5.10 ↓
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v EXPORTS TO CHINA AND THE UK ARE KEY
DRIVERS OF GROWTH
v CHARDONNAY AND PINOT GRIGIO IMPACT US MARKET v BULK PRICES HAVE REMAINED STRONG v 2019 HARVEST LOOKS GOOD – WATER BECOMING AN ISSUE AGAIN 14 15 16 17 ’18 1.9 M 1.8 M 2.0 M 2.1 M 2.0 M $ / GAL. DLVD TREND CHARDONNAY $3.20 – 3.60 ↓ SHIRAZ $4.60 – 5.10 ↔ PINOT GRIGIO $3.75 – 4.25 ↓
CIATTI
v BULK BUYER ACTIVITY LIMITED AS
EUROPEAN BUYERS MOVE TO SPAIN
v PRICES HAVE WEAKENED, BUT PREMIUM AREAS ARE STABLE v PROVENCE ROSÉ REMAINS IN DEMAND BUYERS MOVED TO OTHER
AREAS
v STRONG EXPORTER TO CHINA 14 15 16 17 18 Est. 7.2 M 7.3 M 6.9 M 5.6 M 7.1 M $ / GAL. DLVD TREND CHARDONNAY $5.10 – 6.00 ↓ CABERNET SAUVIGNON $4.85 – 5.90 ↔ MERLOT $4.70 – 5.55 ↔ ROSÉ $4.70 – 6.00 ↔
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v BULK MARKET SLOW TO DEVELOP v LOW ALC/ENTRY LEVEL WINES UNDER PRICING PRESSURE FROM SPAIN, WITH
SOME QUALITY CONCERNS
v HIGH QUALITY DOC AREAS – DEMAND AND PRICING RELATIVELY STABLE v PROSECCO CONTINUES TO GROW ESPECIALLY INTO THE US v BULK ORGANIC WINE EXPERIENCING STRONG DEMAND
14 15 16 17 18 Est. 6.8 M 7.7 M 7.8 M 6.0 M 7.4 M $ / GAL. DLVD TREND CHARDONNAY $3.85 – 5.10 ↓ CABERNET SAUVIGNON $4.05 – 5.25 ↓ MERLOT $3.85 – 5.10 ↓ PINOT GRIGIO $5.10 – 6.00 ↓
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v FOCUSED ON GENERIC MARKET v MAJOR BULK SUPPLIER TO THE EU AND CHINA v LEADING ACTIVITY OVER OTHER EUROPEAN BULK SUPPLIERS GIVEN PRICING v DEMAND DEVELOPING FOR VALUE ROSÉ’S AND ORGANICS INTO EUROPE 14 15 16 17 18 Est. 6.7 M 6.4 M 6.4 M 5.4 M 6.3 M $ / GAL. DLVD TREND CHARDONNAY $4.25 – 5.05 ↓ CABERNET SAUVIGNON $3.75 – 4.40 ↓ GENERIC RED/WHITE $2.75 – 3.50 ↓
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v ITALY/SPAIN GROWING – COULD THIS CONTINUE? v USA REMAINS THE MOST DESIRABLE AND PROFITABLE MARKET v CHINA’S ECONOMIC CHANGES COULD AFFECT WINE
CONSUMPTION GROWTH
v UK – BREXIT UNKNOWN EFFECT FOR U.S. SUPPLIERS v AL
ALL MAR ARKETS WILL GET MORE COMPETITIVE
CIATTI
Source: CA Wine Institute, Gomberg Fredrickson, BW 166, SVB
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MILLIONS OF GALLONS
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PERCENT MARKET SHARE
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vGLOBAL AND U.S. GROWTH SLOWING? vWINE IS READILY AVAILABLE AROUND THE WORLD vBUYERS ARE CAUTIOUS vSEL
SELLING GRA RAPES ES & BULK WINE E WILL BE E MORE RE CH CHAL ALLENGING
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vADJUST YOUR EXPECTATIONS vMANAGE INPUTS AND ASSETS TO MAINTAIN PROFITABILITY vDEVELOP A STRATEGY :
CIATTI
Source: OIV 2018
WINE TRADED INTERNATIONALLY / GLOBAL WINE CONSUMPTION
CIATTI
v ARE WE A VALUE TO THE CONSUMER v MILLENNIALS - HOW DOES THE WINE INDUSTRY CAPTURE THEIR
ATTENTION
v CAN WE DEVELOP NEW AND INNOVATIVE PRODUCTS TO UTILIZE THIS
AVAILABLE SUPPLY
v CAN WE GROW BY TAKING MARKET SHARE FROM OTHER ALC
BEVERAGES (CRAFT BEER AND SPIRITS), IMPORTS, AND EXPAND EXPORTS
v HO
HOW W DO WE WE BECOME MORE INNOVATIVE AND COMPETITIVE
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