Sula Vineyards

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  • Sula Vineyards

    1. 1. Charlie Fauroat Roland Oltmann Katie Schneider Vanessa Ochoa-Llamas
    2. 2. What’s the Problem <ul><li>How will Sula continue to scale up volume as rapidly as feasible while maintaining its reputation for quality and its image? </li></ul><ul><li>Issues to Consider </li></ul><ul><ul><li>Low Cash Flows </li></ul></ul><ul><ul><li>Poor Distribution </li></ul></ul><ul><ul><li>Low Market Share </li></ul></ul><ul><ul><li>Slow Inventory Turnover </li></ul></ul>
    3. 3. <ul><li>Net Cash From Operating Activities </li></ul><ul><ul><li>2007 2006 2005 2004 2003 </li></ul></ul><ul><ul><li>-276 -1351 -412 -485 309 </li></ul></ul><ul><ul><li>(in thousands) </li></ul></ul><ul><li>Distribution </li></ul><ul><ul><li>Avg. Case Price - $54.96 (about $4.60/bottle) </li></ul></ul><ul><ul><li>Avg. Bottle Retail Price – $13-$15 (whites) </li></ul></ul>
    4. 4. Domestic Market Share
    5. 5. Inventory Turnover <ul><ul><li>Avg. Time from harvest to sale of wines </li></ul></ul><ul><li>Reds Whites/Rose </li></ul><ul><li>2-3 years 6-10 months </li></ul>
    6. 6. SWOT <ul><li>Strengths </li></ul><ul><li>Fastest growing market in Wine Industry (30% per annum growth rate) </li></ul><ul><li>Good Climate for Grape Growing </li></ul><ul><li>Women/Youth see health and sophistication in wine </li></ul><ul><li>Weaknesses </li></ul><ul><li>Drinking age (42% of population) is 25 years of age </li></ul><ul><li>Poor awareness of wine and infrastructure </li></ul><ul><li>Wine has an elite taste </li></ul><ul><li>Opportunities </li></ul><ul><li>Large domestic markets with increasing disposable income </li></ul><ul><li>Increased Tourism </li></ul><ul><li>Population changing lifestyle accepting new trends </li></ul><ul><li>Export potential to the rest of the world </li></ul><ul><li>Within the next few years about 100 Million will have reached drinking age </li></ul><ul><li>Threats </li></ul><ul><li>Religion: some view drinking as a “sin” </li></ul><ul><li>Whiskey is preferred alcoholic beverage </li></ul><ul><li>Advertising is banned for alcohol </li></ul>
    7. 7. Financial Analysis A B C 2006 2007 2008 2008 2008 Net Profit Margin .65% 2.84% 1.01% 3.87% 8.49% AR Turnover 5.24 5.39 3.16 4.9 4.94 Days to Collect 69.66 67.72 115.51 74.49 73.89 Current Ratio 1.85 1.7 1.81 1.97 2.11
    8. 8. Financial Analysis - Scenario C
    9. 9. What is Sula’s Big Hairy Audacious Goal? <ul><li>Bypass Chateau Indage as the top selling wine in India. </li></ul><ul><li>Establish Sula as a premier new world winery </li></ul><ul><li>What’s necessary for this? </li></ul><ul><ul><li>GO BIG OR GO HOME </li></ul></ul>
    10. 10. What Are Its Options? <ul><li>Forward integrate into distribution </li></ul><ul><li>Grow white wines and buy reds </li></ul><ul><li>Move into larger local markets (China, Korea, Russia, Japan, Hong Kong) </li></ul><ul><li>Diversify the product line (Brandy) </li></ul><ul><li>Follow scenario C </li></ul>
    11. 11. What It Should Do <ul><li>Finance through debt </li></ul><ul><li>Continue educating consumers about wine </li></ul>
    12. 12. Alternatives <ul><li>Sell </li></ul><ul><ul><li>Go public </li></ul></ul><ul><ul><li>Be acquired </li></ul></ul><ul><li>Lower Growth Targets </li></ul><ul><li>Acquisitions </li></ul>
    13. 13. Risks <ul><li>Market Share </li></ul><ul><li>Selling business prematurely </li></ul><ul><li>Going public </li></ul>
    14. 14. Implementation Timeline <ul><li>Immediately begin looking for investors. </li></ul><ul><li>Find local growers to source red varietals </li></ul><ul><li>Begin acquiring land for vineyard planting. </li></ul><ul><ul><li>1-5 years </li></ul></ul><ul><li>Expand production facilities. </li></ul><ul><li>Acquire smaller established wineries </li></ul>
    15. 15. Questions

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