2017 Central Coast Insights Survey
Compiled by Kathy Archer
Presented by
David I. Freed, Chairman
The Silverado Group
For the Full Survey go to our website www.winesymposium.com
© Wine Industry Symposium Group
1
2017 Highlights
OVERVIEW
• What’s driving the up-market
consumer
• Authenticity & personalization
• Industry concerns and changes
SUPPLY
• Grape contract strategies for a
rising market
• Wineries buying vineyards to
secure supply and prices
• Labor/water/climate change
VARIETALS
PRICING
• Dynamic growth in red blends
• Strong demand for Cabernet and • Grape pricing trends
Pinot and Chardonnay
• Wineries raising wine Prices
• Global competition for Coastal
price points
©Wine Industry Symposium Group
2
1. 2017 Respondent Types- 52 Respondents
Other
2%
Professional/Consultant
9%
Winery
5%
Financial
5%
Grower
20%
Winery & Grower
59%
©Wine Industry Symposium Group
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2. 2017 Location of Respondents
Other/Multiple
6%
San Joaquin County
2%
North Coast
10%
Santa Barbara County
23%
Santa Cruz County
0%
San Luis Obispo County
40%
Monterey County
19%
©Wine Industry Symposium Group
4
3. 2017 Acreage Size of Respondents
0 acres
10%
5-25 acres
16%
500 or more acres
38%
26-100 acres
14%
101-499 acres
22% Symposium Group
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5
OVERVIEW
TOP ISSUES
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6
17. 2017 Consumer
3.95
3.9
3.9
3.85
3.82
3.8
3.75
3.71
3.7
3.65
3.6
Innovation
Personalization
©Wine Industry Symposium Group
Authenticity
7
19. 2017. What Respondents Plan to Add/Change to Their
Businesses over the Next Three Years
90.0%
82.5%
80.0%
70.0%
57.5%
60.0%
50.0%
50.0%
40.0%
40.0%
35.0%
30.0%
25.0%
22.5%
20.0%
10.0%
0.0%
Redeveloping
Vineyards
Increasing
Winery &
Vineyard
Technology
Improvement
to Visitor
Center
More DTC
Technology
Increasing
Increasing
Crush &
Barrel
Fermentation Storage.Case
Capacity
Goods Capacity
©Wine Industry Symposium Group
Buying
Vineyards
8
10. 2017 Positive Impacts for Central Coast
Over the Next Three Years
4
3.75
3.55
3.53
3.52
3.5
3.35
2.87
3
2.5
2
1.5
1
0.5
0
Compelling value
to price ratio
Improved
economy &
consumer
confidence
Increased local
tourism
Increased DTC
Consumer has
Great
traded up to
winemakers
Central Coast coming to Central
sweet spot!
Coast
22. 2017. Recent Respondents Business Changes
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
74.4%
71.8%
65.9%
60.5%
59.5%
55.3%
53.8%
53.8%
VARIETALS
PLANTINGS
NIELSEN DATA
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What’s Hot, What’s Not….
71% Red
29% White
71% Red
29% White
Allied Grape Growers
Unified 2017
6. YES- I am Replanting or Developing New Acres
70.00%
60.00%
59.46%
50.00%
45.95%
40.00%
30.00%
24.32%
20.00%
16.22%
10.00%
0.00%
Demand for CentralCoast
Wine and Varietals
Contract from Wineries
Available
Better Rootstock, Clones Replacing Existing Acreage
and Spacing
©Wine Industry Symposium Group
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Central Coast or North Coast?
Popular Coastal Planting Regions
San Luis Obispo County
(Paso Robles)
Monterey
Allied Grape Growers
Unified 2017
Santa Barbaaraa
County
Sonoma County
Napa County
Sonoma/Napa
Sonoma/Napa
Share of Table Wine- Nielsen, 12/31/16
US Expanded All Outlets Plus Liquor/Convenience/AAES
20.0%
18.5%
18.0%
16.6%
16.0%
14.0%
12.0%
10.0%
8.0%
11.90%
8.9%
7.3%
6.8%
6.0%
6.0%
6.0%
4.0%
2.1%
2.0%
0.0%
2.0%
1.7%
1.0%
SUPPLY
Issues Affecting
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21. 2017 Top Respondent Concerns
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
16. 2017. Climate Change
4.3
4.13
4.1
3.9
4.07
3.76
3.71
3.7
3.5
3.3
3.24
3.24
3.09
3.1
3.04
2.9
2.7
2.5
©Wine Industry Symposium Group
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11. 2017 What Respondents think Will Have Negative Impacts
in the Central Coast over the Next Three Years (Scale of 1 to 5))
4.5
4
4.25
4.23
4.09
3.85
3.6
3.5
3.56
3.28
3.04
3
2.5
2
1.5
1
0.5
0
©Wine Industry Symposium Group
19
2016 Which Factors Respondents Think will Have a NEGATIVE
IMPACT on the Central Coast Wine Industry
(Scale of 1 to 5)
3.9
3.84
3.8
3.75
3.7
3.6
3.57
3.53
3.5
3.46
3.44
1st Place
Last Year
3.4
3.3
3.2
Water Supply
Increase Input
Costs
Environmental
Constraints
Labor Shortage
©Wine Industry Symposium Group
Margin
Compression
Slowing Economy
20
7. 2017 What Percent of Your Grapes Stay in the Central Coast?
