Monday, February 16, 2015

2015 State of the Industry Q&A

The Annual SVB Wine Report and the Live Broadcast is complete. For those that missed either one, the replay and report can now be accessed here: LINK.

For those who are looking for some power point slides to use in their own presentations, we've also posted 86 slides at the bottom of the page. Most of them were used in research but not used in either the Report or the Videocast. You are welcome to use the information there - with attribution of course.

The last duty I have for the year is to post the Q&A from the live videocast. This year as seems is always the case, we had participation both Nationally and from about a dozen countries. There seems to be world interest in the US Wine Industry for some reason?

The chat follows and I've littered it this year with the labels of random participants. Feel free to contact me if you have any other questions and I'll get back to you as I'm able.

SVB State of the Wine Industry Videocast
January 21, 2015




9:31 AM  Alexandra: Good morning from Ramey Wine Cellars in Healdsburg, CA

9:31 AM  Angelica: Good Morning from Sullivan Vineyards!

9:31 AM  Dave: Dave Gould here, from Single Source Solutions

9:31 AM  JonBjork: Good morning from Lodi!

9:32 AM  Kathleen: Good morning from Concannon Vineyard

9:32 AM  VGS: good morning from VGS Chatea Potelle in St. Helena

9:32 AM  CharlesComm: Good Morning! Charles Communications in San Francisco here!

9:32 AM  Mo412: Hello from Napa Valley

9:32 AM  Thea: Morning from cold and foggy Yountville!

9:32 AM  Vivian: good morning from Boston

9:32 AM  pshannon: Good Morning from Pacifica Wine Division, Paso Robles

9:32 AM  EricaGmz: Good morning from St. Francis Winery in Sonoma, Ca

9:32 AM  WillaKenzie: Good morning from the Willamette Valley!

9:32 AM  Heather: Good morning from Wente Family Estates!

9:32 AM  VineyardFinancialAssociates: Good morning from Vineyard Financial Associates!

9:32 AM  Philip Hinerman: Hi from Fox Rothschild

9:32 AM  Camron King: Good morning from the beautiful vineyards of Lodi!

9:32 AM  geyserpeak: Good morning from Healdsburg

9:32 AM  Amanda@Odette Estate: Good Morning from Odette Estate

9:32 AM  Lisa: This is Lisa Adams Walter, Good Morning from the Wine Industry Symposium Group!

9:32 AM  Jake: Good morning from Arkenstone

9:32 AM  Adrienne: Hello from Benson Marketing in Napa

9:32 AM  RIch: Guten Morgen from Cliff Lede Vineyards

9:32 AM  Alex Ebkarian: Top of the morning from a wine enthusiast

9:32 AM  Erich Broksa: Erich: good morning from Early Mountain Vineyards in Virginia

9:32 AM  Chrisy: Hello from Jeff Gordon Cellars!

9:32 AM  Trefethen: Good Morning from Trefethen Family Vineyards!

9:32 AM  Chris Baker: Good morning, Chris Baker from Shannon Ridge here.


9:33 AM  Rich G: good morning from a NYC wine drinker and Howell Mtn fan!

9:33 AM  Parallel44: Good morning from Parallel 44 in Kewaunee, WI

9:33 AM  Josh: Good morning from Uncorkd digital wine menus, even colder here in Chicago :)

9:33 AM  Thea: Morning @lisa!

9:33 AM  DLV: Good Morning from Dirty Laundry Vineyard in British Columbia

9:33 AM  Miguel: Good morning from San Francisco

9:33 AM  Ted Grafe: Good morning!  Ted Grafe from Burr Pilger Mayer (BPM)

9:33 AM  ToddVTWine: Good day from Vermont.

9:33 AM  Judd W: Judd Wallenbrock from Jessup Cellars, Handwritten & Humanitas here.

9:33 AM  Chris: Good morning from Williams & Williams in Tulsa, OK

9:33 AM  kellyhulme: good afternoon from Boston!

9:33 AM  Samantha: Good Morning from Foley Family Wines!

9:33 AM  melodyjohnston: Good morning for mile-high Idyllwild, CA!

9:33 AM  jodiebd: Good Morning from Sanger Family of Wines in Los Olivos, CA

9:33 AM  Thea: holla @judd!

9:33 AM  VINO ZEN: Great day from Pacifc Highway wines

9:33 AM  Rebecca H: Good morning from Folio Fine Wine Partners here in Napa

9:33 AM  Mary Ashley Goding: Hello from Charleston, SC!

9:33 AM  Michele Good: Good Morning from Talley Vineyards

9:33 AM  winesmith: Clark Smith and Mike Faulk of WineSmith

9:33 AM  wyn: good morning Vibrant Vine BC

9:33 AM  John: Good morning from Palmina Wines!

9:33 AM  Mary Ashley Goding: Good morning from Charleston, SC

9:33 AM  ToddVTWine: Anyone else have issuesdownloading the 2015 report PDF?

9:33 AM  Rebecca H changed their nickname to Rebecca Hopkins.

9:33 AM  SVB_Maria: Good morning everyone and thanks for joining!

9:33 AM  Josh changed their nickname to Josh Saunders.

9:33 AM  Jimmy Kawalek: Good Morning from

9:33 AM  Nicholas Adams: Good afternoon from Indianapolis. No vinyard views, but sunny skys, so I suppose I can't complain!

9:34 AM  Viz: good afternoon from vizcarra vineyards in NY

9:34 AM  Thea changed their nickname to Thea_Dwelle.

9:34 AM  Vivian changed their nickname to Vivian Luo.

9:34 AM  Chuck Flanders: Good Morning from OyVino and MUFG Union Bank in San Francisco.

9:34 AM  JessBHavill: Good Morning from BellaGrace in Amador

9:34 AM  Douglas Fletcher: Good morning from Terlato Wine Group

9:34 AM  Timo: Morning from Timo in Dundee Oregon

9:34 AM  lesliegevirtz: Good Morning from LeslieGevirtz

9:34 AM  Julie: Good morning from Robb Bell at Cathedral Ridge Winery in Hood River, OR

9:34 AM  Rick: Rick Aldine, Gary Agajanian, Keith LaHonta of Agajanian Inc.  Good morning!

