Comments on: Super-Secret Winery Financial Data http://www.pinotblogger.com/2007/03/02/super-secret-winery-financial-data/ A blog about starting and building a family winery in the Russian River Valley Mon, 01 Dec 2008 18:39:34 +0000 http://wordpress.org/?v=2.6.3 By: Kevin Finn http://www.pinotblogger.com/2007/03/02/super-secret-winery-financial-data/#comment-15504 Kevin Finn Fri, 09 Mar 2007 02:25:59 +0000 http://www.pinotblogger.com/2007/03/02/super-secret-winery-financial-data/#comment-15504 Wineries certainly run on slim margins, but there is hope. Thanks to technology, and falling legal barriers, a serious opportunity exists for wineries to improve their channel mix. By that I mean selling through a direct sales force, rather than wholesalers. Selling direct, as Josh mentions, is the key to improving margins (especially for smaller wineries). I know wineries are cognizant of this opportunity, as they have invested in software, logistics, and working capital (look at the inventory common size) to accommodate the direct model. Now it's time for the marketing side of selling direct to take hold. These numbers are from 2005 (e.g. prior to the Supreme Court ruling). I'm certain we will see some margin expansion in the future. Wineries certainly run on slim margins, but there is hope. Thanks to technology, and falling legal barriers, a serious opportunity exists for wineries to improve their channel mix. By that I mean selling through a direct sales force, rather than wholesalers. Selling direct, as Josh mentions, is the key to improving margins (especially for smaller wineries).

I know wineries are cognizant of this opportunity, as they have invested in software, logistics, and working capital (look at the inventory common size) to accommodate the direct model. Now it’s time for the marketing side of selling direct to take hold.

These numbers are from 2005 (e.g. prior to the Supreme Court ruling). I’m certain we will see some margin expansion in the future.

]]> By: El Jefe http://www.pinotblogger.com/2007/03/02/super-secret-winery-financial-data/#comment-15042 El Jefe Tue, 06 Mar 2007 07:28:51 +0000 http://www.pinotblogger.com/2007/03/02/super-secret-winery-financial-data/#comment-15042 Thanks :) On the other hand, you should see some of the search terms that are finding my blog these days....! Thanks :)

On the other hand, you should see some of the search terms that are finding my blog these days….!

]]> By: Josh http://www.pinotblogger.com/2007/03/02/super-secret-winery-financial-data/#comment-14992 Josh Mon, 05 Mar 2007 22:02:43 +0000 http://www.pinotblogger.com/2007/03/02/super-secret-winery-financial-data/#comment-14992 El Jefe, I sure hope we do better, and thanks for the heads up. Good luck managing your hump (I promised myself wouldn't drag this one into the gutter like last time)! With your marketing, high quality and recent success in various tastings I'm confident you guys will make it through and prosper. El Jefe,

I sure hope we do better, and thanks for the heads up.

Good luck managing your hump (I promised myself wouldn’t drag this one into the gutter like last time)! With your marketing, high quality and recent success in various tastings I’m confident you guys will make it through and prosper.

]]> By: El Jefe http://www.pinotblogger.com/2007/03/02/super-secret-winery-financial-data/#comment-14946 El Jefe Mon, 05 Mar 2007 09:29:23 +0000 http://www.pinotblogger.com/2007/03/02/super-secret-winery-financial-data/#comment-14946 hi Josh - You would be wise to believe the data, and then be pleasantly surprised when you do better (and I hope you do.) I'm observing that all wineries have a "big hump" to get over after a few years of existence - something about having to ramp up production and then actually sell it two years later. Your hump is coming, I'm in mine! hi Josh - You would be wise to believe the data, and then be pleasantly surprised when you do better (and I hope you do.) I’m observing that all wineries have a “big hump” to get over after a few years of existence - something about having to ramp up production and then actually sell it two years later. Your hump is coming, I’m in mine!

