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SVB PREDICTS END OF TRADING DOWN TREND IN WINE SALES, 8-12% GROWTH IN FINE WINE
Company news | May 3, 2010
Silicon Valley Bank Releases 2010-2011 Annual State of the Wine Industry Report
ST. HELENA, Calif. — May 3, 2010 — 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 2010-2011 today.
Based on in-house expertise and ongoing research among West Coast wineries, Silicon Valley Bank predicts an end to the trading-down trend that has plagued fine-wine producers for the past few years as well as 8-12 percent sales growth for the fine wine segment in 2010. Supporting these predictions, SVB cites improving patterns in luxury buying behavior within affluent segments, expected improvement in corporate entertaining, and emerging improvement in restaurant sales, notably among the independent, white table cloth segment that has been the most impacted in the fine wine sales correction of the last few years. While a prominent level of discounting will continue into Q3 2010, SVB expects improved distributor buying through the year as depleted wine is reordered.
"Those wineries selling on allocation, large scale producers, or established brands in wide distribution are better positioned this year. Moderate scale and non-allocated wineries selling above $50 a bottle will again find 2010 a difficult year," said Rob McMillan, founder of Silicon Valley Bank's Wine Division and author of the report. "Consumers, who have grown accustomed to extreme bargains, will begin to find the window closing on those wine values as the inventory correction phase of this cycle ends this year."
SVB's growth prediction is tempered by persistent financial and economic hurdles nationally, and further cautions that already marginal profitability in the wine sector will continue to be impacted by high grape costs in the cellar, and trade discounts.
McMillan encourages winery owners to move beyond previously established consumer norms, "The new normal for your winery should not be fully defined by the fate of an economically damaged consumer, but by your own sales strategy. Defining a new normal and acting on that is more prudent than waiting for the old normal to return," he said.
Silicon Valley Bank's Annual State of the Wine Industry Report captures trends and addresses critical issues facing the U.S. wine industry. Given the state of the economy and the need for wine businesses to think critically about their strategies, these findings intend to offer data, trends and observations that wine businesses can use during their 2010-2011 planning.
• To become a winery client of Silicon Valley Bank, or to be added to Silicon Valley Bank's report distribution list, contact the author, Rob McMillan (rmcmillan@svb.com)
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), with SVB Analytics, SVB Capital, SVB Global and SVB Private Client Services. 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. — May 3, 2010 — 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 2010-2011 today.
Based on in-house expertise and ongoing research among West Coast wineries, Silicon Valley Bank predicts an end to the trading-down trend that has plagued fine-wine producers for the past few years as well as 8-12 percent sales growth for the fine wine segment in 2010. Supporting these predictions, SVB cites improving patterns in luxury buying behavior within affluent segments, expected improvement in corporate entertaining, and emerging improvement in restaurant sales, notably among the independent, white table cloth segment that has been the most impacted in the fine wine sales correction of the last few years. While a prominent level of discounting will continue into Q3 2010, SVB expects improved distributor buying through the year as depleted wine is reordered.
"Those wineries selling on allocation, large scale producers, or established brands in wide distribution are better positioned this year. Moderate scale and non-allocated wineries selling above $50 a bottle will again find 2010 a difficult year," said Rob McMillan, founder of Silicon Valley Bank's Wine Division and author of the report. "Consumers, who have grown accustomed to extreme bargains, will begin to find the window closing on those wine values as the inventory correction phase of this cycle ends this year."
SVB's growth prediction is tempered by persistent financial and economic hurdles nationally, and further cautions that already marginal profitability in the wine sector will continue to be impacted by high grape costs in the cellar, and trade discounts.
McMillan encourages winery owners to move beyond previously established consumer norms, "The new normal for your winery should not be fully defined by the fate of an economically damaged consumer, but by your own sales strategy. Defining a new normal and acting on that is more prudent than waiting for the old normal to return," he said.
Silicon Valley Bank's Annual State of the Wine Industry Report captures trends and addresses critical issues facing the U.S. wine industry. Given the state of the economy and the need for wine businesses to think critically about their strategies, these findings intend to offer data, trends and observations that wine businesses can use during their 2010-2011 planning.
• To become a winery client of Silicon Valley Bank, or to be added to Silicon Valley Bank's report distribution list, contact the author, Rob McMillan (rmcmillan@svb.com)
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), with SVB Analytics, SVB Capital, SVB Global and SVB Private Client Services. 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.