New York City January 23, 2007 The U.S. Wine Market – Consumer Trends and Analysis Kennewick, WA – February 6, 2008

New York CityJanuary 23, 2007

The U.S. Wine Market – Consumer Trends and AnalysisKennewick, WA – February 6, 2008

Wine Market Council Key Facts:

All Tiers of the Industry Involved

Promotion of Imported and Domestic Wines

Focus on Expanding U.S. Consumer Market for Wine

Wine Market Council Mission Statement:

“…to establish the

widespread acceptance of wine as a

rewarding part of American culture

and to encourage the responsible

enjoyment of wine by current and

future generations of adults in the

United States.”

Ongoing Consumer Research Quantitative studies Focus groups and Internet studies

National Public Relations Campaign Target marginal wine consumers Mainstream consumer media Raise comfort level with wine

Wine Market Council Initiatives


2007: “Tipping Point Year”

Core

Marginal

Consumption Frequency Segmentation, 2007

Source: Merrill Research

45%55%

98 99 00 01 02 03 04 05 06 07

Total Wine Consumption – U.S. (Millions of cases)

Source: Impact Databank

212225 229 231

245259

270279

290304*

*Estimate

1970 1975 1980 1985 1990 1995 2000 2005 2007

U.S. Adult Per Capita Table Wine Consumption v. Population Growth

Adult Population

Gallons per Adult

134 147 154 164 173 184 194

1.05

1.78

2.582.29

1.96 2.132.46

2.81

211

Source: U.S. Census Bureau, Adams Beverage Group *Estimate

216*

3.02*

Male

Female

Male v. Female Ratio of Wine Drinkers, 2007

5050 50 50 4753

Millennial Gen X Boomer


(Percent by segment and generation)

Male Female

Net Gain in Wine Consumption, 2007


(Net gain “Drinking more wine” vs. year or two ago, by gender)

22%

25%

Consumer Segments by Gender, 2007

Core Marginal


Male 54%

Female 46%

Male 41%

Female 59%

Segments by Age, 2007(Mean)

Core

Marginal

45.6 46.9


Younger Generations Drive New Growth, 2007(Net percent “drinking more wine” by generation)

Millennial

Gen X

Boomer


47

37

10

Don’t drink wine 57%

Drink wine 43%

(Ages 21 – Plus)Beverage Alcohol Consumers, 2000


49 M64 M

Don’t drink wine 43%

Drink wine 57%

(Ages 21 – Plus)Beverage Alcohol Consumers, 2007


75 M56 M


Consumer Segmentation

Beer/Spirits 25.8%

Core 17.8%

Marginal 17.2%

Non-Drinkers 39.2%

(Ages 21 – Plus)Consumer Segments U.S. Adults, 2007


0102030405060708090

100

Beer

Spirits

Wine

100

70

82 8680

100

Wine Drinker Consumption of Beer and Spirits, 2007

Core Marginal


(Percent by segment)

Net Gain/Loss in Beverage Alcohol Consumption, 2007


(Percentage gain or loss by beverage type)

-15%

23%

-7%

Wine

Beer

Spirits

Trade - Off

Others

Drinking Less Beer or Spirits but More Wine: “Trade – Off” Drinkers, 2007


90%

10%

0

10

20

30

40

50

60

70

Trade - Off

Total

“Trade-Off” Consumers Skew Younger, 2007

1924

34

2427

39



1518

Aged 62+

(Percentages by generation)

Core

Marginal

17

28

37

57

26

34

Reasons for Increased Wine Consumption, 2007

More occasions

More per occasion

Both


(Percentage by statement)

Core

Marginal

2627

3332

17

21

“I would drink more wine if…” 2007

Less $ in restaurant

More affordable

Spouse drank wine


(Percentage by statement – drinking same or less than year or two ago)

No small children

7

13


Purchase and Usage Behaviors

Core

Marginal

Frequency of Purchase by Price Point, 2007(Frequent or occasional purchase)

17

9

38

29

74

63

81

65 64

45

37

25

<$3 $3 - $6 $6 - $10 $10 - $15 $15 - $20 >$20Source: Merrill Research

Color Mix by Segment, 2007

46%

35%

19%

36%

36%

28%

Blush

White

Red

Core Marginal


Appellation Mix Consumed by Segment, 2007

68%

32%

74%

26%

Imported

Domestic

Core Marginal


It Fr Aus Gr Sp Nz Ch Ar Sa

Core Marginal

Imported Wine Purchases by Country, 2007(Percent have purchased wine by country in past 3 months)

23


32

44

26

41

52

26

18

26

1622

12

23

9

18

6

14

6

Wine Purchases by State, 2007

CA NY WA OR

Core

Marginal

(Percent have purchased wine by state in past 3 months)

90

79

2418

28

13

23

12



Winery and Internet Direct Markets

Core

Marginal

135

76

93

62

Membership in Wine Clubs – 2007(Percent by membership and segment)

50

None 1 Club 2 Clubs 3+ ClubsSource: Merrill Research

2007 - Ever Purchased Wine Directly from a Winery?(Percent by channel and segment)


At Winery Mail Order Web Site

Core

Marginal

59

44

15

6

15

7

2007 - Ever Purchased Wine Over the Internet?

0

10

20

30

40

50

Core

Marginal18

9


(Percent by segment)

Internet Wine Purchases by Channel, 2007(Percent purchase by channel)


Winery

Retail

Auction

Other

38

35

64

2003

2005

2007

Increase in Winery Online Sales, 2003 - 2007(Percent “ever purchased from winery site”)

Core Marginal

6

1

6

17


11

5


Millennial Generation

American Generations

WW II (76 and over) 32 Million

Swing (63 - 75) 30 Million

Boomer (44 - 62) 77 Million

Generation X (32 - 44) 44 Million

Millennial (14 - 31) 70 Million

Source: American Generations

(Age ranges in 2008)

Core

Marginal

26

35

2118

Segments by Generation, 2007



(Percentage by segment and generation)

62-plus

18 17

22

43

Wine Consumed Most Often – Imports vs. Domestic - by Generation, 2007

60%

40%

68%

32%

74%

26%

Imported

Domestic

Millennial Gen X


Boomer

Imported Wine Purchases by Country, 2007

0

10

20

30

40

50

60

70

80

It Fr Au Gr Sp Nz Ch Ar Sa

Millennials

All Respondents

(Percent have purchased wine by country in past 3 months)

43

57

36

50

3336

2322 2422


27

18 18 17 1513 1310

05

101520253035404550


Have Purchased Wine Online, 2007

23%

16%

11%



Importance of Information from the Internet when purchasing Wine, 2007(Top 3 box)

49%

36%

21%



The U.S. Wine Market – Consumer Trends and AnalysisKennewick, WA – February 6, 2008

Documents

New York City January 23, 2007 The U.S. Wine Market – Consumer Trends and Analysis Kennewick, WA – February 6, 2008