SVB wine presentation 2011
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The document discusses the economic outlook for wineries, predicting modest improvements in sales despite challenges such as inventory management and distribution issues. It highlights a recovery in luxury spending and restaurant sales, while also noting various economic obstacles like high commodity prices and unemployment trends. The financial condition of Sonoma wineries is generally positive, with 84% rated as good or better, yet credit remains hard to secure post-crash.
SVB wine presentation 2011
- 1. Dollars and Sense SVB Financial Group Rob McMillan EVP & Founder SVB Wine Division 1
- 2. Discussion Today •Economy •Winery Specific Look 2
- 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. 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. Wineries vs. Growers 5
- 6. Monthly Growth in Retail Sales - Consumers Spending More 6
- 7. ECRI Weekly Leading Indicator Index Source: Economic Cycle Research Institute 7
- 8. Luxury Spending Making a Comeback 8
- 9. Restaurant Same Store Sales Source: Demeter Group 9
- 10. NRA Current Situation Index 10
- 11. Job Creation – Companies Hiring More 11
- 12. Unemployment versus Wine Sales 12
- 13. Window of Affluence Source: Unity Marketing 13
- 14. Luxury Drought 14
- 15. Unemployed and Underemployed 15
- 16. Unemployment Trends - Will Take Time Still 2016 ? Source: Bureau of Labor Statistics 16
- 17. Single Family Housing Starts Bumping on the Bottom 17
- 18. Long Term Interest Rates 18
- 19. Wineries versus Growers 19
- 20. Financial Condition of Wineries 84% of Sonoma Wineries Good+. Only 6% Very Weak Source: Silicon Valley Bank Proprietary Research 20
- 21. Credit Availability Since the Market Crash 72% Said “More Difficult.” Source: Silicon Valley Bank Proprietary Research 21
- 22. What Will You do with the Price of Your Wine? 22
- 23. Inventory Positions in the Cellar Source: Silicon Valley Bank Proprietary Research 23
- 24. Fine Wine Financial Snapshot Q2 2010 Source: Silicon Valley Bank PGA Data
- 25. Can Wineries and Growers Really Get Along? 25
- 26. Actively Participate in a SM Platform and Interact 26
- 27. Don’t Actively Use SM as a Tool 27
- 28. Use a CRM and Track Buying Patterns and Demographics 28
- 29. We have a Digital Marketing Plan in Place 29
- 30. A Dedicated Employee to Execute using Digital Tools 30
- 31. Survey Customers to Discover Post-Purchase Experiences 31
- 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. A Better Tomorrow ……. After tomorrow anyway 33
- 34. 2011 Will be ……………. 34
- 35. Grape Purchases vs. Price in 2011 60 % Expect to buy more 65% Expect to spend less 35
- 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. 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