0-25%
22%
100%
40%
26-50%
4%
51-75%
18%
56% of Growers Keep Between
75% and 100% in Central Coast
75-90%
16%
©Wine Industry Symposium Group
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14. 2017 Which RED Varietals Have the Strongest Demand
According to Respondents
80.0%
70.5%
70.5%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
11.4%
10.0%
9.1%
0.0%
Cabernet Sauvignon
Pinot Noir
Syrah
©Wine Industry Symposium Group
Merlot
22
CASS. 2008 - 2016 District 1-8 Red Grape Tons
250,000
Up
43%
200,000
UP
52%
150,000
UP
10%
100,000
UP
39%
50,000
-
Cabernet Sauvignon
Merlot
Pinot Noir
Syrah
2008 Tons
141,635
67,303
80,541
31,118
2010 Final
214,433
113,491
97,521
43,021
2012 Final
233,698
122,312
158,042
41,138
2013 Eratta
235,060
117,858
167,570
42,656
2014 Errata
232,498
100,801
163,965
38,063
2015 Errata
165,883
76,476
97,745
25,520
2016 Prelim
233,737
83,924
146,870
32,207
2008 Tons
2010 Final
2012 Final
2013 Eratta
2014 Errata
©Wine Industry Symposium Group
2015 Errata
2016 Prelim
23
CASS 2008- 2016- District 7 Red Grapes
70,000
UP 80%
60,000
50,000
40,000
Up 14%
UP 66%
30,000
Up 50%
20,000
10,000
2008 Final
2010 Final
2012 Final
2013 Errata
2014 Errata
2015 Errata
2016 Prelim
2008 Final
Cabernet
17,045
31,431
35,494
36,035
33,403
18777
31127
2010 Final
Merlot
17,687
36,057
40,621
37,940
34,557
24204
27646
2012 Final
2013 Errata
Pinot Noir
23,181
34,287
54,104
56,070
63,133
31969
57462
2014 Errata
©Wine Industry Symposium Group
2015 Errata
Syrah
6,246
10,272
9,786
10,429
9,323
5121
7675
2016 Prelim
24
CASS. 2008- 2016 District 8 RED Grape Tonnage
70,000
UP
49%
60,000
50,000
40,000
30,000
UP 31.9%
UP 11.7%
UP 31.3%
20,000
10,000
2008 Final
2010 Final
2012 Final
2014 Errata
2015 Errata
2016 Prelim
Cabernet
29,243
62,806
53,516
51,847
32719
64,496
2008 Final
2010 Final
Merlot
13,632
29,865
21,889
19,650
15,468
17,523
2012 Final
Pinot Noir
12,373
15,586
23,498
27,505
16,903
24,829
2014 Errata
©Wine Industry Symposium Group
2015 Errata
Syrah
13,914
21,355
17,699
16,859
10,057
14,646
2016 Prelim
25
14. 2017. Which WHITE Varietals Have the Strongest Demand
according to Respondents
60.0%
51.2%
50.0%
43.5%
40.0%
30.2%
30.0%
20.0%
10.0%
0.0%
Sauvignon Blanc
Chardonnay
©Wine Industry Symposium Group
Pinot Grigio
26
CASS 2008 -2016 Districts 1-8, White Grapes
400,000
350,000
Up 20%
300,000
250,000
200,000
150,000
Up 36%
100,000
Up 31%
50,000
-
Chardonnay
Sauvignon Blanc
Pinot Grigio
2008 Tons
237,116
47,161
12,216
2010 Final
295,592
55,462
18,302
2012 Final
303,410
60,926
23,615
2013 Eratta
335,811
74,808
20,592
2014 Errata
326,671
68,516
21,104
2015 Errata
232,838
48,876
12,761
2016 Prelim
279,714
66,167
16,670
2008 Tons
2010 Final
2012 Final
2013 Eratta
2014 Errata
©Wine Industry Symposium Group
2015 Errata
2016 Prelim
27
CASS= 2008- 2016 District 7 White Grape Tonnage
140,000
120,000
Up 12.1%
100,000
80,000
60,000
40,000
UP 44%
UP 79.2%
20,000
-
2008 Final
2010 Final
2012 Final
2013 Errata
2014 Errata
2015 Prelim
2016 Prelim
2008 Final
Chardonnay
90,791
112,672
103,312
116,553
124,742
84,378
94,588
2010 Final
Pinot Grigio
5,422
8,114
8,962
8,123
9,342
4,341
7,779
2012 Final
2013 Errata
2014 Errata
©Wine Industry Symposium Group
Sauvignon Blanc
6,288
8,240
8,542
10,432
10,077
5,208
7,498
2015 Prelim
2016 Prelim
28
CASS. 2008- 2016 DISTRICT 8 WHITE GRAPE TONNAGE
60,000
50,000
UP 20.4%
40,000
30,000
20,000
UP 22.3%
UP 31.3%
10,000
-
Chardonnay
Pinot Grigio
Sauvignon Blanc
2008 Final
46,560
3,281
4,728
2010 Final
52,437
3,522
7,440
2012 Final
46,341
3,536
6,251
2014 Errata
46,015
3,449
7,641
2015 Errata
33843
2009
4132
2016 Prelim
42,532
2,925
5,322
2008 Final
2010 Final
2012 Final
2014 Errata
©Wine Industry Symposium Group
2015 Errata
2016 Prelim
29
PRICING
Grape Prices
Winery Prices
Profits & Revenues
©Wine Industry Symposium Group
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11. 2016- How Much Will Respondents Raise Grape Prices in
2016?
