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32 W i n e s & V i n e s n o V e m b e r 2 0 1 4 80% 70% 60% 50% 40% 30% 20% 10% 0 W ith clean stacks of bins and picking shears at the ready, Wines & Vines polled vineyard and win- ery suppliers at the start of harvest 2014 to assess the health of the wine industry. As provid- ers of financing, equipment and services, wine industry suppliers have unique knowledge about how much wine is awaiting bottling, its intended market and what plans their winery and vineyard cli- ents have for the future. This is the seventh year the magazine has conducted the supplier survey, which we rolled out on the brink of the Great Reces- sion in 2008 and continue now that the economy has arrived firmly on the other side. Steve Herron, senior vice president and commercial banking manager at Exchange Bank, said, "During the downturn, '09 through '11, there was a shakeout, particu- larly among smaller, higher end producers and mid-priced producers. "A lot of people sold the business, prob- ably to somebody larger, because that downturn—when distribution sales dropped by about 30% in 2009—that hurt virtually all wineries." Herron added that the wineries still oper- ating post-shakeout are survivors, some of whom attracted outside equity to stay afloat during the downturn. (See "Will 500 West Coast Wineries Sell?" on page 94.) The past year Nearly 150 wine industry suppliers com- pleted our 2014 survey, with respondents including purveyors of nursery stock, wine packaging, fermentation vessels, loan financing, compliance services and more. This year a record number of suppliers said the wine industry had experienced rapid growth during the 12 months leading up to the survey. A full 30% of vineyard and win- ery products and service providers reported observing rapid expansion in the industry— a 14% jump in two years. An additional 52% of respondents reported slow growth among their winery and vineyard clients. Marisa Peltier of Peltier Glassworks said slow growth has become the standard in California's Central Coast region of Paso Robles. "There are new wineries popping up every year, but it's not an outrageous number," Peltier said. "It's growing at a healthy, steady pace." She told Wines & Vines she's seen an increase in the number of clients coming to get large-format bottles screenprinted, which she described as a more economical solution than having them etched. Shelby White of capsule supplier Maverick Enterprises agrees that the North American wine industry is continuing its slow expansion, with three consecutive large harvests in Cali- fornia pushing production to new heights. "Wineries that started small are getting larger because the harvest has been so great," White said. According to the USDA's Califor- nia Grape Crush Report, state vineyards pro- duced a record 4 million tons of wine grapes in 2012 and 4.2 million tons in 2013. The uptick in production has had a noticeable effect on custom-crush opera- tions, she added, as many wineries call in Coming Out of the Dark Vineyard and winery suppliers report clients in the best shape since pre-recession By Kate Lavin Highlights • A record number of respondents reported wine industry growth in our seventh survey of vineyard and winery suppliers. • Grape and wine producers' ability to obtain financing has rebounded from the Great Recession. • More than half of suppliers plan to raise their prices during the next 12 months. Wine Industry Performance How would you describe the performance of the wine industry during the past year? 80% 70% 60% 50% 40% 30% 20% 10% 0 Getting Better Staying the Same Getting Worse Grew Rapidly Grew Slowly Remained Unchanged Declined Slowly Declined Rapidly Financial Health of Wine Industry Clients What is your impression of the financial health of your wine industry clients? 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2012 2013 2014 2012 2013 2014 2012 2013 2014 2012 2013 2014 2012 2013 2014 S A L E S & M A R K E T I N G s u p p l i e r s u r v e y