Shifting Economic Conditions to Have Lasting Impact in Fine Wine Businesses

Silicon Valley Bank Releases Annual State of the Wine Industry Report

Silicon Valley Bank, a leading provider of commercial banking services to the wine industry, released its annual "State of the Wine Industry Report" today. Based on in-house expertise and primary research among West Coast wineries, the report forecasts flat growth in the fine wine segment and modest growth in higher volume segments in 2009. Silicon Valley Bank's research also finds that the distribution channel for modest wine producers and many smaller brands is effectively closed, suggesting lasting changes in sales strategies.

"Wine businesses across the board are being pushed to new limits in the current environment," said Rob McMillan, founder of Silicon Valley Bank's Wine Division and author of the report. "We believe we are at the beginning of a longer-term change in the fine wine market that will generally compress the pricing of wines and separate out high-priced cult brands that deliver consistently good quality from the me-too entrants. Inevitably this will lead to a certain percentage of wineries that will quietly exit the market at bargain prices in the next two years. The sustained negative market conditions will have an impact on high-end family wine businesses that will last well past the bottom of the present recession."

Silicon Valley Bank's annual wine report captures trends and addresses critical issues facing the U.S. wine industry in 2009/10, including the credit markets, distribution, bottle pricing, grape and inventory supply, foreign competition, marketing and alternative sales channel challenges. The report also offers strategic and tactical recommendations to wine businesses as they adapt to current and anticipated market conditions.

Nearly 500 wineries throughout California, Oregon and Washington participated in Silicon Valley Bank's annual wine survey in March 2009. Financial data from Silicon Valley Bank's Peer Group Analysis program, which contains information from more than 100 premium wineries obtained over several years, is also used.

For a copy of the full report, please visit http://www.svb.com/pdfs/wine/StateoftheWineIndustry0910.pdf.

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 Napa, Sonoma, the Central Coast 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 Private Client Services is a division of Silicon Valley Bank. SVB Financial Group is also a member of the Federal Reserve.
 
 
SOURCE Silicon Valley Bank