A sustainable business requires a plan and real-time monitoring. Whether you’re a small boutique winery or on your way to 100,000 cases, you have the opportunity to proactively drive more profitable revenues at each tipping point in your business. Learn to drive your business instead of it driving you. Walk away with new tools for assessing impacts of key decisions (organizational, product, sales channel, facilities, operational) on winery strategic plans.

1. 1
2017 Oregon Wine Symposium

2. 2
Approach – 90 minutes
DEB – SETTING THE STAGE
KEITH - WHAT DRIVES VALUE IN DIFFERENT
BUSINESS MODELS?
DEB - KEY TIPPING POINTS: WHAT HAPPENS
WHEN I GROW?
PANEL

3. 3
Who is in the audience?
1. Who is over 5k cases?
2. Who is going through transition?
3. How many would like to become more
profitable?

4. 4
Sobering but provocative headlines
‘About 28 percent of Oregon
wine producers said they
were in poor financial health,
compared to 16 percent for
the industry overall.’
MATEUSZ PERKOWSKI,
CAPITAL PRESS
‘A quarter of winemakers
say the financial health of
their operations is poor, and
many are considering
exiting the business. More
than 40 percent of Oregon
winery owners say they
may sell in the next five
years.’ PETE DANKO,
PORTLAND BUSINESS
JOURNAL.

5. 5
WHAT is keeping you up at night?
1. Understanding how to drive cash flow.
2. Concerned about profitability.
3. Understanding whether we are spending enough.
4. Establishing realistic sales goals.
5. Do we have the right people in place?
WHAT does a healthy business look like?
5

6. 6
3 KEYS to success
1. Proactively drive revenues and contribution
margins – with 3 levers:
 Cases Produced/Sold + Price + Product/Channel Mix
2. Optimize metrics before trying to grow.
3. Develop a detailed and well capitalized action
plan, before growing.
“IF you understand these keys, you can move from
breakeven to a sustainable business at any size.”

7. 7
“IT’S NOT WHAT YOU MAKE, IT’S
WHAT YOU KEEP”

8. 8
What drives value in different
business models?
Keith Meyers, Perkins & Co

9. 9
Shift to running your business
(rather than having your business run
you)
1. Understand the dynamics of 3 scenarios.
2. Case premise:
 Applying best practices
 ‘What a winery of a certain size and composition can
achieve when they are driving sustainable results.’
3. ‘Doing it with purpose.’
 OK to have cash flow or profitability constraints IF you
understand key cost drivers in different models

10. 10
5,000
Cases
Metrics
Average Revenues/cs 234$ Breakeven cases 4,221
Average COGS/cs 106$ Revenues 1,171,350$
Average GP/cs 129$ Gross Profit 643,017
Gross Margin 55% Operating Profit 100,179
Operating Margin 9% Net Cash Flow 89,741$
Return on Equity 11.2% Return on Assets 6.9%
Grape Costs
19%
Production
26%
Selling Costs
25%
Overhead
17%
Owner Comp
4%
Interest
0%
Taxes
1%
Profits
8%

11. 11
5,000
Cases - -
Maximized
Metrics
Average Revenues/cs 260$ Breakeven cases 3,721
Average COGS/cs 106$ Revenues 1,301,500$
Average GP/cs 155$ Gross Profit 773,167
Gross Margin 59% Operating Profit 197,792
Operating Margin 15% Net Cash Flow 153,190$
Return on Equity 19.1% Return on Assets 11.8%
Grape Costs
18%
Production
23%
Selling Costs
25%
Overhead
15%
Owner Comp
4%
Interest
0%
Taxes
3%
Profits
12%

12. 12
10,000
Cases

13. 13
20,000
Cases

14. 14
Summary: 3 scenarios
5k Baseline 5K Max. 10k 20k
Revenues 1,171,350$ 1,301,500$ 2,429,467$ 4,511,867$
Gross Profit 643,017$ 773,167$ 1,372,800$ 2,398,533$
Operating Profit 100,179$ 197,792$ 388,317$ 655,923$
Net Cash Flow 89,741$ 153,190$ 285,294$ 475,600$
Channel mix: Case Volume 5,000 5,000 10,000 20,000
Wholesale/National/FOB cases 2,500 2,500 6,000 14,000
DTC 2,500 2,500 4,000 6,000
Key Metrics
Average Revenues/cs 234$ 260$ 243$ 226$
Average COGS/cs 106$ 106$ 106$ 106$
Average GP/cs 129$ 155$ 137$ 120$
Gross Margin as % of sales 55% 59% 57% 53%
Operating Margin as % of sales 9% 15% 16% 15%
Return on Equity 11.2% 19.1% 19.7% 18.3%

15. 15
Key Tipping points: what happens
when I grow?
Deborah Steinthal, Scion Advisors

16. 16
16
I. Entrepreneurial – ‘working IN your business.’
II. Formalization – ‘working ON your business.’
III. Maturity – ‘developing a team of leaders.’
Tipping points…

17. 17
Cousin
partners
Sibling
partners
Controllin
g Owner
Entrepreneuri
al
Expansion/
Formalizatio
n
Maturity
OwnershipStage
Business Stage
WHAT STAGE ARE YOU IN?
82%
11%
2%
Cristom
Adelsheim
PONZI
Bethel Heights
Brittan
Vineyards
Bergstrom
Sokol Blosser

18. 18
Key decisions: 5,000 growing to
10,000 cases
Strategic
1. Plan with 5-year horizon
2. Sales plans driving
consistent revenues
3. Timing of key personnel?
4. Capital expansion trade
offs + timing!
Operational
1. Banking relationships
2. Simple cost accounting
and COGS reporting
process
3. Simple sales reporting

19. 19
Key decisions: 10,000 growing to
20,000 cases
Strategic
1. Cash flow and higher
returns
2. Strong brand and
customer experience
3. Optimized investments to
build scalability
Operational
1. COGS and financial
reporting
2. Strong banking partnership
3. Agility in sales
4. Culture of accountability
through management team

20. 20
Take aways about growth
1. Hire the right people and develop your own
leadership skills.
2. Focus brand and build a sales machine.
3. Manage complexity at every stage.
4. Embrace analytics before making key decisions.
The more you have at risk,
the more costly the mistakes!

21. 21
Beware of growing pains
 Increasing production capacity
 Expanding into new markets
 Cash drain from inventory build-up
NEED FOR CAPITAL!

22. 22
Q&A - Panel: 60 minutes
3 Panelists
1. Deb Steinthal, Managing Director, Scion Advisors
2. Erik McLaughlin, Director, Exvere Inc.
3. Gary Mortenson, President, Stoller Family Estates
How to build sustainability at each
stage?
Moderator: Keith Meyers, Perkins & Co.

23. 23
Questions?

24. 24
Vision IncentivesSkills Resources Action Plan CHANGE
IncentivesSkills Resources Action Plan Confusion
Vision Incentives Resources Action Plan Anxiety
Vision Skills Resources Action Plan Resistance
Vision IncentivesSkills Action Plan Frustration
Vision IncentivesSkills Resources
False Starts
Managing growth: What is the organization
feeling?