SANTA ROSA -- An accounting firm and an investment bank are starting what they hope will be a biennial benchmark of vintner and grower finances and operations in the Pacific Northwest.
The Santa Rosa-based wine practice of Moss Adams LLP and San Francisco-based Demeter Group want as many as 1,000 from California, Oregon and Washington to participate in their Internet-based Wine Industry Financial Benchmarking Survey, according to Steve Jannicelli, senior business consultant for the wine group. To get such involvement, survey results will be kept strictly confidential and available in peer-aggregate form for all participants, not just clients of either firm.
“A common thing I’ve seen in the industry is that a vast majority of wineries think they are unique,” Mr. Jannicelli said.
The goal in having such a large number of participants is to allow aggregated information to be relevant enough for wineries to compare their viticulture, winemaking, grape and wine sales, costs of production, capital expenditures and accounting policies with those of other vintners or growers of similar annual case production, assortment of wines, sales-channel utilization or ownership of vineyards or facilities.
Likely, some participants will be looking to confirm their assumptions of how they compare to their peers, but Moss Adams and Demeter put up $250,000 to launch the survey so that the proprietors as well as advisers and lenders will have a forecasting tool, according to Mr. Jannicelli.
For example, the survey has questions that could allow a grower to weigh the costs involved with a switch to organic or Biodynamic viticulture. Also, a vintner could compare returns with those with a different channel mix, such as a greater proportion of direct-to-consumer sales. A large number of small wineries from a given region in the survey will help balance out atypical capital expenditures on production equipment, according to Mr. Jannicelli.
“People know their own trends and, to a lesser extent, have a budget or forecast so they can answer the question, ‘Am I where I thought I would be today?’” he said. “They didn’t have the third leg of what the rest of the industry is doing and what action they should take as a result.”
One of the last sizeable wine industry financial benchmarking surveys was conducted by Deloitte & Touche in 1996. Such information can get stale after a couple of years, with even comparisons made from financial information from just a year ago being somewhat obsolete, according to Mr. Jannicelli.
Economic conditions in recent years have made up-to-date information highly prized, according to Demeter Group Executive Vice President George Coope. The firm focuses on advisory for consumer products companies – mainly in the food and beverage industries – in mergers, acquisitions and business valuation. Comparables are important tools in both endeavors, he noted.
“For the M&A side of the business, we find that wineries with strong business models do sell and continue to get high multiples, but wineries without strong models, valuation is way down,” Mr. Coope said. “Which is why wineries want tools to be able to fix any problems.”
Executives from Jackson Family Wines, William Selyem Winery, Frog’s Leap Winery, Justin Vineyards & Winery and Long Shadows Vintners helped develop the questionnaire.