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Silicon Valley Bank Forecasts 11 to 15% Growth in Fine Wine Sales This Year
Company news | April 27, 2011
2011-2012 Annual State of the Wine Industry Report Released
ST. HELENA, Calif. –– April 27, 2011 — Silicon Valley Bank (SVB), a leading provider of commercial banking services to the wine industry, released its Annual State of the Wine Industry Report for 2011-2012 via live webinar today. The report captures trends and addresses critical issues facing the U.S. wine industry, offering unique data and observations that help wine business owners and managers think critically about their strategies.
Based on its in-house expertise, ongoing research and a survey of nearly 600 wineries, SVB predicts the fine wine segment is at the beginning of a long-term, steady growth phase. It forecasts 2011 sales growth will be 11 to 15 percent higher year over year and wineries will experience marginally improving profitability.
SVB's forecast is supported by many factors: inventory analysis that suggests supply is more balanced than many believe; improving luxury consumer trends; greater purchasing power among Gen X and Baby Boomers; improving white table cloth-restaurant sales; and stabilization of the national economy, which is leading consumers to trade up and purchase higher-priced bottles.
"After several years of doom and gloom in this business, it feels good to be past the bottom of the cycle and headed up again," said Rob McMillan, founder of Silicon Valley Bank's Wine Division and author of the report. "While we aren't expecting the business to return to the halcyon days before the financial collapse anytime soon, we are predicting a slow and steady climb up that should span several years leading to improved prospects for the wine business."
The report and webinar also point out numerous headwinds that will challenge the industry: geo-political and national economic hurdles; crop prices that have reset lower compared to the fixed costs in producing grapes; continuing distribution challenges; low adoption rates of social media and digital best practices that could make wine businesses more efficient; and threats to direct consumer wine sales from the proposed HR1161 bill being debated in Washington.
McMillan added, "There is still a lot of risk in the business for investors. That said, there are plenty of buyers so we expect the remaining wounded winery players will either recapitalize or sell over the next 18 months."
To be added to Silicon Valley Bank's report distribution list, contact the author, Rob McMillan rmcmillan@svb.com or @SVBWine.
About Silicon Valley Bank's Wine Division Silicon Valley Bank is the premier commercial bank for emerging, growth and mature companies in the technology, life science, private equity and premium wine industries. Its Wine Division specializes in commercial banking for premium wineries and vineyards and the industries that support them. SVB has the largest team of commercial bankers dedicated to the wine industry of any bank nationwide. Founded in 1994, SVB's Wine Division has offices in Napa and Sonoma counties and serves clients in the fine wine producing regions of California, Oregon and Washington. By virtue of its dedication to the wine industry, Silicon Valley Bank is able to support its clients consistently through economic and growth cycles, and offer guidance on many aspects of their business, beyond traditional banking services. Silicon Valley Bank is a member of global financial services firm SVB Financial Group (Nasdaq: SIVB). More information on the company can be found at www.svb.com.
Silicon Valley Bank is the California bank subsidiary and the commercial banking operation of SVB Financial Group. Banking services are provided by Silicon Valley Bank, a member of the FDIC and the Federal Reserve. SVB Financial Group is also a member of the Federal Reserve.
ST. HELENA, Calif. –– April 27, 2011 — Silicon Valley Bank (SVB), a leading provider of commercial banking services to the wine industry, released its Annual State of the Wine Industry Report for 2011-2012 via live webinar today. The report captures trends and addresses critical issues facing the U.S. wine industry, offering unique data and observations that help wine business owners and managers think critically about their strategies.
Based on its in-house expertise, ongoing research and a survey of nearly 600 wineries, SVB predicts the fine wine segment is at the beginning of a long-term, steady growth phase. It forecasts 2011 sales growth will be 11 to 15 percent higher year over year and wineries will experience marginally improving profitability.
SVB's forecast is supported by many factors: inventory analysis that suggests supply is more balanced than many believe; improving luxury consumer trends; greater purchasing power among Gen X and Baby Boomers; improving white table cloth-restaurant sales; and stabilization of the national economy, which is leading consumers to trade up and purchase higher-priced bottles.
"After several years of doom and gloom in this business, it feels good to be past the bottom of the cycle and headed up again," said Rob McMillan, founder of Silicon Valley Bank's Wine Division and author of the report. "While we aren't expecting the business to return to the halcyon days before the financial collapse anytime soon, we are predicting a slow and steady climb up that should span several years leading to improved prospects for the wine business."
The report and webinar also point out numerous headwinds that will challenge the industry: geo-political and national economic hurdles; crop prices that have reset lower compared to the fixed costs in producing grapes; continuing distribution challenges; low adoption rates of social media and digital best practices that could make wine businesses more efficient; and threats to direct consumer wine sales from the proposed HR1161 bill being debated in Washington.
McMillan added, "There is still a lot of risk in the business for investors. That said, there are plenty of buyers so we expect the remaining wounded winery players will either recapitalize or sell over the next 18 months."
To be added to Silicon Valley Bank's report distribution list, contact the author, Rob McMillan rmcmillan@svb.com or @SVBWine.
About Silicon Valley Bank's Wine Division Silicon Valley Bank is the premier commercial bank for emerging, growth and mature companies in the technology, life science, private equity and premium wine industries. Its Wine Division specializes in commercial banking for premium wineries and vineyards and the industries that support them. SVB has the largest team of commercial bankers dedicated to the wine industry of any bank nationwide. Founded in 1994, SVB's Wine Division has offices in Napa and Sonoma counties and serves clients in the fine wine producing regions of California, Oregon and Washington. By virtue of its dedication to the wine industry, Silicon Valley Bank is able to support its clients consistently through economic and growth cycles, and offer guidance on many aspects of their business, beyond traditional banking services. Silicon Valley Bank is a member of global financial services firm SVB Financial Group (Nasdaq: SIVB). More information on the company can be found at www.svb.com.
Silicon Valley Bank is the California bank subsidiary and the commercial banking operation of SVB Financial Group. Banking services are provided by Silicon Valley Bank, a member of the FDIC and the Federal Reserve. SVB Financial Group is also a member of the Federal Reserve.