1	Sonoma County Winegrape Commission Dollars & $ense Seminar Joseph W. Ciatti Co., LLC 1101 Fifth Ave # 170 San Rafael, CA 94901 www.Ciatti.com 415/458-5150
2	Points to Discuss Sales Update 2006 Winegrape Harvest & Market International Bulk Market Who are the buyers? The Future Questions
3	Wine Shipments YTD (Oct ‘06 ) Wine shipments +1.5% (bttld) 1.6% Overall YTD GFA Premium Wine Index +7% Premium growth offset by losses in economy wines Bulk Exports +2% YTD; Bottled -3% YTD Limited gain given world supply
4	Wine Shipments YTD (Oct ‘06) Imports growing faster than domestic Total imports to US + 8% (bottled +2%, Bulk +21%) CA > US +2.1% Australia +4%; Spain +11%; France +28% (mostly bulk) Imports could reach 30% of all wine consumed in U.S. by end of the year.
5	Wine Shipments YTD (Oct ‘06)
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7	North Coast Tons
8	Sonoma County White Grape Tonnages 2000 –2006 Est
9	Sonoma County Red Grape Tonnages 2000 –2006 Est
10	2006 Winegrape Harvest Late/Long Season Rain/Moisture caused challenge w/thin skinned varieties Sizeable amount of custom crush Good to Outstanding quality
11	2006 Winegrape Market PINOT, PINOT, PINOT!!!! Large PN Crop CH picked up late; CS and ME in Sonoma & Napa unsold ’05 Hangover - Major wineries on sideline or selling fruit/wine Notice on existing contracts - Pricing more reflective of spot market
12	2006 Spot Market Grape Pricing
13	2006 Spot Market Grape Pricing
14	California Winegrape Acreage 2005
15	Sonoma Winegrape Acreage 2005
16	2007 Grape Market Outlook Overall Market will improve CH continues to strengthen – especially RRV PN Strong – but less pkg deals. Spot Mkt will soften Zin will continue to stabilize – price ceiling CS will show signs of improvement – prices still below expectations – Opportunistic buyers ME continues to be challenged. Significant amts of grafting Other areas of NC not as strong as Napa/Sonoma
17	USA vs. World
18	Global Winegrape Production 2005
19	Australian Production
20	Imported Wine Shipments Bulk/Bottled YTD Sept
21	International View All wineries weighing global opportunities – the supply is there! Bulk importing could increase category base w/ short varieties – produce future CA demand? Imports will continue to grow if consumers indifferent and cost advantages exist CA must compete based on quality and price Need Understanding Sonoma/CA/World Supply/Demand Balance
22	California Bulk Market VERY LARGE Carry-over of ’05 – Slow Market Inventories relatively high level Current Sonoma County Bulk Market CH – Balanced to Short CS – Long ME – Long ZN – Balanced PN - Short ’05 Bulk Inventory is stalling the market Normal Buyers have Inventory Low and High Market Activity – no Middle Seeing some ’05 activity on Cabernet ‘05 will be used in other vintages ’06 Activity Delayed
23	CHARDONNAY Pricing Valley $3.00 – 4.00 Coastal $5.00 – 7.00 Napa/Sonoma $8.00 – 14.00
24	MERLOT Pricing Valley $2.50 – 4.00 Coastal $4.50 – 7.00 Napa/Sonoma $6.00 – 12.00
25	CAB SAUV Pricing Valley $3.00 – 4.50 Coastal $4.50 – 8.00 Napa/Sonoma $8.00 – 22.00
26	ZINFANDEL Pricing Valley $6.00 – 8.50 Coastal $8.00 – 10.00 Napa/Sonoma $10.00 – 16.00
27	PINOT NOIR Pricing Valley N/A – N/A Coastal $15.00 – 20.00 Napa/Sonoma $20.00 – 25.00
28	SAUV BLANC Pricing Valley $3.50 – 4.50 Coastal $5.00 – 7.00 Napa/Sonoma $7.00 – 10.00
29	SYRAH Pricing Valley $3.50 – 5.50 Coastal $5.00 – 8.50 Napa/Sonoma $9.00 – 14.00
30	Who is Today’s Buyer? Different business models have resulted in different mechanics Larger wine companies starting to look more like negociants For in demand varieties, negociants starting to look more like wineries In today’s longer market, growers starting to look more like wineries
31	"In an effort to be..." In an effort to be more nimble and “negociant-like”, wineries acquiring & creating new brands. Constellation Blackstone Rex Goliath The Wine Group Big House Red & White Cardinal Zin Kendall Jackson White Rocket
32	"For in demand varieties such..." For in demand varieties such as Pinot Noir, negociants starting to look more like traditional wineries. Procure a custom crush location & source fruit instead of wine.
33	"Growers building wineries and custom..." Growers building wineries and custom crushing more fruit than ever before Exposes a grower to more potential buyers who are focused on marketing wine, not on marketing a facility
34	What does this mean for growers? For longer varieties, buyers will remain cautious & look to secure a significant % of needs from the bulk market. In the near future growers will still be selling bulk wine For tighter varieties, a great opportunity to sell fruit at good prices to better buyers. Others may pay more short term, but are they economically viable into the future As market tightens, negociants will need to source grapes and growers will be able to sell as fruit not wine
35	"’06 Crop severly impacted by..." ’06 Crop severly impacted by ’05 hangover Good early season bulk activity Market should strengthen, when we move through ’05 bulk, Ltd. New Acres/Growing Demand Son. Cty in good position- Coastal supply bigger concern ’07 grape demand to improve – longer term contracts CH/PN PN may soften on spot, but will remain solid Long term effects to CA of off shore sourcing?
36	E- Newsletter To sign up for our E-Newsletter “Ciatti Insight” Email Lora at Lora@ciatti.com
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38	Thank You for your time and Attention Joseph W. Ciatti Co., LLC Glenn Proctor/ Chris Welch T.415/458-5150 E. glenn@ciatti.com www.ciatti.com