9:34 AM  VINO ZEN: Digital Corkscrew Mobile Ads Target Millenials

9:34 AM  George King: Hi there from George in San Francisco

9:34 AM  Mona Sampson: Good Morning from Ojai, CA

9:34 AM  Martin Fujishin: Good Morning from Fujishin Wines in Idaho

9:34 AM  pam cooley: good morning from CADE winery

9:34 AM  ajones: Good morning from Wine First in Vancouver BC

9:34 AM  Adan Guzman: Hello from Santa Cruz, CA

9:34 AM  Lisa Sedgley: Lisa Sedgley - Morning from PlumpJack Group

9:34 AM  JimCasler: JimCasler, Traverse City, MI USA

9:34 AM  Chris Figgins: Good Morning From Walla Walla Valley!

9:34 AM  Shari: Good Moring from Seavey Vineyard in St Helena, CA

9:34 AM  Ali from Dumas Station: Ali here from Dumas Station in Walla Walla

9:35 AM  Kitch: Good Morning Greg and Rob from Don Sebastiani & Sons

9:35 AM  Dan Glisky:

9:35 AM  Stephanie Redmond: Good morning from South Coast Winery, Temecula, CA

9:35 AM  Alicia Antone: Good Morning from Knights Bridge Winery

9:35 AM  VINO ZEN: Proctor looking good...

9:35 AM  Alexis: Alexis Iaconis from Copain Wines in Healdsburg, CA

9:35 AM  Shaun Everest: Shaun Everest: Tinhorn Creek Vineyards, Oliver, BC

9:35 AM  Thom Sichta: Greetings from CHEHALEM in Oregon

9:35 AM  Stephen: Good morning from Parry Cellars

9:35 AM  Allen Holstein: Allen Holstein, Argyle, Dundee Or

9:35 AM  WLVWinehound: Good morning from Larry Dutra, Adams Wine Group

9:35 AM  Julie changed their nickname to Julie Skov.

9:35 AM  Ed Skupien: Edward Skupien - Frank Family Vineyards

9:35 AM  khannah: Good morning from Karen Hannah, San Francisco, Winemaker Studios

9:35 AM  GVM: Good morning from Gaw Van Male law firm in Napa, CA!

9:35 AM  stevecdv: Steve Tamburelli with Clos Du Val - good morning!

9:35 AM  Susan: Susan from Gamble Family Vineyards

9:35 AM  Becky: Good morning from Naked Winery in Hood River!

9:35 AM  pearsonsarah: Sarah Pearson from The Hess Collection

9:35 AM  Harold: Hi Harold Yount with Accent Distributors in NC

9:35 AM  Kerry: Good morning from Cornerstone Cellars in Yountville,CA

9:35 AM  Bob: Bob Cooley Benovia Winery Santa Rosa

9:35 AM  Redonk Marketing: Good morning from Redonk Marketing!

9:35 AM  Oded Shakked: Oded Shakked, Hello & Surf's Up at Longboard Vineyards

9:35 AM  Clark: Clark & Linda Hornbaker, Eden Hill Winery, Celina, Texas

9:35 AM  Jim Cargill: Jim Cargill House Family Vineyards - Saratoga, CA

9:35 AM  Nadia Kinkade: Good morning from Nadia Kinkade at Cornerstone Cellars

9:35 AM  Kimi: Kimi for Mckinley Vineyards

9:35 AM  Steve Heringer: Good Morning From Heringer Estates, Clarksburg, CA

9:35 AM  Guy Carl: Guy Carl from BDCo CPAs in St. Helena

9:35 AM  David Rudnick: David from somme des parties in Walla Walla, WA

9:35 AM  Hunnicutt: Good morning from Hunnicutt and D. R. Stephens Estate ...Justin

9:36 AM  Jay Soloff from BCM WineWorks: Good morning everyone.

9:36 AM  kgarcher: Kathy Archer, Wine Symposium, Napa

9:36 AM  Tom Reed: Tom Reed, Hawk's Shadow Vineyard, Dripping Springs, TX

9:36 AM  Rick Quinn: Rick Quinn: Good morning from Paso Robles!

9:36 AM  David Tonus: David Tonus: Hello from Soledad, CA.

9:36 AM  Darlyne Miller: Good morning from WillaKenzie Estate in Yamhill OR

9:36 AM  homefire: homefire is here

9:36 AM  Patty Rock: Patty Rock from Saracina Vineyards

9:36 AM  Shannon Muracchioli: Shannon Muracchioli -The Donum Estate, Sonoma

9:36 AM  Jerry Charlup: Jerry Charlup- Broadway Vineyards in Sonoma

9:36 AM  Robert: Good Morning from La Jolla Winery

9:36 AM  Charlie: Charlie Tsegeletos from Cline Cellars, Sonoma, CA

9:36 AM  MJ: Mayra:Hello from Wente Family Estates

9:36 AM  DaddyWIne: Good morning from Artisans DIrect

9:36 AM  martinbarrett: Martin Barrett; good morning from Sozo

9:37 AM  LisaAdamsWalter changed their nickname to LisaAdamsWalter.

9:37 AM  Chris: I think Tulsa has the cheapest gas in the country...&1.59 a gallon

9:37 AM  Heather changed their nickname to Heather Everett.

9:37 AM  JessBHavill: Audio cutting out

9:37 AM  Chrisy: Hello!

9:37 AM  HandMashie: DV: Thornton Winery checking in!

9:38 AM  chris: Morning! Christine from Copain Wine Cellars!

9:38 AM  Randy: Hello! Randy Graham - Courtyard Winery on the south shore of Lake Erie!!

9:38 AM  EricaGmz changed their nickname to egomez@stfranciswinery.

9:38 AM  Chris: Hi Christine!

9:39 AM  michaellongerbeam: Good morning from Dry Creek Vineyard

9:39 AM  Sarah Pearson changed their nickname to Sarah Pearson.

9:39 AM  Paul Shannon Pacifica Wine Division changed their nickname to pshannon@pacificarealestate.

9:39 AM  Cindysteinbeck: Cindy Steinbeck, Steinbeck Vineyards & Winery Paso Robles, CA

9:39 AM  Sarah Pearson changed their nickname to Sarah Pearson.

