Delamere Vineyard

Delamere Vineyard struggles to generate a consistent bring in income during the companys quest for quality booze. Richard Richardson, owner, manager, and winemaker is touch on about the long term future of Delamere Vineyard. GOALS/OBJECTIVES Develop the highest quality of wine-colored Richardson has been known for developing great wine and is constantly looking for ways to improve the general quality. In 1994, customers even stated that his Reserve Pinot Noir was amazing and far superior to their competition.Richardson genuinely believes in three potential improvements exist and I contain outlined his potential projects (highlight below). Option 1 Prevent Excessive Oxidation (Determine optimum SO2, level) a. )Potential Benefit Prevent oxidization improve the agreement and fruitiness b. )Risk Decrease complexity c. ) Capital Expenditure Zero dollars d. )Production 10%-30% scrap This selection would allow Richardson to produce a consistent wine on a family to year basis . Wine that uses SO2 leave behind still command a high price and sell very well on the market. Less risk can be associated with this method acting as well.On the downside, by producing wine using SO2 you tend to reduce the individual character of the wine. Initially Richardson depart risk the chance of losing some of his harvests given(p) Richardson previous chemistry back ground, he should be able to develop a formula faster than others. Option 2 Deepen Red Wine Color (Implement Rotofermenter) a. )Potential Benefit Improve customer reception 10% price increase b. )Risk Altered taste c. ) Capital Expenditure Rotofermenter $30,000 d. )Production 10% Richardson has stated that customers traveling to his region and surrounding markets prefer wine with darker color. By using the rotofermenter,Richardson leave be able to create a darker wine, which he believes pass on increase his retail by up to 10%. Based on Richardsons revenue from 1997 this method would generate an additional $2 4,391. 80 in gross sales. This option does raise the risk of potential oxidation, which in the past has plagued Richardson. The rotofermenter also has a chance of altering the taste the wine. The cost for introducing the rotofermenter is $30,000. Option 3 Optimum excitement Mix (Whole set Destem Full Crush) a. )Potential Benefit Greater complexity, character b. )Risk Customers may reject c. ) Capital Expenditure New fermentation tank . )Production 20%-40% This method has the potential to produce amazing wine that could sell at a much higher retail. The final product will not be sympathetic to Richardsons competition base and could potentially give him the edge in pinot noir sales adding complexity to ever bottle. However, the taste and quality will vary from position to barrel. Lots of risks are associated with this process. This method would require that the grapevines are handpicked and also smashed by feet which would increase labor costs. Consistency would be the largest p roblem and could potentially make to decreased customer satisfaction.Close to 88% of Delameres customer base tends to buys wine based on consistency and price, rather than the complexity and character. Delameres current customer base is comprised of 58% cellar door purchases, 37% wholesale purchases and 4% to Mail order purchases. The chart below outlines the percentages of business for Delamere Vineyard. Delamere Vineyard % of sales 1997 Delamere Pinot NoirReserve Pinot NoirDry RedChardonnay Dollars$179,424. 00$32,671. 00$31,823. 00$36,118. 00$280,036. 00 Avg. $ per bottle12. 7516. 85810. 2 Bottles Sold 1407219393978354123530 % of Business64. 7%11. 67%11. 36%12. 90% Delamere Vineyard does have small percentage of his customers that prefer the complexity and singular character of Richardsons Reserve label. However, this particular customer accounts for merely 12% of their total wine business. During Richardsons 12 years of winemaking the specter of oxidation has reared its ugly h ead several times. In 1993, Richardson lost his entire vintage stock of chardonnay and in 1994 his pinot noir which was considered by many as his best only when was criticized by Judge James Halliday as prematurely aged, indicative of oxidation.Some of Delameres customers have recently commented about a lack of consistency with Richardsons wine. Below is a comment from one of Delameres wholesalers. Richard, Im worried about this years pinot. Its very incompatible to last years. What are you doing different? Im worried that if I sell this to restaurants that took last years theyre going to be surprised, and perhaps disappointed Wholesaler, commenting on the 1994 whole-bunch reserve Pinot Noir. Generate a consistent Income Over the course of 8 years, Delamere Vineyard has struggled to produce a consistent net income.As get windn in the graph below, Delamere Vineyards net income was as low as -$41,124 in 1993, and as high as $70,218 in 1997. The lack of consistency makes it very ha rd for any business owner or manager to manage their business. Richardson has stated that wine making has its peaks and valleys and