What do you see as the essential role of a financial leader in the current environment?: To help your organization’s management become better stewards of the owner/shareholders capital. Financial leaders are required to focus more and more on their role as strategic partners with the executive management teams of their organization. In an increasingly volatile and information driven world analyzing opportunities and assessing risk has become essential, and financial leaders are uniquely positioned to help accomplish that.
What are the biggest changes you’ve seen in your industry?: Several of the bigger changes in the industry are the global supply and demand shifts and the changing consumer. Beyond annual fluctuations in the grape harvest, supply and demand is being influenced by significant long term trends. Demand in much of Europe, the largest global supplier, has been declining while US and emerging economy countries see demand continue to increase. Supply is being affected differently in different geographies but there are significant implications for sourcing, brand development and domestic and international opportunities. The behavior of the wine consumer is changing as well, from the impact of the recent financial crisis to the addition of 80 million millenials to the ranks of alcohol beverage consumers. Understanding how to get the attention of consumers, distributors and retailers is affecting how wineries think about brands, marketing, and distribution.
Tell us about the particular challenges and opportunities your organization has met in the recent past: The big challenge and opportunity for us has been the high growth in our brands. Because we had well positioned brands in the premium and super-premium segments of the industry, the financial crisis actually accelerated our growth rate as consumers traded down. At the same time, we made an acquisition of another brand, Four Vines, in 2010. This created a challenge to secure grape and wine supply since our company does not own vineyards. It also strained our balance sheet as we needed to both fund working capital, and complete the transaction. We made some calculated judgments on entering into long term contracts for grapes and wine, and with the help of our lenders we were able to take advantage of the opportunity.
What advice would you give to young emerging financial leaders?: Think like a long-term investor and behave like an owner. The numbers are important but understanding all aspects of your business and how value is created in your industry is critical. To be a leader you need to be an effective manager. You can be brilliant with numbers but to make big things happen you will need to engage your team and others at all levels in the organization.
What’s the best advice for weathering today’s economic environment?: First and foremost you have to ensure that the financials are sound and take the actions required to do that. Certainly, you should work closely with your lenders and other stakeholders to do this. Once that is accomplished, I think it very important to look at what opportunities exist in the current environment, from accessing historically cheap capital to taking advantage of opportunities that may be provided by nervous or gun-shy competitors.
How do you think your business will change in the next five years?: I think there will be consolidation in all three tiers of the industry. Distributor consolidation will continue and we are also likely to see a greater percentage of wine sales at larger retailers. This should result in a growing private label wine and alcohol business. Suppliers will respond to this and to other forces with consolidation as well. Domestic grape supply is likely to be constrained by not enough new plantings and competition from alternative crops so imports are likely to make up a larger share of the domestic market especially if the dollar appreciates. Emerging economies will continue to increase consumption at high rates and their impact will become greater and greater on the industry.
What is a decision you wish you hadn’t made? What did you learn from it?: Most decisions I’ve regretted are missed opportunities, either during my time as an investor or as an operator. I always try to understand what I may have missed. Sometimes I just didn’t have enough information and I’m OK with that, but I always look back to see if I either misjudged the size of an opportunity or its perceived risk.
What is your most memorable business experience?: Becoming a shop floor supervisor in a large tire manufacturing plant. Moving from a young engineer out of college to supervising a large group of shift workers taught me a lot about people, management, and communication. Becoming a manager at an early stage of your career is a tremendous learning experience.
What is your greatest business success?: As an investor, I’ve had a number of memorable successes, but I’m most proud of being a part of the Purple Wine Company and Sonoma Wine Company teams and, in particular, the successful sale of our Mark West brand.
What was your toughest business decision?: Letting people go. Companies need to be profitable to survive and when conditions change there may be no other choice but to reduce the work force. That is always a tough decision.
What would your friends be surprised to find out about you?: I don’t think I have any secrets left.
How significant was your role as CFO in the sale of the Mark West brand to Constellation Brands?: It became the major component of my job for quite a while. From the early stages of understanding the value of the brand to an acquirer, through the negotiation, due diligence and post transaction process, I spent a lot of time with our team, bankers, lawyers and the Constellation team. Like most transactions, the route to the finish line wasn’t straight but it was a terrific deal for both sides.
Most admired businessperson outside the company:: Jeff Bezos. With his relentless analytical focus on the customer and the long term, he continues to reinvent old industries and help create new ones.
Current reading: The best American essays of 2012
Most want to meet: Gordie Howe
Stress relievers: Exercise, cycling, and playing with my kids.
Favorite activities outside work: Skiing, surfing, time with my family.
Anything else?: Thank you for the recognition and I’d like to acknowledge how fortunate I’ve been to work with the great teams at Purple Wine Company and Sonoma Wine Company.
Tell us about yourself: I grew up and in Nova Scotia received a Bachelor in Industrial Engineering from Dalhousie University. I worked for several years with Michelin Tires as an industrial engineer and supervisor. I then attended the University of Western Ontario and received an MBA and worked in Toronto as a management consultant for Canadian Pacific, Limited. After moving to the Bay Area in the early ’90s, I worked as a consultant in the business valuation groups of Price Waterhouse and KPMG.
I then spent 10 years as a principal with a hedge fund in San Francisco focusing on merger arbitrage and long and short equities. In January 2009 I started with Purple Wine Company and Sonoma Wine Company as CFO. As with many people in the wine business, it has now gotten into my blood and I enjoy it tremendously.
I have a terrific wife, Laura, and four young sons, all of whom keep me very active outside work. They teach me something everyday — usually negotiation skills.
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