9:40 AM  bsc: Brad C. Geyserville CA

9:40 AM  TASween1: Tracy Sweeney Corison Winery

9:40 AM  alismithstory: Good Morning from Smith Story Wine Cellars everyone!

9:40 AM  Tonya Wake: Tonya Wake: Thornton Winery Temecula Good Morning

9:40 AM  Bounty Hunter: Craig House, Bounty Hunter Rare Wine and Spirits

9:40 AM  Jennifer Rabanal: Jennifer Rabanal, Moss Adams LLP Napa office

9:41 AM  Chrisy Gallagher: Chrisy Gallagher, Jeff Gordon Cellars

9:41 AM  BrentVin65: Morning, Brent from Vin65

9:42 AM  VINO ZEN: If you don't have a millenial base of consumers, you will be passed by!

9:43 AM  Brandon_VinTank: Good morning all. Brandon from VinTank

9:43 AM  Michaela: Villa Ragazzi Michaela here,

9:43 AM  WillaKenzie: sound gone

9:43 AM  lisabarker: Lisa Barker, Miner Family Winery

9:43 AM  lisabarker: Lisa Barker, Miner Family Winery

9:44 AM  Christopher Calicott: hola from Las Vegas

9:44 AM  VinoShipper: Hello from VinoShipper WIndsor CA

9:44 AM  Randy2015: Hi from sunny Buellton

9:45 AM  Jacques: Jacques, here from Coeur de Terre Vineyard

9:46 AM  vinoman87: Daniel Bishofberger, Chatterbox Wine Marketing in Napa

9:46 AM  HandMashie: Audio is breaking up frequently

9:46 AM  HandMashie: Just me?

9:46 AM  Hunnicutt: no breaking up...

9:46 AM  pshannon@pacificarealestate: My audio is good

9:46 AM  lisabarker: breaking up a bit on my end as well

9:46 AM  Deborah: Deborah Hedges Family Estate

9:46 AM  Chrisy Gallagher: audio good here

9:46 AM  Mary Ashley Goding: audio good here as well

9:46 AM  Deborah: audio is solid

9:47 AM  winesmith: Our audio is perfect.

9:47 AM  Tonya Wake: breaking up here also

9:47 AM  john w: audio fine

9:47 AM  jodiebd: all good here



9:48 AM  Rebecca H: what % of that $14-$18 is domestic vs. imported?
  • Finally to the questions Rob? The answer is it depends on what you are talking about.
9:48 AM  kellyhulme: Thoughts on where that 14-18% fine wine growth will come from? Domestic...Europe...newer producing countries like NZ or SA?
  • Rebecca and Kelly - that growth is going to come from both domestic and foreign wines. The EU and traditional importing countries have a currency advantage but have a large obstacle getting through the distribution channels and to the consumer.
9:48 AM  Sarah: audio good but feed keeps stalling

9:48 AM  PatrickMerr: Good morning Alexandra and all from Merrill Research

9:48 AM  Vignermom: Hello from Oakland--the original urban wine country

9:49 AM  pshannon@pacificarealestate: Why are we seeing a drop in Low bottle prices, I thought that would start to be feed by the millennials
  • In recessions, we see trading down. As markets recover, people trade up. For lower cost wines to see growth, marketing and promotion needs to take place to remove the product from a commodity class. Its been said Millennials are looking for "authenticity." Perhaps, but I think everyone wants an emotional connection with any product. Without marketing and promotion of lower cost wines, I don't believe we will see lower priced wines grow.
9:49 AM  VINO ZEN: +$20 = 5.34%, growing 11.5% total US xAOV; Millenials shop between $8-$15 = 48% of dollars

9:49 AM  Ed Skupien: Would there be enough data to add another Category besides $20 and up? Perhaps $
  • The information about the above $20 category is sketchy. I pick $20 and above because there are several data bases that I can use to support my beliefs and theory. At times I can get a better instinct on higher segments, such as that we obtain from the Annual Wine Conditions Survey but there is very limited information that's useful otherwise.

9:50 AM  mandii: It's cutting out for me too.

9:50 AM  VINO ZEN: gotta to have a millennial base or you will be passed by....
  • There is no evidence to support that comment. That said, Millennials will someday be the dominant consuming cohort when they fall between the 35 - 55 age range. Today they represent about 15% of wine consumption. Lower priced producers should be spending time and money marketing to the cohort today. Higher priced producers are best advised to work on Gen X today.
9:50 AM  Ed Skupien: Perhaps $20-40 and $40.00 to 60.00?

9:50 AM  Ron Grijalva: Good morning  - Ron at ASV Wines

9:51 AM  SCW: Hello Everybody, Good Morning from Shoe Crazy Wine

9:51 AM  PatrickMerr: Supply & demand will impact sales above and below $15

9:52 AM  PatrickMerr: and Millineal wine drinketrs earn higher & higher incomes

9:53 AM  thea_dwelle: millenials are getting older - have good jobs.  Moving up to $20-25 is natural progression
  • Agreed

9:53 AM  VINO ZEN: if you are a two top - four top white table restaurant you will be passed by if you can't set to a a communal 6-8-12 top tables

9:54 AM  VINO ZEN: natural but slow...

9:54 AM  ShoeCrazywine: what about outlook for exports?
  • Exports have always been a small part of US production. Larger wineries have been more effective at exports. Smaller wineries can sell all of their production in the US so making an argument to export is difficult.

9:54 AM  DTC Wine Workshops: President of Argentina has made difficult for Argentinian wineries to export this past year
  • The Government of Argentina has made it difficult for their domestic businesses to do business anywhere. With more debt defaults than any country on the globe, and provocative actions like taking over their JV oil company with the Spanish, they will never get world investment. That said, they make very good wines and if their government ever gets their acts together, they can be a formidable importer - more so than they are today.

9:54 AM  Jimmy Kawalek: Inventory is key as well as knowing your actual costs

9:55 AM  PatrickMerr: stronger US $ should have neg impact on exports
  • Agreed in the short term. Longer term there has to be something more take place for exports to make sense even if we ignore exchange rates.

9:55 AM  Jimmy Kawalek: making wine because you can is not a reason to make it
  • Amen!

