Silicon Valley Bank Projects Bright Wine Future in 2011-2012 Report
Silicon Valley Bank (SVB) is projecting a bright future for the wine industry in its 2011-2012 “State of the Wine Industry” report presented online April 27 by Rob McMillan, Executive Vice President & Founder, SVB Wine Division.
Also speaking at the seminar was Vintank Chief Strategy Officer Paul Mabray, who offer the gathering his perspective on the digital outlook for wine.
â€śWe believe we are at the beginning of another long-term steady growth pattern in fine wine sales,â€ť said McMillan.
Highlights of the report (available in its entirety here):
Predictions for 2011-2012
- Growth in luxury goods will outpace the rest of the economy
- Trading up trend will accelerate in higher priced wine
- Marginally improved pricing power at the producer level
- Boomers and Gen X will support most of the fine wine recovery
- Improving restaurant sales, specifically in full-serve restaurants
- Producer level inventory closer to balanced than most seem to think
- Shifting threats to the legal landscape for direct shipping
- Flat or declining pricing on grape contracts except in best properties
- Sales growth of 11% -15% with marginally improving profits
- Slowly improving economy, but several issues that hold back prediction of a rapid return to the good old days.
Factors Leading To The Conclusions
- Trading-down will end but profitability will be impacted
- â€śLâ€ť shaped recovery
- Improving affluent consumption â€“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
- Discounting into Q3 2010
- Sales growth in the 8% -12% range overall for Fine Wine
- Government Still Spending on Stimulus
- Factories Producing More
- Consumers Spending More â€“Going Out More
- Companies Hiring More â€“Unemployment dropping
- Retail Sales Improving
- Stability of the Tax System/Rates
- Improved Consumer and Business Sentiment â€¦ But
- Huge Unknowns in Macro and National Economies, Geo-Political Risk, and Securitizations