Issue link: http://winesandvines.uberflip.com/i/766392
January 2017 WINES&VINES 151 PRACTICAL WINERY & VINEYARD BUSINESS " It is really about diversity. When you think about our portfolio and how we go to mar- ket with a pyramid of brands, it helped us weather the storm more or less. We experi- enced more interest in our economy and entry-level brands during the recession. But as the economy recovered, we saw more interest in our luxury brands; the key is that diversification." " We are looking at sourcing flexibility, making sure we can retain sourcing flex- ibility so that we can respond to some of the potentials for a downturn in the econ- omy. The other piece is, if you think about a downturn and what it might do to the landscape of the industry…you look for opportunities that pop up, whether it might be new facilities or vineyards or new ideas or brands or things like that. You start to make your shopping list, so to speak. If there is a downturn, that could create some opportunities in that regard." " We have moved a lot of interest, debt, from variable to fixed rate. We have a really good fixed rate. Locking in low rates, the money is almost free." " We went through the previous recession and executed a 'Plan B' pretty well. We took ad- vantage of that relationship we had with key buyers. Instead of going to a second label, we did two things: We right-sized our inven- tory by selling some on the bulk market. We took a loss but took advantage of that with some great tax loss carried forward. We did some exercises that continued to support the brand image—by-the-glass program- ming. A couple of airline deals helped move inventories without tarnishing the brands." " For the first time in this company's history, we are doing consumer research to deter- mine how we have become as successful as we have and how to continue that. This is not preparation for a recession. I am more concerned that, having grown to the size we are, how to sustain that with brand equity. The other thing we are seriously looking at is the weakness in our supply chain. This company was built to be sold, but that decision was changed a few years ago. My predecessor ran a very lean sup- ply chain, with no vineyard ownership to speak of. We are looking at that as a weak- ness going forward. It is not a plan for re- cession, just an attempt to shore up our supply chain and gain some modicum of SUMMARY A number of survey respondents said they prepare for times of growth, not for a recession. Those who do prepare for recession encourage monitoring inventory so excess does not become a liability, while simultaneously anticipating the need to grow when the market demands. A diversified wine portfolio with both economy and luxury products appeals to consumers regardless of economic conditions. Investing in mechanized farming is a way to trim fat and cut costs. Preparing for the inevitable: the next recession The Oak Infusion Spiral® is the fastest, most effective way to deliver true oak integration in ways other alternatives like staves, sticks and blocks simply can't match. ON A TIMELESS TRADITION A WHOLE NEW TWIST V I S I T I N F U S I O N S P I R A L . C O M T O D A Y Available for both BARREL & TANK systems "I have tried all the alternatives out there. I found these to be the absolute best." — Rick "Kaz" Kasmier, Kaz Winery, Sonoma, CA