9:55 AM  SVB_Maria: Please remember to type your questions into the chat panel at any time. We’ll answer them as we have time.

9:55 AM  Pasogrower: Good Morning from Paso Robles

9:56 AM  Iris: Good morning from Xero

9:56 AM  VINO ZEN: Hmmm. $3-$8 = 1/3 of all wine sales in US

9:56 AM  Pasogrower: what does the panel think will be the impact on the industry with respect to immigration reform?
  • We'll see where it goes. This country has long been a country of immigrants and they have always supported the economic health of the country. Nothing is changed now except the politics.
9:56 AM  Vivian Luo: Apologies, what are the names of the speakers on the panel?
  • The most important one is Rob McMillan. You can read his blog right here. The other supporting actors look better, but Rob is more important. That is all you need to know.

9:57 AM  VineyardFinancialAssociates: Let's talk long-term cyclical effects: In your opinions,where and when will we be over-planted and see grape prices crest and begin to fall?
  • Totally region dependent. I believe economically its more effective to plant in Oregon and Washington today for higher priced wines, and to import lower priced wines. We are ripping tens of thousands of acres in the Central Valley right now. I wouldn't predict the same for the coastal AVAs or the PNW.

9:57 AM  thea_dwelle: @vino_zen perhaps not as slow as for xers or boomers -  Millenials are much quicker to adapt, adopt, and follow trends

9:58 AM  pshannon@pacificarealestate: Cost of farming is going to be the biggest factor in the coming years, medical is going to have a huge effect on labor

9:58 AM  winesmith: Left to right: Paul Mabray (VinTank), Glenn Proctor (Ciatti grape guy), Amy Hoopes (Wente marketing gal)
  • And the most important person is Rob McMillan who you left out.

9:58 AM  PatrickMerr: Rob McMillanSVP at SVB=talking now
  • Thanks Patrick.

9:58 AM  SVB_Maria: Panel includes:Amy Hoopes, Chief Marketing Officer at Wente Family Estates; Paul Mabray, Chief Strategy Officer of Vintank; Glenn Proctor, Partner in the Ciatti Company; and Rob McMillan of SVB

9:59 AM  ShoeCrazywine: private labels should be able to benefit from lower cost of over supply ?
  • Absolutely true. There will be some good values on the market in the next several years.

9:59 AM  Alejandro: If you want to market to millenaials, regardless of price point, you need a story, and a story that is bigger than just a story about you.

9:59 AM  JonBjork: Thanks for the Lodi plug!
  • Editors note: I am a fan of Lodi wines and believe they have upside in the fine wine side of the business.

9:59 AM  VINO ZEN: 20% of older millenials drink imports; they don't drink wine that dad drinks
  • These are the kind of stats that are repeated without proper context or support and readers make their own minds up about what it means absent facts. Some of the largest brands when Boomers were Millennials were Mateus, Blue Nun, and Lancers. Millennials don't drink those brands but they are drinking lower priced foreign wines, just like their dads. The difference between then and now is information, availability, number of selections, national marketing and speed of delivery. I believe personally the next generation of wine drinkers will continue to have increased choice and that's a business challenge we as an industry need to consider whether domestic or foreign.

9:59 AM  Alejandro: That's done via social media and word of mouth.

9:59 AM  winesmith: IMO, oversupply is a myth given the growth, though there may be opportunities in the lower end.

9:59 AM  Todd in Vermont: Domestic Wines fundamentally speak to the Eat/Drink Local movement
  • That is a very relevant comment for non West Coast wineries. Every place I've ever traveled in the US and has a producer is proud of their local wine efforts. That is the way all the AVA's started and built themselves. Start local. Today, its also green which doesn't hurt.

10:00 AM  PatrickMerr: half of wine Millenials drink are imports
  • That means twice the amount of imports are Millennials I think?
    10:00 AM  pshannon@pacificarealestate: Thinks like Vivnio are changing the wine consumers amount of education and allowing millenials to buy good low cost wine

    10:00 AM  pshannon@pacificarealestate: things

    10:01 AM  NAT d: the promotion of California & American wines has be accompanied by both quality and a fair price. this must be done while still acknowledging the various quality an and prices of the state's AVAs
    • Thanks for the comment Nat......   California is about as diverse a state as any country and can produce at virtually all price points, great quality wine. Wine that is fair from a price perspective is of course in the eyes of the consumer. Sometime, the consumer needs to have a product made top of mind and be reminded why its still a great value. California Wine has the opportunity to take that position for lower priced wines back - or at a minimum slow or stop the erosion, but the current dynamics create a situation where the lower cost wines are made by domestic producers who seem more agnostic about the country of origin than in years gone by. That's not a good setup to get cooperation to expect anything to change, but I hope it does.

    Merr: very few hold any wine more than 48 hours

    10:02 AM  Jacques: Any comments geared outside CA and Central Valley? How about WA, OR or ID regional markets?
    • I wish we weren't so California focused. What we try to do each year is get survey information from all the West Coast and present that information in the slides. The information of course is representative of the wine industry locations. Idaho hasn't yet surfaced in our survey information despite their growing reputation for quality wine. Maybe you can help get their AVAs interested in participating in the surveys?

    10:02 AM  kellyhulme: @Mari - anecdotally, not at all

    10:02 AM  Rich G: i started buying to hold around 25 yrs old

    10:02 AM  Alejandro: exactly, they're not geeking out about wine yet in general terms to think about buying to age.

    10:02 AM  Bethberrie: What's the best way to talk to the Milliennial audience?

    10:02 AM  Rich G: before, buy to drink

    10:03 AM  Mari Jones: That's what I figured, from personal experience and my friends. But I have to say that there is a BIG opportunity for us as wineries to educate millenials and get them to geek out about wine

    10:03 AM  Rick: almond = 3.5 acre-ft water per yr vs grapes 2.5 acre-ft water per yr (Central Vly grapes in general)

    10:03 AM  tnewhoff: For those experiencing problems with the audio, it is most likely a bandwidth issue when streaming Live Stream. We will be sending out a link to the replay in the coming weeks.