]]> By: Josh http://www.pinotblogger.com/2007/03/02/super-secret-winery-financial-data/#comment-14812 Josh Sat, 03 Mar 2007 22:31:11 +0000 http://www.pinotblogger.com/2007/03/02/super-secret-winery-financial-data/#comment-14812 Hi Mike, These are means. I do know that for profitablity, generally 2/3 of wineries in each category are profitable, with the majority only slightly profitable. The graph is an S curve, with some folks at the very high and low ends. The rep from SVB guesstimated that around 15% of their clients were of they sort that run their wineries like hobby farms and don't really need to show a profit. Those in the unprofitable third that aren't showing a profit include some of those hobby farms as well as wineries in various stages of start up. The hit comes not just from growth, which is absolutely right, but even more so from owning your own land/winery. In general, the advice is to avoid building a winery at all costs. So naturally I'm ignoring it. :p Hi Mike,

These are means. I do know that for profitablity, generally 2/3 of wineries in each category are profitable, with the majority only slightly profitable. The graph is an S curve, with some folks at the very high and low ends. The rep from SVB guesstimated that around 15% of their clients were of they sort that run their wineries like hobby farms and don’t really need to show a profit. Those in the unprofitable third that aren’t showing a profit include some of those hobby farms as well as wineries in various stages of start up.

The hit comes not just from growth, which is absolutely right, but even more so from owning your own land/winery. In general, the advice is to avoid building a winery at all costs.

So naturally I’m ignoring it. :p

]]> By: Mike Duffy http://www.pinotblogger.com/2007/03/02/super-secret-winery-financial-data/#comment-14809 Mike Duffy Sat, 03 Mar 2007 21:37:47 +0000 http://www.pinotblogger.com/2007/03/02/super-secret-winery-financial-data/#comment-14809 Are these averages (means) or medians? It's more useful to know the point where half of the wineries are above/below it. The hit clearly comes when you take on financing to grow. A very useful and interesting post. Thank you, Josh. Are these averages (means) or medians? It’s more useful to know the point where half of the wineries are above/below it.

The hit clearly comes when you take on financing to grow.

A very useful and interesting post. Thank you, Josh.

]]> By: Josh http://www.pinotblogger.com/2007/03/02/super-secret-winery-financial-data/#comment-14789 Josh Sat, 03 Mar 2007 17:21:35 +0000 http://www.pinotblogger.com/2007/03/02/super-secret-winery-financial-data/#comment-14789 I love it. Thanks Alan! I love it.

Thanks Alan!

]]> By: Allan P. London, CPA http://www.pinotblogger.com/2007/03/02/super-secret-winery-financial-data/#comment-14733 Allan P. London, CPA Sat, 03 Mar 2007 02:33:31 +0000 http://www.pinotblogger.com/2007/03/02/super-secret-winery-financial-data/#comment-14733 It is not mass insanity; it is alcoholism and a total lack of business sense. Those are the ingredients to make great wine. Gravity feed and only put 60%of the crush in the barrel – make grappa with the rest. The grappa will keep you going until the next after crush party! Prune back your vines to the nib; and never accept a yield of more than 1.5 tons an acre. Then sell all your wine to all your friends at fantastic margins, but spend the money on new oak. Legs and oak makes the wine God (who only talks to Parker) happy! When there is no more cash – sell the winery at a fantastic profit to the next guy with stars in his eyes and return to the valley (that is Silicon Valley!). That is the wine biz It is not mass insanity; it is alcoholism and a total lack of business sense. Those are the ingredients to make great wine. Gravity feed and only put 60%of the crush in the barrel – make grappa with the rest. The grappa will keep you going until the next after crush party!

Prune back your vines to the nib; and never accept a yield of more than 1.5 tons an acre. Then sell all your wine to all your friends at fantastic margins, but spend the money on new oak. Legs and oak makes the wine God (who only talks to Parker) happy!

When there is no more cash – sell the winery at a fantastic profit to the next guy with stars in his eyes and return to the valley (that is Silicon Valley!).

That is the wine biz

]]> By: Super Playstation 2 » Super-Secret Winery Financial Data http://www.pinotblogger.com/2007/03/02/super-secret-winery-financial-data/#comment-14697 Super Playstation 2 » Super-Secret Winery Financial Data Fri, 02 Mar 2007 19:50:11 +0000 http://www.pinotblogger.com/2007/03/02/super-secret-winery-financial-data/#comment-14697 [...] post by Josh and plugin by Elliott Back [...] [...] post by Josh and plugin by Elliott Back [...]

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