Our Proposed Bottling Plan Analysis and Recommendations

1
Our Proposed Bottling PlanAnalysis and
Recommendations
Prepared by ABCD Consultants For Chateau DeCline
Winery
Presenter 1 Ann Presenter 2 Binh Presenter
3 Carl Presenter 4 Dan
2
Agenda

• Ann Provide an overview of market conditions
  and constraints
• Binh Present most profitable bottling plan
• Determine the most profitable bottling plan given
  the current constraints and recipes
• Adjust the Meritage recipe to further increase
  profits
• Carl Report on the plans sensitivity to
  changes in price and supply constraints
• Dan Suggest additional recommendations

3
Business Overview

• Producer of red wine varietals and blends
• Supply Regions
• 1) Napa
• high cost and high prestige
• less than 4 of Californias wine grapes
• 2) Lodi
• Low cost and lower, but growing, prestige
• 500K tons of wine grapes grown annually
• Market for products
• Retail prices fixed
• Demand caps exist for all products
• Must maintain presence in Napa Cabernet and Napa
  Merlot
• Supplies limited, do not match demand

4

• Must Supplies
• Napa Cabernet,
• Merlot and Mourvedre
• Lodi Cabernet, Merlot and Cab Franc

• Demand
• Pure Regional Varietals
• Meritage
• 40 Napa Cab
• 40 Merlot
• 15 Cab Franc
• 5 Napa Mourvedre

5
Base-Scenario Bottling Plan

• Annual profit 242.9K
• 80 of potential demand filled
• Excess supply 16K bottles

6
Adjusted Recipe Bottling Plan

• Annual profit 264.0K, an increase of 9
• 85 of potential demand filled
• Excess supply decreased to 14K bottles

7
Meritage Blending
40 Napa Cab
40 Napa Merlot
40 Napa Merlot
27 Napa Mouv
18 Napa Cab
15 Lodi CabF
15 Lodi Cab
5 Napa Mouv
Original Recipe 2.47 cost/bottle
Modified Recipe 2.20 cost/bottle
8
Sensitivity Analysis for Contract Negotiations

• Further supplies on all Napa must
• As demand is unmet, additional Merlot and
  Cabernet are worth up to 10/bottle
• While not sold as a varietal, Mourvedre is an
  effective blending grape for Meritage and is
  worth up to 10/bottle
• Lower must prices

• Focus Lodi Cabernet and Lodi Merlot, accounts
  for 50 of varietal sales, some use in Meritage

9
Additional Recommendations

• Short term Instead of 100 varietal bottling,
  blend in less costly region and varietal must as
  per industry regulations

Cost per bottle

• Strategic Lodi Region has best growth potential
• Largest supplies and lowest cost
• Invest in marketing to increase demand and
  improve image (and price point)
• Develop a Lodi Meritage
• Meritage products often have greater profit
  margins

10
Thank You for Your Attention

• Questions and Answers

"In vino veritas" (In wine is truth)
- PLATO -