    10:03 AM  Rich G: I agree @Mari Jones

    10:03 AM  winesmith: Given the Millenials growing up, it's reasonable to predict the return of the personal wine cellar.
    • While there is an overall return to urban living for younger folks as I understand it, I have a suspicion one of the reasons to return to the cities has to do with a social life. If wine is part of socializing, I'm guessing we'll see cost effective solutions to wine storage evolve. That said, I'm not certain the personal cellar ever left. If a wine is going to be consumed in a few years, there are many apartment living solutions without working too hard at it, that should still work. 

    10:04 AM  pshannon@pacificarealestate: The problem is storage space, we are used to living in smaller houses and apartments and its effecting are ability to properly store wine.

    10:04 AM  Alejandro: Yes, as they age, and most importantly their disposable income increases, personal cellers will grow. Just like it does with any generation.
    • I make a distinction between a storage space needed for storing wine for current consumption and one needed for proper cellaring and aging of luxury and collectable wine. I took a lot of joy keeping a small wine cellar with the right wines to share. It was in my closet in the dark and it worked great for years until I could build something more substantial.

    10:04 AM  PatrickMerr: and Millenails are an urban group

    10:04 AM  Mari Jones: even if they don't then there's an opportunity for us to age wines for them and relase vintages later or do more library wine programs to appeal to those who want to drink the wines they buy right awa

    10:04 AM  Alejandro: good point

    10:04 AM  VINO ZEN: Millenials seek TRUTH; Think Craft beer;  they get "value" for money/liquid/flavors and seek "values", what you stand for - JT

    10:04 AM  pshannon@pacificarealestate: Great point

    10:04 AM  Rich G: Spain does a good job with that

    10:04 AM  Rich G: eg 01 / 04 riojas

    10:05 AM  kellyhulme: @Mari - maybe even using something like Kickstarter to pre-sell and deliver when ready to drink?
    • Thus far the business of cellaring with the attendant costs of storage, personnel and electrical has been a difficult proposition - even with bottle price increases. One also has to remember from a cash flow perspective, cellaring means getting no revenue up front while wine is cellared. The model has been tried before, but inventory control and care is a major cost to deal with and as a business, I'm not certain the risks of the business can be supported by the returns.

    10:05 AM  Jameson McFadden: Do you have to launch a new brand to move into a more premium category?

    10:05 AM  Mari Jones: totally! that would be awesome

    10:05 AM  Alejandro: Sustainability is one of the best stories to tell. Facts tell, but stories sell.
    • I might agree with that, except I don't think the term 'sustainable' is very well defined. It means different things to different people. I remember hearing a chef say shell fish were sustainable because they were caught in the ocean. (Tell that to the whales.) Some people think it means 'green' and others think it means longevity.
    10:05 AM  kellyhulme: Kickstarter has gotten people used to paying upfront for products/services delivered later

    10:06 AM  WLVWinehound: Dark Social? Define?
    • This was a new one for me too. Here is what I found: Dark social is a term coined by Alexis C. Madrigal, a senior editor at The Atlantic, to refer to the social sharing of content that occurs outside of what can be measured by Web analytics programs. This mostly occurs when a link is sent via online chat or email, rather than shared over a social media platform, from which referrals can be measured.....  So I think what this means is the impact of social sharing when it comes to direct sharing isn't fully captured. That would be relevant in particular because that direct peer to peer sharing is probably the most powerful.

    10:06 AM  Chuck Flanders: Congrats Rob on not having a smartphone!
    • You will be happy to know that after being abused for my old school thriftiness, I have last week purchases a Galaxy 5, the first smartphone that has more options than my intelligence can process. I will now have the same excuse as everyone for typos. "No ... I didn't say you were a jerk. I said you were a good person. It was the predictive text."

    10:06 AM  Joe H: What does dark social mean?

    10:06 AM  thea_dwelle: What is a ... black berry?  LOL

    10:06 AM  winesmith: Outsourced personal cellars are an opportunity, especially linked to retail or in urban wineiris like Auto Vino in Menlo Park.

    10:06 AM  alismithstory: we ran a 30-day Kickstarter Campaign - a total success on many fronts for our new winery!

    10:06 AM  PatrickMerr: lol

    10:06 AM  kellyhulme: @pshannon - think there is an opportunity for a retail-esque outlet that will cellar wines for Millenials in urban areas who live in smaller spaces?

    10:06 AM  Mari Jones: my generation cares about what companies they support - look at how much Tom's shoes sell for. They are marked up probably 80% but we all buy them because we want to support their social mission

    10:06 AM  PatrickMerr: kelly-col idea!

    10:07 AM  thea_dwelle: Kickstarter has evolved - now people offer great perks for being an early investor. Uniqueness is key

    10:07 AM  pshannon@pacificarealestate: I think there is a possibility, we are seeing a huge growth in wine storage here in Paso Robles. I think a natural progression would be long term holding to then pour a 4 or 5 year vintage much like i

    10:07 AM  pshannon@pacificarealestate: france

    10:07 AM  pshannon@pacificarealestate: its a great way to educate a younger consumer

    10:07 AM  Josh Saunders: There are many companies that already do personal wine storage

    10:07 AM  kellyhulme: @winesmith ....yup. didn't know Auto Vino that's pretty niche but a cool idea

    10:08 AM  kellyhulme: builds community

    10:08 AM  Joe H: Paul: Please explain what you mean even if the effort fails?
    • Editors note: About this time the other panelists started taking over and the participants began this chat to entertain themselves between the time I .... Rob McMillan .... would speak again.

    10:08 AM  Jimmy Kawalek: Damn close to impossible to find smaller distributors to support smaller producers

    10:08 AM  SVB_Maria: Thanks for your comments and questions. Keep 'em coming!

    10:08 AM  Bethberrie: Do any of the wine preservation systems have an impact on the market?

    10:08 AM  Ed Skupien: "It is, what it is" Really?

    10:08 AM  winemaps: With cost of gas lower, has shipping prices reduced?

    10:08 AM  Jimmy Kawalek: Monopoly distribution continues to damage the opportunity to grow a small brand

    e H: Paul: Please explain what you mean even if the effort fails?

    10:08 AM  Jimmy Kawalek: Damn close to impossible to find smaller distributors to support smaller producers

    10:08 AM  SVB_Maria: Thanks for your comments and questions. Keep 'em coming!