that your goal as a wine maker is to minimize the valleys and capitalize on the peaks. As you take a closer look at the graph, you will notice that that Delameres income never sincerely spikes during its so called peaks and plummets during its so called valleys.What is most concerning is Richardsons in world power to capitalize on what many have stated as being his best Pinot Noir wine in 1994. Following this harvest Richardson produced good profits, but not records numbers. Profitability has not been a focal point of Richardson business in previous years. However, it should be something Richardson looks to improve given the statistics above. Relaying on the peaks of Delamere is like hoping one gets lucky. Expand current operations Option 1 Plant more grapes Richardson is currently only using up 8. 1 acres of the available 21. 3 acres, which accounts f or only 38% of his land suitable for vineyards.Below is an example of how much Richardson could increase production by merely duplicate his operations. 1997 Delamere Vineyard Production pinot noir chardonnaytotal Estimated production Acres of vines currently planted6. 91. 28. 116. 2 Yield per acre (Tonnes)3. 363. 366. 7213. 44 Liters of wine produced16. 2682,9052921. 2685842. 536 Casks (barrels)721385170 Evaporation and scrap (liters)97617411502300 % of scrap0 Total Liters wine (net)15,29227311802336046 Cases169930320024004 Bottles 20,38936412403048060 Library and Owners Use4001005001000 % of grape type0 Total Bottles (net)19,98935412353047060Option 2 Expand the wine cellar Door Sales As stated above, Richardson is currently using 38% of his 21. 3 acres. The Cellar Door has change by reversal a unique experience for many of Richardsons customers and also been a great source of revenueroughly 58 % of Richardson business. The vast majority of the Cellar Door customers our tourist t o the Tasmania region and Richardson should consider adding lodging accommodations for these guests. Richardson could possible encompass one nights lodging, wine seminar, and a case of wine. The obvious downsides would be the building cost and also additional employee help.Hire Additional Help Add an additional employee that oversees the daily operations of the vineyard. This would be an added expense, but it will give Richardson the ability to focus on perfecting the wine making process. This will also help aid in future growth of the vineyard. Recommendation Given the fact that it will take time for planted grapes to harvests, Ive broke down my recommendations based on years of operation. Year 1 In year one Im recommending that Richardson start adding SO2 to his wine. Given Richardsons chemistry background this should be relatively easy to implement.This change can be completed with very midget start up cost and will help produce a consistent wine on a yearly basis improving the overall quality of Richardsons wine. The new wine consistency will pay dividends with Delameres wholesale customerswhich accounts for 38% of his yearly businesswhere consistency has been critical. The addition of S02 has been instituted by other vineyards already and has been received well throughout the market place. Over/under oxidation will also not be as paramount as in the previous years and should allow Richardson to increase the retail on his wine, increasing his gross margin.Richardson will need to research his competitors pricing to see how big of an increase is justified. Im also recommending that you plant an additional 8. 1 acres of grapes. Given the fact that nearly 62% of your vineyard lays vacant, you will more than double your GMROI in future years to come. Year 3 Once the newly planted crop is ready for harvest Im suggesting that Richardson hire an additional employee that can manage your daily operations of the vineyard. It is during this time that Im suggesting t hat Richardson also consider pursuing optimum fermentation.This would require the purchase of a fermentation tank but would allow Richardson to express his creativity and focus on the overall quality/complexity of your pinot noir. I recommended that Richardson only trust 4 acres of his vineyard to this method given the risk associated with this practice which I have highlighted above. Year 8 The last improvement is one that will have to be based on the over success of the other improvements mentioned above. By this time Richardson should have a grasp on whole bunch fermentation and mastered the art of adding SO2 to his wine.Richardson will have created a successful vineyard and more likely will be looking for other ways to improve creativity of his vineyard. It is at this time I that I suggest Richardson look into developing the remaining 5. 1 acres into a bed and breakfast lodge. More than 50% of his business already comes from cellar door customers that are visiting the Tasmania region. This could become a popular venue for tourists interested in wine making, wine tasting events, weddings, and other special events. The initial cost of this recommendation would be extremely high however, it has the potential to increase sales dramatically.