Dollars and Sense   SVB Financial Group        Rob McMillan       EVP & Founder      SVB Wine Division                    ...
Discussion Today            •Economy            •Winery Specific Look                                    2
What We Predicted for 2010 ….• Trading-Down will end but Profitability Impacted• “L” Shaped Recovery• Discounting into the...
Economic Opportunity and Obstacles o Factories  Producing More o Consumers Spending More – Going Out More o Companies Hiri...
Wineries vs. Growers                       5
Monthly Growth in Retail Sales- Consumers Spending More                                 6
ECRI Weekly Leading Indicator Index              Source: Economic Cycle Research Institute   7
Luxury Spending Making a Comeback                                    8
Restaurant Same Store Sales                   Source: Demeter Group   9
NRA Current Situation Index                              10
Job Creation –  Companies Hiring More                          11
Unemployment versus Wine Sales                                 12
Window of Affluence               Source: Unity Marketing   13
Luxury Drought                 14
Unemployed and Underemployed                               15
Unemployment Trends - Will Take Time Still                                                      2016 ?                 Sou...
Single Family Housing Starts Bumping on the Bottom                                                     17
Long Term Interest Rates                           18
Wineries versus Growers                          19
Financial Condition of Wineries               84% of Sonoma Wineries Good+.                     Only 6% Very Weak         ...
Credit Availability Since the Market Crash       72% Said “More Difficult.”                 Source: Silicon Valley Bank Pr...
What Will You do with the Price of Your Wine?                                                22
Inventory Positions in the Cellar                       Source: Silicon Valley Bank Proprietary Research   23
Fine Wine Financial Snapshot Q2 2010           Source: Silicon Valley Bank PGA Data
Can Wineries and Growers Really Get Along?                                             25
Actively Participate in a SM Platform and Interact                                                     26
Don’t Actively Use SM as a Tool                                  27
Use a CRM and Track Buying Patterns and Demographics                                                   28
We have a Digital Marketing Plan in Place                                            29
A Dedicated Employee to Execute using Digital Tools                                                      30
Survey Customers to Discover Post-Purchase Experiences                                                    31
2010 Will be ………….50%45%40%35%30%25%20%15%10% 5% 0%      The best year in our One of our better   A good year   A year in ...
A Better Tomorrow ……. After tomorrow anyway                                              33
2011 Will be …………….                      34
Grape Purchases vs. Price in 2011       60 % Expect to buy more   65% Expect to spend less                                ...
Early Predictions for 2011• Slowly Improving Restaurant Sales• Slowly Improving Economy with a Hangover• Continued Distrib...
Presentation or Banking Questions:      Email: Rob McMillan      Twitter: @svbwine      RMcMillan@svb.com      707-967-136...
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SVB wine presentation 2011

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A key report by Rob McMillan from SVB about the wine industry where he surveyed 598 wineries from their portfolio.

For more information about the report -
Email: Rob McMillan
Twitter: @svbwine
RMcMillan@svb.com
707-967-1367

If you tweet about this report, please use #SVB

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SVB wine presentation 2011

  1. 1. Dollars and Sense SVB Financial Group Rob McMillan EVP & Founder SVB Wine Division 1
  2. 2. Discussion Today •Economy •Winery Specific Look 2
  3. 3. What We Predicted for 2010 ….• Trading-Down will end but Profitability Impacted• “L” Shaped Recovery• Discounting into the fall• Improving Affluent Consumption – with a continuing gulf• Price Pressure on wines in Distribution• Slightly too much inventory. Growers will be impacted.• Modest Improvement in Restaurant Sales• Distribution continues ambivalent toward small wineries• Sales growth in the 8% - 12% range overall for Fine Wine 3
  4. 4. Economic Opportunity and Obstacles o Factories Producing More o Consumers Spending More – Going Out More o Companies Hiring More o Stability of the Tax System/Rates o Improved Consumer and Business Sentiment ….. But o Lower Home Prices & Unsold Home Inventory o Higher Commodity Prices o Fed Has to Remove Stimulus o Walking Zombie States and Municipalities o Sovereign Debt Defaults (PIIGS) o Higher Interest Rates ( …. Higher home and US Debt payments) o Non-Functioning Asset Backed Debt System 4
  5. 5. Wineries vs. Growers 5
  6. 6. Monthly Growth in Retail Sales- Consumers Spending More 6
  7. 7. ECRI Weekly Leading Indicator Index Source: Economic Cycle Research Institute 7
  8. 8. Luxury Spending Making a Comeback 8
  9. 9. Restaurant Same Store Sales Source: Demeter Group 9
  10. 10. NRA Current Situation Index 10
  11. 11. Job Creation – Companies Hiring More 11
  12. 12. Unemployment versus Wine Sales 12
  13. 13. Window of Affluence Source: Unity Marketing 13
  14. 14. Luxury Drought 14
  15. 15. Unemployed and Underemployed 15
  16. 16. Unemployment Trends - Will Take Time Still 2016 ? Source: Bureau of Labor Statistics 16
  17. 17. Single Family Housing Starts Bumping on the Bottom 17
  18. 18. Long Term Interest Rates 18
  19. 19. Wineries versus Growers 19
  20. 20. Financial Condition of Wineries 84% of Sonoma Wineries Good+. Only 6% Very Weak Source: Silicon Valley Bank Proprietary Research 20
  21. 21. Credit Availability Since the Market Crash 72% Said “More Difficult.” Source: Silicon Valley Bank Proprietary Research 21
  22. 22. What Will You do with the Price of Your Wine? 22
  23. 23. Inventory Positions in the Cellar Source: Silicon Valley Bank Proprietary Research 23
  24. 24. Fine Wine Financial Snapshot Q2 2010 Source: Silicon Valley Bank PGA Data
  25. 25. Can Wineries and Growers Really Get Along? 25
  26. 26. Actively Participate in a SM Platform and Interact 26
  27. 27. Don’t Actively Use SM as a Tool 27
  28. 28. Use a CRM and Track Buying Patterns and Demographics 28
  29. 29. We have a Digital Marketing Plan in Place 29
  30. 30. A Dedicated Employee to Execute using Digital Tools 30
  31. 31. Survey Customers to Discover Post-Purchase Experiences 31
  32. 32. 2010 Will be ………….50%45%40%35%30%25%20%15%10% 5% 0% The best year in our One of our better A good year A year in which we A disappointing One of our most The most difficult history years will be pretty much year challenging years year in our history treading water Source: Silicon Valley Bank Proprietary Research 32
  33. 33. A Better Tomorrow ……. After tomorrow anyway 33
  34. 34. 2011 Will be ……………. 34
  35. 35. Grape Purchases vs. Price in 2011 60 % Expect to buy more 65% Expect to spend less 35
  36. 36. Early Predictions for 2011• Slowly Improving Restaurant Sales• Slowly Improving Economy with a Hangover• Continued Distribution Issues• Large Euro and US Economic Challenges• High Costs to Produce Wines with Lowed Price Points• Inventory Closer to Balanced than most think• Improving Consumer Economy with Hangover• Flat Pricing on Grapes except in Best Properties• Double Digit Growth in Fine Wine Sales and Flat Profit 36
  37. 37. Presentation or Banking Questions: Email: Rob McMillan Twitter: @svbwine RMcMillan@svb.com 707-967-1367 If you tweet about this report, please use #SVB 37

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