    10:08 AM  Bethberrie: Do any of the wine preservation systems have an impact on the market?

    10:08 AM  Ed Skupien: "It is, what it is" Really?

    10:08 AM  winemaps: With cost of gas lower, has shipping prices reduced?

    10:08 AM  Jimmy Kawalek: Monopoly distribution continues to damage the opportunity to grow a small brand

    10:09 AM  Nicholas Adams: Thoughts on impact on wine kegs on on-premise outlook?
    • That's a business that continues to grow and evolve from a niche to mainline business. Its still in the early stages but has great promise. For the right price ..... a keg in my cellar .... I'd be willing to say it has astounding promise.

    10:09 AM  winesmith: Face it. If you're under 500,000 cases, you have no chance in three tier. Downsize and go DTC. That's 99% of wineires.
    • I'd say maybe 50,000 cases, but am guessing yours was a typo.
    10:09 AM  Chrisy Gallagher: Yes Jimmy K. you are correct...distribution is a huge waste of time and $ for limited production.

    10:09 AM  Chuck Flanders: WTSO pays about 20% of retail...

    10:09 AM  Rick: Death to the Wine Distributor monopoly!!!

    10:10 AM  Alejandro: Off with their heads!

    10:10 AM  Dave: my company is working on addressing this very issue

    10:10 AM  Rick: Hear-Hear !!!

    10:10 AM  thea_dwelle: Personal STORAGE vs Personal Cellar Somm - diff model.  having the ability to store, but also select based on meal, event etc is new trend

    10:10 AM  VineyardFinancialAssociates: 500K cases can do fine with 3 tier as part of model.  Many of my clients at that level do fine.

    10:10 AM  Martin Fujishin: Will lower fuel prices increase the viability of DTC?  Less expensive shipping leveling the playing field with 3 tier?

    10:10 AM  winesmith: We really need the Supreme Court to open up interstate privileges for online retailers.  Current situation is clearly unconstitutional. Violates the Interstate Commerce clause.

    10:10 AM  DTC Wine Workshops: Amen Amy Hoopes!

    10:10 AM  pshannon@pacificarealestate: Agree

    10:11 AM  Tom Gamble: Panel: how will marijuana legalization compete with wine sales?
    • That's a big debate in the trade. Check out the post in SVB on Wine for some of my recent thoughts.
    10:11 AM  JimCasler: it will probably complement it???

    10:11 AM  Rick: Duuuuude

    10:11 AM  VineyardFinancialAssociates: Interstate commerce clause is trumped by the verbiage of the 21st Amendment, which specifically reserves rights to the states in regard to alcohol.
    10:11 AM  pshannon@pacificarealestate: I would say hurt it

    10:11 AM  Alejandro: weed + wine = win/win

    10:11 AM  thea_dwelle: criowdsourcing.  Bloggers, apps, community is the key

    10:12 AM  winesmith: Especially for destination tourism to places like Humboldt.

    10:12 AM  Nicholas Adams: Look at impact of sites like RateBeer on craft beer consumer choices.

    10:12 AM  winesmith: Especially for destination tourism to places like Humboldt.

    10:12 AM  Nicholas Adams: Look at impact of sites like RateBeer on craft beer consumer choices. Crowdsourced reviews / recommendations can only hep brands reach Millennial consumers.

    10:12 AM  kellyhulme: @Alejandro - new opportunities for pairings!

    10:12 AM  pshannon@pacificarealestate: but also kill a winery, the effects of yelp can make or break a tasting room

    10:12 AM  Alejandro: :-)   especially among the crowd that drinks to enjoy, not just to get drunk
    • Apparently the pot smokers have started their own chat room and have all the answers now. We are just glad to facilitate discussion.
    10:12 AM  Alejandro: for the crowd that drinks just to get drunk, then weed might be a competitor.

    10:12 AM  Rich G: more people on cellertracker perhaps

    10:13 AM  Nicholas Adams: Absolutely @pshannon . Quality (and customer experience) matter.

    10:13 AM  DTC Wine Workshops: Great point Paul Mabray.  Direct to consumer wine sales allows wineries to have real-time access to buying insights.

    10:13 AM  Shaun Everest: one panelist said that 4 apps are the clear winners.  Which wine apps are these... Vivino and what others?
    • Drync, Vivino, Delectable, and I think the last one Paul Mabray mentioned was Cellar Tracker but I could be wrong on the last one.
    10:13 AM  Mary Ashley Goding: delectable, drink

    10:13 AM  Josh Saunders: Vivino, Drync, Delectable, CellarTracker

    10:13 AM  kellyhulme: @Shaun Delectable, Drync, CellarTracker

    10:14 AM  Shaun Everest: Thanks!

    10:15 AM  Tom Gamble: The issue of tourism in Napa is will Napa be an ag county supporting tourism or do we transfer into a tourist economy that capitalizes on ag?
    • Its a large question that is being discussed in several AVA's today. I'm hopeful we find an answer to effective planning to both protect the wine regions unique atmosphere, and at the same time allow for commerce. Its a balance because you can't attract tourists to a warehouse... not interesting. And you can't sell grapes without wine consumers. The key to that is getting good unbiased information and hopefully recognizing whether grape growers, employees, or wineries - its in our best interest to align on the desire to protect to golden goose - which is the environment which produces our West Coast wines.

    10:16 AM  PatrickMerr: Tasting rooms should consider themselves in the Hospitality Business--a snooty attitude is a HIGE turn off-esp to Millineials
    • Hospitality is by its definition, not snooty. That said, there was a period when Lifestyles of the Rich and Famous was the vision promoted. Totally agree that doesn't fly today and if you ask me, never really did.
    10:16 AM  Alejandro: totally correct Patrick

    10:16 AM  Rich G: agree patrick

    10:16 AM  Rich G: some people do a great job - like Ladera, Robert Sinskey

    10:16 AM  SVB_Maria: Please remember to include your name or email in your user name so we can answer any of your questions by email.

    10:16 AM  Alejandro: I know a lot of people that have switched over to i.e. Sonoma or Anderson Valley to get away from snootiness.

