Economics of a Family Winery

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Presentation transcript:

Economics of a Family Winery Napa County Planning Commission Economics of a Family Winery Presented by: Craig Underhill, CPA, CSPM Managing Partner 9/16/2019 ©2016 Brotemarkle, Davis & Co. www.bdcocpa.com © Brotemarkle, Davis & Co. LLP www.bdcocpas.com

©2016 Brotemarkle, Davis & Co. www.bdcocpa.com Background A CPA for over 29 years and has been with BDCo since 1995. Business financial and strategic planner Educator to wine businesses since 2004 Sonoma State Wine MBA Program guest speaker U.C. Davis Extension International Wine Industry guest speaker since 2012 Board chair for Junior Achievement past 18 years in Napa County 9/16/2019 ©2016 Brotemarkle, Davis & Co. www.bdcocpa.com © Brotemarkle, Davis & Co. LLP www.bdcocpa.com

©2016 Brotemarkle, Davis & Co. www.bdcocpa.com Channel Sales Mix Direct to Consumer (retail) Accounts for 31% of gross profit Winery’s <10,000 cases require 50% DTC 9/16/2019 ©2016 Brotemarkle, Davis & Co. www.bdcocpa.com © Brotemarkle, Davis & Co. LLP www.bdcocpa.com

©2016 Brotemarkle, Davis & Co. www.bdcocpa.com Trends 9/16/2019 ©2016 Brotemarkle, Davis & Co. www.bdcocpa.com © Brotemarkle, Davis & Co. LLP www.bdcocpa.com

Critical Financial Decisions Grapes: purchase or grow Facility or custom crush Number of skus DTC vs. Distributor 9/16/2019 ©2016 Brotemarkle, Davis & Co. www.bdcocpa.com © Brotemarkle, Davis & Co. LLP www.bdcocpa.com

©2016 Brotemarkle, Davis & Co. www.bdcocpa.com Investment Trends Barrels Winery equipment Vineyard planting 9/16/2019 ©2016 Brotemarkle, Davis & Co. www.bdcocpa.com © Brotemarkle, Davis & Co. LLP www.bdcocpa.com

©2016 Brotemarkle, Davis & Co. www.bdcocpa.com Income Statement Delicate Balancing Act Balance Sheet Cash Flow 9/16/2019 ©2016 Brotemarkle, Davis & Co. www.bdcocpa.com

Cash timeline – single vintage Year 1 Year 2 Year 3 Year 4 Year 5 ENP Farming Grape Purchases Production Bottling and Packaging Sale of wine Sale of wine 9/16/2019 ©2016 Brotemarkle, Davis & Co. www.bdcocpa.com © Brotemarkle, Davis & Co. LLP www.bdcocpas.com

Cash timeline – single vintage Year 1 Year 2 Year 3 Year 4 Year 5 ENP Farming Grape Purchases Production Bottling and Packaging Sale of wine Sale of wine 2013 ($$$) ($) $ $$ $$ $$$ + $$$$ 9/16/2019 ©2016 Brotemarkle, Davis & Co. www.bdcocpa.com © Brotemarkle, Davis & Co. LLP www.bdcocpas.com

Cash timeline – vintages Year 1 Year 2 Year 3 Year 4 Year 5 Eventual Net Profit + $$$$ ENP Farming Grape Purchases Production Bottling and Packaging Sale of wine $ Sale of wine 2013 ($$$) ($) $$ $$ $$$ $$$ ($$$) $$ $ ($) 2014 + $$$$ Annual Cash Impact ($$$) ($$$) $$ $$$$ 9/16/2019 ©2016 Brotemarkle, Davis & Co. www.bdcocpa.com © Brotemarkle, Davis & Co. LLP www.bdcocpas.com

Impact on Local Economy Stonebridge Research Findings The region's wine production has an annual economic impact on Napa County of $13.3 billion The wine industry, directly and indirectly provides 46,000 full-time equivalent jobs in Napa County Wine-related tourism generates more than $1 billion annually The wine industry generates nearly $1.3 billion annually in local, state and federal taxes Napa's vintners generate $84 million annually in charitable contributions 9/16/2019 ©2016 Brotemarkle, Davis & Co. www.bdcocpa.com © Brotemarkle, Davis & Co. LLP www.bdcocpas.com

©2016 Brotemarkle, Davis & Co. www.bdcocpa.com Thank you Craig@bdcocpa.com 9/16/2019 ©2016 Brotemarkle, Davis & Co. www.bdcocpa.com © Brotemarkle, Davis & Co. LLP www.bdcocpas.com