Name: Mark B. Smithers
Title: CFO and SVP of Finance
Company: Trinchero Family Estates (aka Sutter Home Winery, Inc.)
Company address: P.O. Box 248 St Helena, California 94574
Number of company employees: 800
Professional background: CPA KPMG Peat Marwick 8 years, CFO Joseph Phelps Vineyards 6 years, CFO Trinchero Family Estates 16 years
Education: BS Business with concentrations in Accounting and Finance, San Francisco State University
What do you see as the essential role of a financial leader in the current environment?
In any environment, the CFO is a valuable member of the executive team working closely with the President or CEO (as the case may be) developing strategies for growth that will strengthen the winery in the consumer market as well as increase its appeal to the distributor network. The CFO is in a unique position to analyze and synthesize issues related to financing, cost efficiency, capital requirements and global economics providing the president or CEO with an understanding of the risks associated with portfolio expansion, facility and production expansion, and partnerships that may develop through various opportunities or requirements. As a number two executive supporting (and not competing with) the president or CEO, he will be instrumental in ensure that the company’s directions are cared out as communicated to the team.
What are the biggest changes you've seen in your industry?
Obviously there have been significant consolidation and ownership transfers at the distributor level. Competition from Europe and Australia has lessened of recent due to their strengthening exchanges rate. The most significant change is on the consumer end whereby consumers traded down from higher priced wines to lower priced wines all while consumption increased. I believe this consumer move is a paradigm shift that will remain for years to come. Over the last decade many large / volume wineries began employing the same winemaking techniques as high priced smaller volume wineries. While consumers were somewhat “forced” to give up high priced wines, they found the quality of wines below $15 have improved dramatically; there is no need for them to spend $25 or $30 a bottle when they can generally receive the same quality at $10 or $15.
Tell us about the particular challenges and opportunities your organization has met in the recent past?
We have enjoyed significant growth over the last decade and this has presented numerous challenges. This is a capital intensive industry requiring significant investment in winemaking and production facilities and equipment. Supporting our growth required increasing supplies of grapes and bulk wine to satisfy demand while planted acreage has not increased. Finding quality vineyards for our own grape production as well as adding to our grower network has pushed land and grape prices up, generally. We have been forced to import significant supplies of bulk Muscat as the California supply is not nearly enough to meet recent demand for this product. Finding quality personnel to meet the expanding needs of all departments has been challenging even in an environment of high unemployment; the best players are hesitant to move. All of this while ensuring that we do not over extend ourselves financially and retain a certain amount of available capital for opportunities.