    10:17 AM  pshannon@pacificarealestate: that's why Paso is still great

    10:17 AM  PatrickMerr: I feel the best Tasting rooms do real time segmentation-take each person to where they feel most comfortable

    10:17 AM  pshannon@pacificarealestate: fun and hometown feel with great wine

    10:17 AM  kthwing: What constitutes the "North Coast"? Anything north of San Francisco?
    10:17 AM  PatrickMerr: Alejandro-data confirms that

    10:17 AM  TASween1: Paul is spot on for WI's next key focus!

    10:17 AM  JonBjork: When will CA ABC issue an advisory on social media?

    10:17 AM  Heather Everett: excellent point, paul!
    • Heather - I couldn't agree more.
    10:17 AM  Alejandro: good to know Patrick.

    10:17 AM  Jimmy Kawalek: Spot on Paul
    • Proof positive Paul was right.
    10:17 AM  VineyardFinancialAssociates: How do we get consumers to help us fight the war on wine?
    10:18 AM  Rick: North Coast = Marin, Napa, Sonoma, Mendo, Lake and perhaps Solano

    10:18 AM  Todd in Vermont: Wine Industry needs to pony up the lobby money with the increased revenues that are being projected. It would be a great investment.

    10:18 AM  PatrickMerr: war?

    10:18 AM  Nicholas Adams: Does the wine industry care (for lack of a better word) about Midwest / Northeast wineries? Or is volume too little to be considered a threat to West Coast wine?
    • Regions outside the West Coast are evolving each year and wines being sold in those regions improving. I don't consider emerging wine regions a threat to the West Coast. In fact, I believe its easier to find free advice and council from West Coast producers. If someone in your region wants a West Coast wine, that's what they will buy. But it doesn't preclude a local from being proud of the regions wines. Even in VA which is a larger producing area, the vast majority of wines are sold within the state. Keep up the faith!
    10:18 AM  mandii: Did I miss it? Will the slides and/or transcript of this presentation be available?
    10:18 AM  Jimmy Kawalek: Restriction on freedom of speech due to outdated laws

    10:18 AM  ShoeCrazywine: Yes excellent point Paul !!!

    10:18 AM  JimCasler: slides are under the video screen.

    10:18 AM  thea_dwelle: There is snootiness everywhere, and NON snootiness everywhere.  It just depends on where you go and what you want.

    10:18 AM  PatrickMerr: more consumers are buying local wine\

    10:19 AM  Knights Bridge Winery: Will the video be available as well?
    10:19 AM  Alejandro: True Thea but some regions tend to display it more than others, generally. Of course there are always exceptions.

    10:19 AM  TheWineDrinkersClub: Wine experience is personal, physical and digital

    10:19 AM  SVB_Maria: We’ll send you the slide deck a few days after the videocast.

    10:19 AM  WLVWinehound: UPS and FedEx aren't lowering their prices, lower oil or not

    10:20 AM  Nicholas Adams: @Knights Bridge - Yes - video will be made available, though I'm not sure what they said the timeline would be.

    10:20 AM  VineyardFinancialAssociates: Let's talk long-term cyclical effects: In your opinions, where and when will we be over-planted and see grape prices crest and begin to fall?
    • I think the question was mentioned already but its region specific. The Central Valley is pulling tens of thousands of grapes. I don't expect the same to be the case in Coastal regions and the PNW.
    10:20 AM  Rick: Howdy Meredith!

    10:20 AM  Tom Gamble: Jimmy is right but the 21st amendment which repealed prohibition but keeps interstate commerce clause from applying to wine makes it a high hurdle to change.

    10:20 AM  michaellongerbeam: Discounted shipping almost always beats discounted price. Test, test, test

    10:20 AM  winesmith: Consumers need to be educated as to how they are getting screwed by distributors. I sold a bottle to NH (The Live Free or Die State) and now I'm charged with a Class B felony. Consumers should get mad

    10:20 AM  Alejandro: Shipping or best price? How about both?

    10:20 AM  BrentVin65: Free Shipping promps always* beat product discounts. - Vin65

    10:20 AM  BrentVin65: promos*

    10:20 AM  TheWineDrinkersClub: Thanks for the info BrentVin65

    10:21 AM  winesmith: What other changes needed in Napa at large?  e.g. how to mitigate the traffic?
    • Start with information about why there is traffic then we can find solutions. At this point, there are no good studies that have been done. The one that has recently been done included 13 wineries and observation and determined that the vast majority of traffic in the Napa Valley comes from employees versus non-local traffic. That fact should change the discussion to different solutions than the anti-tourism diatribe that has surfaced.
    10:21 AM  Rick: Death to the Big 3 Distributors.  It's the MOB.

    10:21 AM  Ali from Dumas Station: What is "AOV?"

    10:21 AM  Chrisy Gallagher: Will viewer chat transcript be available as well?
    • Yes. I was a little slow this year because of banking business .... yes I am really a banker and this other stuff is what I do in my copious free time. 
    10:21 AM  Nadia Kinkade: average order value

    10:21 AM  lisabarker: Average Order Volume

    10:21 AM  ShoeCrazywine: too funny Rick ..Capone in abstentia !

    10:21 AM  PatrickMerr: i believe most consumers care about total cost-no matter what cost what,  Wineries beter to discount shipping than price of their wine

    10:21 AM  Ali from Dumas Station: Thx @Nadia & @Lisabarker

    10:21 AM  Michele Good: Average Order Value

    10:22 AM  Ali from Dumas Station: Thx Michele

    10:22 AM  Rick:

    10:22 AM  kellyhulme: @Rick hahah, wonder who's selling it?

    10:22 AM  winesmith: Big distributors shouldn't be the enemy. They just need to realize that DTC stimulates their sales too. It's not a zero sum game.
    • Totally agree. I asked the same question to a group of Distributors to whom I was speaking last year. Half felt tasting rooms were a help and the others saw them as competition.
    10:23 AM  BrentVin65: Wineries in the top 20% of DTC wine sales, charge 5% of their AOV = $100 order, means $5 shipping charge.

    10:23 AM  SVB_Maria: Please remember to type your questions into the chat panel at any time. We’ll answer them as we have time.

    10:23 AM  michaellongerbeam: Totally agree Winesmith

    10:23 AM  ChrisOG: Great job all. Very informative!

