Premium Wine Market Today The Opportunity
High-margin, high-growth industry
Increased travel/hospitality spending
Strong demand for luxury wines
Plentiful supply of high-quality grapes
Notes:
- That said, we still believe that this competitive environment also offers compelling opportunity.
- For example, the fragmented nature of our industry, the capital demands of large-scale agriculture, and wine’s long production cycle all favor well-capitalized companies with strong brand portfolios like Robert Mondavi.
- What’s more, the underlying dynamics of the premium wine market remain very attractive: the steady 5 to 6 percent annual volume growth with higher margins than many consumer branded products.
- In addition, per capita consumption of premium wine continues to grow in the United States, and favorable demographic trends are bringing more consumers into our market.
- Cyclical economic trends have also been positive lately, with a weak US dollar helping exports and a steady improvement in the economy that has spurred consumer spending, especially in markets like travel and restaurants where we are seeing strong demand for luxury wines.
- Even the overabundance of high-quality fruit in recent harvests has a silver lining because it means that more and more people are drinking better and better wine. For a quality-oriented producer like us, this is a good thing in the long-term.
- One thing is certain: to succeed not only in this current market, but in the long-term, as well, brand strength, distribution clout, and significant financial resources are absolutely essential. We believe Robert Mondavi has all three. I want to discuss how we are translating those advantages into strategic steps to improve our returns, but first let’s take a quick look at our recent financial performance in this environment