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8 WINES&VINES March 2016 A member of Wine Communications Group Inc. President & Publisher Chet Klingensmith Chairman Hugh Tietjen Publishing Consultant Ken Koppel Associate Publisher Tina Vierra Publishing Assistant Tiffany Maxwell EDITORIAL Editor Jim Gordon Managing Editor Kate Lavin Senior Editor Andrew Adams Senior Correspondent Paul Franson Contributing Editor Jane Firstenfeld Northwest Correspondent Peter Mitham Columnists Grapegrowing: Cliff Ohmart and Glenn T. McGourty Contributing Writers Laurie Daniel, Richard Smart, Richard Carey, Chris Stamp, Andrew Reynolds, Craig Root, Ray Pompilio, Andy Starr, Fritz Westover Practical Winery & Vineyard (PWV) Editor Don Neel Wine East Editor Linda Jones McKee DESIGN & PRODUCTION Graphic Designer Rebecca Arnn Design & Production Bridget Williams DATABASE DEVELOPMENT AND INFORMATION TECHNOLOGY Vice President—Data Management Lynne Skinner Project Manager Liesl Stevenson Database & Web Development James Rust, Peter Scarborough EDITOR'S LETTER BETWEEN PRODUCTION OF THE FEBRUARY ISSUE and this one for March, our entire staff spent three days at the Unified Wine & Grape Symposium in Sacramento, Calif. It is quite possible we saw you there, too, among the 13,800 attendees. Unified is always the best and biggest wine industry function of the year, as much for catching up with old friends as for seeing new products and equipment in the trade show. When you add in the conference sessions, there is no better place to get a sense of how our industry is doing. So how is it doing? Answering that question was the goal of the State of the Industry session held Jan. 27 during Unified. Our editorial team covered that crowded meeting and posted our report online that day, along with three other news stories that detailed other aspects of the symposium (see pages 18-19). The State of the Industry is solid, according to the speak- ers, who variously study the global economy, grow grapes, buy and sell bulk wine, and collect wine shipment data. Collectively they said grape and wine supply and de- mand is balanced, and wine sales continue to increase. Some things are not perfect, however, such as the decreasing demand for lower priced wines, troublesome competition from craft beer and unsettled economies worldwide. It was also enlightening to hear in a smaller panel discussion the perspective of experts who are just outside the wine production tier looking in, including a vineyard real estate appraiser, Tony Correia of the Correia Co.; a banker, Charles Day of Rabobank; an institutional investor, Randall Pope of Westchester Group/TIAA-CREF; and a winery mergers and acquisitions facilita- tor, Mario Zepponi of Zepponi & Co. Their topic was an "Update on Capital Markets, Values and Investing," and below I will paraphrase a few of their insights. What are you most worried about? The appraiser: The effect of national and global economies on consumer attitudes and wine sales. The investor: The global economy is as it was in 2008. The dealmaker: That there may be no more buyers for wineries and brands. The banker: That the dealmaker's clients are buying my clients and taking them away. What are you most optimistic about? The appraiser: The wine moving through the market is very good, and there is a lot of it. The investor: This industry is very, very resilient. The dealmaker: The wine business is in very good shape. The banker: The fundamentals of winery business operations are good. What advice do you have for winery owners and grapegrowers? The appraiser: The best way to make a small fortune in the wine business is to start with a large fortune. The investor: None. The dealmaker: Begin your business with the end in mind. The banker: Especially for small operators, build that cash cushion. These comments offer a good blend of comfort and caution: Business is good; people love to drink wine and will very likely continue to drink it. Businesses, however, have to be practical, establish good cash flow and stash away some reserves when the times are good. Times are certainly good now, so let's all enjoy the good times—in moderation, of course. —Jim Gordon How Investors View the Wine Economy It was enlightening to hear the perspective of experts who are just outside the wine-production tier looking in. CONTACT US SUBSCRIPTIONS Email: subs@winesandvines.com Online: winesandvines.com/subscribe Phone: (866) 453-9701 EDITORIAL Email: edit@winesandvines.com MAIL 65 Mitchell Blvd., Suite A San Rafael, CA 94903 CONNECT WITH US facebook.com/WinesandVines twitter.com/WinesandVines youtube.com/WinesandVines1919