    10:23 AM  Nicholas Adams: Are Millennials over-indexing in DTC purchases? And how big do we expect the DTC industry to become (% of volume / sales)?
    10:23 AM  DTC Wine Workshops: good info BrentVin65.  thanks!

    10:23 AM  pshannon@pacificarealestate: great group, we should do this more often a huge resource of knowledge

    10:24 AM  kellyhulme: @winesmith yes agree - they are good at pushing wines that need to hit a quota, totally different sales process

    10:24 AM  JonBjork: What percentage of wineries do you think make illegal interstate shipments?
    • I wonder if we could ask that on a survey? ....... maybe not. Seriously though, today the percentage who do ship illegally are much smaller because there are legal solutions. More likely there are consumers who use shipping to ship to themselves, wines they can't get in their states when they visit the wineries.
    10:24 AM  PatrickMerr: i belive Millenaisl under index to DTC-they def are less likely to be Club mebres

    10:24 AM  winestudies: How can we leverage the "craft beverage" trend for the wine industry?
    • I'd suggest the small family winery is a "craft beverage" and the spirits, beer and cider businesses are following in the footsteps. All are welcome I believe.
    10:24 AM  winesmith: My guess is 99% of wineries sell 5% of volume as DTC, 20% of gross sales and 50% of profits.

    10:25 AM  VINO ZEN: VinoZen =

    10:25 AM  Alejandro: interesting ? winestudies, though I think the wine industry has been doing just that for a very long time with small, non-behemoth wineries.

    10:25 AM  winesmith: JonBjork: Do you imagine there are any that don't?

    10:25 AM  JonBjork: :-)

    10:25 AM  TheWineDrinkersClub: @ winestudies - by actually making and promoting craft wines.  Most wines on the shelves aren't craft

    10:26 AM  VINO ZEN: The craft beer purchase/enjoyment  is shaping purchasing behaviors...

    10:26 AM  Todd in Vermont: Can we get a read on projected growth in alternative packaging moving up the price scale?

    10:26 AM  TheWineDrinkersClub: Digital is the way to offer that to a new audience

    10:26 AM  NAT d: if we loose control of the lower price wines <$10 to imports this still represents >50% of wine sales where or how will we get those entry level wine drinkers to move up the  wine price categories
    • My greatest fear is just that Nat. Our North Coast small producers aren't going to find success selling sub $10 wines but that is a fantastic place to educate a palate and experiment. If all the wine consumed is from foreign sources, will tomorrows consumer care about US wines?
    10:26 AM  pshannon@pacificarealestate: garagisite festivals is a great resource to promote the craft wine feel

    10:26 AM  Nicholas Adams: @ToddinVermont I'd also love to hear thoughts on alternative packaging.

    10:26 AM  VINO ZEN: Safeway wine selection = 80% fa

    10:26 AM  Alejandro: The smaller/boutique wineries have to leverage that same "small, loving, artisanal" approach.



    10:26 AM  DTC Wine Workshops: Thanks Rob!  Awesome JOB

    10:27 AM  PatrickMerr:

    10:27 AM  PatrickMerr: Thanks all!

    Maria: Thanks for joining! We’ll send you the slide deck a few days after the videocast.

    10:27 AM  Alejandro: yes winesmith, agreed

    10:27 AM  Knights Bridge Winery: Great discussion, thank you!

    10:27 AM  khannah: informative conference -- thanks!

    10:27 AM  Martin Fujishin: Thanks all!

    10:27 AM  DTC Wine Workshops: Cheers!

    10:27 AM  Harold: Thank

    10:27 AM  John: Well done, great discussion!

    10:27 AM  Todd in Vermont: Thanks @SVBWine

    10:27 AM  NAT d: Great job to the panel and I've enjoyed reading the chats

    10:27 AM  Tonya Wake: Thanks so much!!!

    10:27 AM  LisaAdamsWalter: Thanks!

    10:27 AM  Alejandro: great show

    10:27 AM  Michael De Loach: Great job everyone! Very informative and motivating.

    10:27 AM  Shaun Everest: Thank you!

    10:27 AM  Ed Skupien: Thansk!

    10:28 AM  kaz: Thank you for another great job!!!!!!!!!!!!

    10:28 AM  La Jolla Winery: Thanks La Jolla Winery

    10:28 AM  Stephanie Redmond: Excellent! Thank you.

    10:28 AM  Douglas Fletcher: Thanks for the interesting discussion.

    10:28 AM  Christopher Calicott: great show... thanks!  Say hello on Twitter: @mecee

    10:28 AM  Mike Veseth: Nice job!

    10:28 AM  Alejandro: @__alejandro__

    10:28 AM  winestudies: Very useful.  Many thanks!  keep 'em coming.

    10:28 AM  SCW: Thanks you

    10:28 AM  Becky Morus: Very informative- this was a great discussion!

    10:28 AM  Leskup: Thanks gang....

    oe Crazy Wine . Great information and food for thought !

    10:28 AM  Doug Filipponi: thank you excellent

    10:28 AM  DaddyWIne: Thanks for a great report!!

    10:28 AM  Nicholas Adams: For those looking:
    • Thanks for the props Nicholas.
    10:28 AM  kellyhulme: Yep great discussion - agree @pshannon this should happen more than once a year!

    10:28 AM  Jake: Thanks from @ArkenstoneNV

    10:28 AM  Julie: Thank you, great information

    10:28 AM  Katie: Thanks!

    10:29 AM  Jim Gullett: Thank you

    10:29 AM  Alejandro: My wine, sustainability and social media curated content blog:

    10:29 AM  kellyhulme: @newworldterroir for any who want to connect for discussion after

    10:29 AM  Cindysteinbeck: thank you team!

    10:29 AM  Rick: BUY NAPA MERLOT GRAPES!  Best deal going... 1/2 the price of Cab.  Pursue red table wine as a volume sku.

    10:30 AM  Mary Ashley Goding: Thank you for a very informative session

    10:30 AM  Noplonk: Terrific! Thank you.
    • You are all welcome!! Thanks for tuning in. We we all look forward to seeing you at Silicon Valley Bank in person at some point.
    • Feel free to contact me for other questions at this address: Rob McMillan
    • Please join the site at the upper right side of the page, log in and offer your thoughts for the benefit of the wine community.
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