60.0%
50.0%
49.2%
40.0%
30.0%
18.6%
20.0%
15.3%
10.2%
10.0%
6.8%
0.0%
No change
Raise 2%
Raise 5%
©Wine Industry Symposium Group
Raise 10%
Above 10%
31
9. Respondent Wineries Raising Prices in 2017
More than 10%
15%
No change
34%
0.1
12%
2%
7%
5%
32%
©Wine Industry Symposium Group
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12. 2017- Respondent Profits and Revenues for 2016
35.00%
31.58%
Profits
29.27%
30.00%
Revenues
26.32%
25.00%
21.95%
21.05%
19.51%
20.00%
15.00%
9.76%
10.00%
9.76%10.26%
9.76%10.26%
Same
Worse
5.00%
0.00%
0.00%
Above 10%
Plus 10%
Plus 5%
Plus 2%
©Wine Industry Symposium Group
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15. 2016 - How 2015 Respondent Profits Compared with 2014
30%
25%
25%
23%
20%
20%
17%
???
15%
10%
8%
6%
5%
0%
Above 10%
+ 10%
+ 5%
+ 2%
©Wine Industry Symposium Group
Same
Worse
34
Volume Percent Change Y/E 2016
Nielsen Expanded
14.0%
11.8%
12.0%
9.9%
10.0%
8.9%
8.0%
Axis Title
6.0%
6.0%
4.0%
2.0%
0.7%
0.0%
-2.0%
-2.4%
-2.7%
-4.0%
< $3
$3- $6
$6-8.99
$9-11.99
$12-14.99 $15-19.99
©Wine Industry Symposium Group
$20+
35
15. 2017 Price Points
4.50
4.21
4.00
3.93
3.74
3.50
3.6
3.00
2.50
2.3
2.00
1.50
1.53
1.00
0.50
0.00
$3-7
$7-10
$10-14
$14-20
©Wine Industry Symposium Group
$20-25
Over $25
36
20. 2017. Lender Discussion Topics
50.0%
45.0%
42.9%
40.0%
35.0%
28.6%
30.0%
25.0%
20.0%
17.9%
15.0%
10.0%
7.1%
5.0%
0.0%
Future Planning
Requirements
Interest Rate Changes
Increased Back Up
Information
©Wine Industry Symposium Group
Global Concerns & Political
Changes
37
M & A in Central Coast Wine Industry
•
•
•
•
•
•
•
•
Five Rivers to Trinchero - 2016
Rita’s Crown - Sea Smoke - (Riboli) 2016
Robert Hall to O’Neill Vinters - 016
Chalone to Foley - 2016
Talbott to Gallo - 2015
Eberle to Eberle - 2015
Meiomi to Constellation - 2015
Chronic Cellars to Winery Exchange - 2014
©Wine Industry Symposium Group
38
2017 Highlights
OVERVIEW
• What’s driving the up-market
consumer
• Authenticity & personalization
• Industry concerns and changes
SUPPLY
• Grape contract strategies for a
rising market
• Wineries buying vineyards to
secure supply and prices
• Labor/water/climate change
VARIETALS
PRICING
• Dynamic growth in red blends
• Strong demand for Cabernet and • Grape pricing trends
Pinot and Chardonnay
• Wineries raising wine Prices
• Global competition for Coastal
price points
©Wine Industry Symposium Group
39
2017 Central Coast Insights Survey
Compiled by Kathy Archer
Presented by
David I. Freed, Chairman
The Silverado Group
For the Full Survey go to our website
www.winesymposium.com
© Wine Industry Symposium Group
40