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J ANU AR Y NEWS Tough Times Teaching Y Wineries Tough Lessons Bottom line: Cash flow is king akima, Wash.—One of the key challenges wineries have faced during the recession and retrenchment of the past two years, aside from maintaining financing, is ensuring cash flows. A buck in the hand has been worth two from the bank, thanks to conservative lending practices prompting wineries to lower prices on products and reduce margins in order to bolster balance sheets. Some operations have given up, and more may follow. The latest financial results from Oregon's 130,000-case Wil- lamette Valley Vineyards Inc. (WVV)—one of the few publicly traded wineries—tell a tale common to many Pacific Northwest vintners. Case revenue increased to $4.6 million in the quarter ended Sept. 30, up 5.5% over the same quarter a year earlier. Year-to-date rev- enues rose to $12.25 million, 1.6% over 2009. Publicly traded Willamette Valley Vineyards sold more wine, but prof- its were down, a situation many wineries are suffering. However, gross profit dropped 7.4% in the quarter, while net in- come fell 30.9% from $248,021 to $171,345 in the same quarter of 2009. Year-to-date net income stood at $111,288, down 83.3% from $666,961 in the first nine months of 2009. The challenges of moving product may prompt wineries to start asking the more fundamental question of whether what they're pro- ducing should be made in the first place, Fenich said. "You've got to be able to move this inventory, and if you don't think you can, you've got to think whether you should be sinking all the money into it in the first place," he said. "It's a huge dilemma, and there's not neces- sarily one pat answer. But it's a situation where anything and everything needs to be looked at in a different light." winesandvines.com Learn more: Search keywords "tough lessons." QSEE US AT UNIFIED, BOOTH #1142 18 Wines & Vines JAnUARY 2011 —Peter Mitham