SVB Wine Division Founder Expects Economy to Bottom Out by Q4 of 2009 or Q1 of 2010

ShipCompliant's 4th annual Direct Shipping Seminar & User's Conference draws a crowd of over 400 attendees

The economy is expected to bottom out by Quarter 4 of 2009 or Quarter 1 of 2010 Rob McMillan, founder of the Silicon Valley Bank Wine Division, said today at ShipCompliant's 4th annual Direct Shipping Seminar & User's Conference. Over 400 attended the conference at the Marriot in Napa.

McMillan, who gave a report on the state of the wine industry, said that household debt is at an all time high and that the unemployment rate is continuing to go up. He also reported that retail sales are up after two quarters of being down. The most important thing, though, is that consumer confidence is up and that leading economic indicators are showing a gain, he said.

In the best case scenario, McMillan said that there will be very muted economic conditions with low growth in GDP and low inflation as the government slows its spending. His expected case scenario, however, is that there will be lower real GDP growth combined with modest nominal GDP but even higher levels of inflation to pay back debt.

McMillan also gave a summary of Silicon Valley Bank's 2009 Forecast for the Wine Industry: sales growth is flat, gross margin will be squeezed down with promotions and discounts, pretax profits will go back to single digits, bottle prices will drop, supply will be largely in balance, there will be few start ups and some brands will transition to bargain prices.

Opportunity lies in acquisitions, adjusting early to distributor changes in markets, adopting electronic direct to consumer tools as soon as possible and understanding what value really means and apply it. "Don't just drop price; think about how you're going to drop price appropriately," McMillan said.

Other speakers in the morning sessions included: Steve Gross, director of state relations at Wine Institute, who gave direct shipping legislative updates and Curtis Coleburn, COO of the Virginia ABC who gave an update on Virginia ABC rules and enforcements. The morning session concluded with a discussion and analysis of the California ABC's recent advisory on online sales programs operated by so-called unlicensed Third Party Service Providers by Susan Cagann an attorney with Farella Braun & Martel.

In the afternoon, ShipCompliant CEO Jason Eckenroth and VP of Compliance Jeff Carroll and announced two new advances to ShipCompliant's technology that will launch today: EasyWineLicensing.com, a licensing service, was launched to help wineries expand their markets. Currently, EasyWineLicensing will only be available to producers.

The second new product announcement is what Eckenroth said is ShipCompliant's largest product launch in three years: ShipCompliant Wholesale, a solution that allows wineries to consolidate and manage all their wholesale, compliance and direct shipping needs in one location in a user-friendly in-house system. For more on ShipCompliant's Wholesale Compliance Solution, see the "Direct to Consumer" section in Wine Business Monthly's current issue (June 2009).