###

THE OPPORTUNITY – KEY WINE MARKET STATISTICS

Big Market/Strong Growth (Source:  The Wine Institute):

·         U.S. retail wine sales increased almost 7% in 2002 to $21.1 billion and have grown an average of 6.4% per year since 1992

·         U.S. is the world’s 4th largest producer and 3rd largest total consumer of wine, however, it is ranked 34th in per capita consumption, illustrating that there is significant room for continued future growth

·         2002 U.S. Wine Market Share By Origin:  67% California , 25% Foreign, 8% Other U.S. States; California accounts for over 90% of U.S. production

Strong/Desirable Consumer Base (Source:  The Wine Market Council):

·         53.6 million people or 26.4% of the U.S. adult population are wine consumers

·         Demographics Of Wine Drinkers:

o        63% female

o        Primarily skew in 30-59 age range

o        Significantly higher household incomes versus the average population (average $63-78M)

o        Significantly higher education levels versus the average population (> college/post-graduate)

·        The Wine Market Council’s stated goal is to position wine as a more common, casual everyday enjoyment (versus a formal, special occasion beverage) and to target the younger adult demographic segment to get them to adopt wine as a part of their everyday lives

On-Trend Opportunity :

·         Cotton Inc. 2006 color forecast included the “Wine Country” color palette as a top 6 trend

·         Entertaining-at-home trend continues to drive increased demand for wine-related products (Furniture/Today)  

Come Home to the Wine Country Lifestyle

World Vineyards™ Lifestyle Brand Launch At Fall IHFM

HIGH POINT, N.C. (September 3, 2004) — The strategic marketing and licensing company behind the successful Dick Idol™ line plans to launch the World Vineyards™ lifestyle brand in partnership with lead licensee Klaussner Furniture at the Fall 2004 International Home Furnishings Market.  The brand’s mission is to target the 54 million adults in the U.S. alone who are passionate about wine, entertaining at home, and living a casual lifestyle by creating a broad variety of products inspired by the many unique vineyard regions around the world and the lifestyles that they reflect.  Importantly, the brand is less about the wine itself and more about the geographic regions…product collections will start with the Napa Valley, California “melting pot” and will expand seasonally to regions of Italy , Spain , France , Germany , Australia , South America , Washington State, South Africa , and more. 

The brand will partner with local vineyards with each geographically based seasonal collection to help build brand personality and authenticity.  Inspiration for the initial World Vineyards™ Napa Valley Collection comes from Flora Springs Winery & Vineyards, a third generation, family-owned winery with a variety of award-winning wines produced from grapes grown in their families’ 700 vineyard acres in the Napa Valley.  A variety of unique trade marketing events are planned at Klaussner during market including a wine trail tasting experience at the showroom, special winemaker dinners with Flora Springs owner John Komes, suggested wine pairings at nightly dinners, and even a sweepstakes for purchasing dealers to win a trip to Napa to visit Flora Springs and its family-owned Rancho Caymus Inn.  In addition, direct to consumer promotions are planned in conjunction with Flora Springs when the program hits retail floors.  Other longer-term brand building efforts range from wine/culinary clubs and vineyard trip promotions to a possible lifestyle television series to retail store franchising and direct mail catalogs. 

The initial collection is based on the eclectic styles found in the world-famous Napa Valley wine region.  It’s a perfect blend of old world meets new world with key product themes including the trellis, wine cellar doors/barrels, tile, metal gates, stained glass, vines/grapes, pottery, and on-trend wine country color palettes, among others.  “Reserve” items include specially selected, signature products inspired by Flora Springs .  Importantly, all World Vineyards™ products combine great vineyard region lifestyle looks with great values for the consumer.  Current licensing partners and products to be launched include:

·         Klaussner Furniture – Case Goods:  Approximately 100 case good/occasional SKU’s including 2 bedroom and dining room groups, 1 free-standing bedroom group, and 6 occasional collections.  Beds will retail at values from $799-$1,299.

·         Klaussner Furniture – Upholstery:  An eclectic assortment of upholstered offerings to coordinate with each of the 6 occasional collections with styling based on California casual influence using traditional and transitional elements.  Klaussner will use their premium branded Distinctions product featuring down-blend cushions, eight-way hand tied construction, a vast array of custom order fabric selections, and lifetime warranties on cushions and frame. The collection will focus on retail price points from $799-$999, and leather at $1,799-$1,999, but the lifestyle inspired fabric assortment will be available on the dealer’s choice of any Klaussner upholstery style.

·         ·         StyleCraft Lamps:  More than 30 SKU’s of table, buffet, and floor lamps and decorative accessories; additional 25 SKU’s of framed art and mirrors; single source for coordinating lighting, accessories, and wall décor, all at extremely strong values.

·         2-Day Designs:  Klaussner Furniture will sell approximately 20 SKU’s of accent furniture and decorative accessories made from actual wine barrels by this Georgia company.

·         Natural Creations:  35 permanent florals and 15 trees including a signature four foot tall grape vine; key looks include grapes, grape ivies, and topiary style items.

·         Carolina Mattress Guild:   2 mattress sets with special fabrics reflecting the colors and comfort of the Napa Valley , fire-retardant safety, and opportunity for great retail prices and margins.  “One stop shop” concept is important since almost 50% of bed buyers also purchase a new mattress set.

·         Southern Textiles:  5 complete bedding ensembles specifically developed to enable furniture stores to “dress” their showroom beds and ship sales direct to the consumer without carrying inventory; “one stop shop” concept allows consumers to buy coordinated bed, mattress, and bedding.

·         Other:  Additional announcements are planned soon in a variety of categories including stemware, barware, dinnerware, bed & bath, cooking products, gourmet foods, and more.

All partners involved with the launch are extremely bullish about the long-term opportunity.  Jeff Davis, vice president of Klaussner Furniture, said, “We are pleased to expand our licensing partnership and believe that World Vineyards™ will be huge based on the brand’s potential longevity, line breadth, and broad appeal, particularly to women.”  John Komes, owner of Flora Springs Winery & Vineyards said, “We’re excited to have been selected to be a part of this non-traditional marketing alliance and believe we can have a lot of fun increasing sales of both wine country products and our wines.”  Jim Williams, president of World Vineyards™ added, “We’ve been fortunate to put together a team of the best players in their categories and believe this will be the most comprehensive initial launch of a new brand that our industry has seen.  Cheers!”