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South Valley Winery Presented by: Carol Luca Glenn Houser Kyle Gross Andy Jackson.

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Presentation on theme: "South Valley Winery Presented by: Carol Luca Glenn Houser Kyle Gross Andy Jackson."— Presentation transcript:

1 South Valley Winery Presented by: Carol Luca Glenn Houser Kyle Gross Andy Jackson

2 Mission Statement: South Valley Winery will work as a family business to establish profitable value added fruit products while facilitating the development of the fruit wine industry in Saskatchewan South Valley Winery

3 Introduction South Valley Winery will be located on the No. 1 highway near Balgonie, SK South Valley Winery will produce fruit wine and operate as a “Cottage winery” as governed by the Saskatchewan Liquor and Gaming Authority (SLGA) The Cottage Winery Policy was drafted in May 2001 by the SLGA to promote the development of tourism and agriculture resources in Saskatchewan

4 Cottage Winery Policy 65% of fruit must come from Saskatchewan production - 25% of fruit must be grown by the operator on his/her own land or leased land Winery must be situated on farm property and the operator must derive 50% of gross income or $20,000 annually from agricultural production Must produce no less than 4,500L (500 cases) and no more than 45,000L (5,000 cases) Can sell wine directly from premises, to commercial permit holders or to holders of special occasion permits

5 South Valley Winery Rod and Jeanne Flaman operate South Valley Farms and have established fruit production They will expand their farm to include South Valley Winery Rod and Jeanne will supply all of the owners equity for the business Rod and Jeanne’s son Nick will manage and operate the winery

6 Goals & Objectives of South Valley Winery Create a significant value-added agricultural industry Establish an image and name for the product Become a member of The Fruit Wines of Canada, producing recognized quality fruit wine products Create a tourist attraction along one of Saskatchewan’s busiest highways Maximize production at 5,000 cases Provide at least 20% return on equity South Valley Winery

7 Operations Plan

8 Loading Dock Parking Main Building Entrance Saskatoon Berries Raspberries Rhubarb Rasp- berries Tree Row Highway #46 To Balgonie N S E W To Regina Highway #1 To Pilot Butte Highway # 364 To Edenwold Enter Exit

9 Fruit Delivery in crates Process of Winemaking Filter 3 X Bottler Primary Fermentation 15 – 20 days Fruit Crusher Pump Basket Press Pump Storage Tank Stabilize and Clear Add water, yeast. sugar Pump Corker PackagingLabel and Shrink Wrap

10 Office Retail Counter Finished Inventory Cold Storage Crusher Bottling Area Primary Fermentation Tank Secondary Fermentation Tanks Pump Filter Showroom Winery Floor plan 60 ft Loading Dock 42 ft Basket Press

11 Capital Budget

12 Total Cost of Goods Manufactured

13 Human Resource Plan

14 Organizational Structure Directors/Shareholders Rod and Jeanne Flaman Nick Flaman Manager Part-time Retail/tours in summer Part-time Bottling help (5) Full - Time Marketing (1)

15 Human Resources Shareholders/Directors: Decide on winery objectives and production levels. Provide extra labour during bottling. Manager: Over-seeing retail sales, wine production, book-keeping and marketing. Salary: $35,000 + bonus of 2.5% of gross margin. Marketer: Create a product image to increase demand for authentic Saskatchewan fruit wine. Attend various trade-shows, and promote the fruit wine industry in Saskatchewan. Salary: $35,000 + bonus of 2.5% of gross margin.

16 Human Resources Part-time retail sales- ($9.00 hourly wage) Two positions to look after wine retail sales and conducting tours and tasting, site maintenance. Part-time bottling staff- ($8.00 hourly wage) Bottle preparation, labeling, corking and shrink- wrapping bottles for distribution. South Valley Winery

17 Labour Costs South Valley Winery

18 Marketing Plan

19 Product/Service Physical Product –Saskatchewan made Raspberry, Saskatoon, Rhubarb and Chokecherry wine –Wine made from local fruit production –Quality product: consistent and variety The Rest of the Package –Memorable experience Free tasting, tours –Washrooms, picnic area –Personally sold from vintner to customer –Free delivery for large orders

20 Current Market Canada is commonly regarded as one of the world’s leading fruit wine producing countries – –Fruit wines are commercially produced by more than 53 licensed wineries in nine provinces (including Saskatchewan) Established markets in B.C. and Eastern Canada – –Market high quality dry fruit wines, ice wines and ports; prices comparable to grape wines – –Almost all wineries include tours, tasting and special events on location.

21 Current Market The Fruit Wine Association, formed in 2000 labels member wines with a Quality Assurance label –similar to the Vintner’s Quality Assurance (VQA) labels currently in the grape wine market. Current consumption of all types of wine in Saskatchewan 4.9L per capita, national average 12.2L Increase in sales of VQA wines and domestic ice wines in Saskatchewan show promising market

22 Canadian Wine Sales

23 Competition Aspen Grove Winery (White City) - Similar product and service goals Liquor Board Store and off-sale  Grape Wine ($8 - 20) / Wine Coolers ($6 - 12) Wine-making ingredients ($35 - 75) Other Tourist Attractions South Valley Winery

24 Target Markets Adventurous –Both males and females aged 35-64, minimum income $35,000+ –Includes tourists and locals - Population around 80,000 in 25 mile radius. (including Regina and Moose Jaw) Special Event Holders –Holding special liquor permits for private functions Future Potential Markets –Restaurants, Export, SLGA stores

25 Pricing Policy Par with the fruit wine Industry

26 Promotion Attend Trade Shows - Farm Progress Show Regina, Local fall fairs, Bridal Shows, Farmer’s market Billboards, Posters, Brochures Radio and Newspaper advertisements Web page Word of Mouth and personal advertising From the Vintner's Home to Yours

27 Promotion Wine tasting Winery tours Future Considerations: –Casino bus tours –Expand wine products to include sour cherry, black current, Port wine South Valley Winery

28 Market Plan Budget From the Vintner's Home to Yours

29 SWOT Analysis Strengths   Direct distribution channel to customers – “from the vintner’s home to yours” – –Wine available at the winery – unique to Saskatchewan Weaknesses   Need a strong product image – –Limited distribution Opportunities  Sell product to both tourist and special permit markets  Expand products and services (restaurant) –Location- 1 highway, close to a major centre Threats  Government policy –Competition - must differentiate our product

30 Financial Plan

31 Financial plan projected over 10 year period Prices, wages, and expenses are increasing at an inflation rate of 2.5% Long term debt borrowed from FCC at 7.4% and paid back over 15 year period

32 Financing Budget South Valley Winery

33 Dividends Dividend policy –cash on hand minus working capital multiplied by 1.15 Dividends paid South Valley Winery

34 Summary of Financial Results

35 Ratio Analysis

36 Unit Cost of Production South Valley Winery 54% Selling and Administration 12% Fruit 10% Packaging Materials 9% Overhead 2% Other Ingredients 13% Direct Labour

37

38 Economic Accounting Base Case

39 Economic Accounting

40 Conclusions South Valley Winery is a feasible enterprise –The financial model has demonstrated an IRR of 29.2% The business’s main obstacle – reaching the desired level of sales in an undeveloped fruit wine market South Valley Winery will ensure that sales are met by –extensive marketing to tourists and to the special permits market


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