Allied Grape Growers, All rights reserved. Unified Wine & Grape Symposium State of the Industry Thriving, Just Surviving or Somewhere in Between? Nat DiBuduo Allied Grape Growers January 27, 2016 Allied Grape Growers, All rights reserved. Its more interesting to talk about huge crops during excess or short crops during shortage, but a short crop in a time of ample supply just makes for a boring production story of moving toward balance. -AGGs Industry Update Newsletter, January 2016- Allied Grape Growers, All rights reserved Crush.. Allied Grape Growers, All rights reserved. Todays presentation utilizes information obtained via Allied Grape Growers (AGG) annual Grapevine Nursery Survey combined with evaluation of numerous reports and data made available by the State of California. Wine shipment data is courtesy of the Gomberg Fredrikson Report. AGGs internal operations data along with unquantified industry observations and anecdotal evidence was also used to draw conclusions. Allied Grape Growers, All rights reserved. The Changing Five-Year Landscape 2010 vs. Now.. Supply/Production: Bearing acreage up 11% (now 555,000) Yield up 5% on average (7.25 TPA average) Competition: Wine imports up 15% (114m case average) Craft beer/Cider Demographics/Consumers: Less boomers, more millennials Premiumization Economics: Recession vs. Recovery Strength of US Dollar up 25% Allied Grape Growers, All rights reserved. This changing landscape has/will affect different regions in different ways Some positive Some negative Allied Grape Growers, All rights reserved. Over the Hump.. Last Year, AGG predicted 20,000 acres would be planted. Allied Grape Growers, All rights reserved. Over the Hump.. Our prediction for 2016 is 16,000 new acres. Allied Grape Growers, All rights reserved. Whats Hot, Whats Not. 65% Red 35% White Allied Grape Growers, All rights reserved. Planting Trends, Cabernet Sauvignon - 31% Cabernet Sauvignon - 31% Pinot Grigio 17% Pinot Grigio 17% Pinot Noir 15% Pinot Noir 15% Chardonnay 13% Chardonnay 13% Cabernet Sauvignon - 29% Cabernet Sauvignon - 29% Chardonnay 17% Chardonnay 17% Pinot Grigio 12% Pinot Grigio 12% Pinot Noir 12% Pinot Noir 12% Cabernet Sauvignon - 29% Cabernet Sauvignon - 29% Chardonnay 14% Chardonnay 14% Pinot Noir 13% Pinot Noir 13% Zinfandel 10% Zinfandel 10% Allied Grape Growers, All rights reserved. Categorical Review Trends, Issues, Threats & Opportunities Allied Grape Growers, All rights reserved. Breaking it Down. Value - ($20/bottle) Coastal (Napa, Sonoma, etc.) Allied Grape Growers, All rights reserved. Value Category Trends, Issues, Threats & Opportunities Allied Grape Growers, All rights reserved. +/-21,000 winegrape acres removed between the 2014 and 2015 harvests. 20,000 acres pulled (+/- 10,000 winegrapes) since the 2015 harvest. Vineyard Removal. (All interior, including Lodi) Removals will likely continue at the current pace thru Spring. Based on current shipment trends/grape buying activity, removals are necessary. Allied Grape Growers, All rights reserved. We estimate that unless demand for