Issue link: http://winesandvines.uberflip.com/i/877508
60 WINES&VINES October 2017 BARRELS PRACTICAL WINERY & VINEYARD COSTS BY BARREL ORDERING AND PAYMENT DECISION Barrel Price in Euros Regular Delivery, Standard (Sept.) Payment Regular Delivery, Late (Oct.) Payment Early Delivery, Early Payment (April Payment with Discount) Early Delivery, Standard Payment (Sept. Payment with Discount) Total savings compared to standard payment ($6,221.31) $78,874.82 $78,309.99 2001 € 657 $59,603.04 $59,951.25 $54,750.44 $56,622.89 2002 € 688 $67,568.48 $67,843.68 $57,425.30 $64,190.06 2003 € 700 $76,755.00 $81,697.00 $72,425.15 $72,917.25 2004 € 700 $85,176.00 $86,891.00 $81,928.00 $80,917.20 2005 € 700 $86,716.00 $83,531.00 $86,177.35 $82,380.20 2006 € 728 $93,307.76 $92,346.80 $83,427.71 $88,642.37 2007 € 754 $102,785.28 $107,309.28 $95,740.66 $97,646.02 2008 € 792 $115,798.32 $111,521.52 $117,825.84 $110,008.40 2009 € 810 $115,943.40 $117,765.90 $101,927.97 $110,146.23 2010 € 810 $103,680.00 $111,180.60 $103,636.26 $98,496.00 2011 € 826 $117,994.10 $110,081.02 $110,964.43 $112,094.40 2012 € 846 $106,418.34 $108,939.42 $107,044.80 $101,097.42 2013 € 870 $114,596.40 $117,919.80 $106,122.60 $108,866.58 2014 € 880 $115,412.00 $110,906.40 $115,284.40 $109,641.40 2015 € 898 $100,899.28 $100,153.94 $91,750.91 $95,854.32 2016 € 929 $103,546.34 $104,382.44 $100,893.12 $98,369.02 Total payment in euros for each option is presented. The cheapest option for each year is shown in bold. We assume wineries select one consistent method of payment for the entire time period, and the savings should be compared to the base payment option presented in the "Standard (Sept.) Payment" column. To provide a more comprehensive estimate, the table provides calculations for the total cost of each tactic over 15 years. The first row presents estimated cost differences compared to a winery that selected the standard payment option all 15 years. A winery that selected regular delivery and late payment (in October) would have spent $6,221.31 more than than a similar winery select- ing regular delivery and payment in September. The results for payment in both September and October are included because French oak barrel invoices are typically due in one of those two months. The table illustrates the huge advantage, over time, to order early and re- ceive the benefit of the early delivery discount: Wineries would have saved either $78,874.82 by payment in April or $78,309.99 by payment in September. Given the cost savings from the early delivery discount, when should a winery pay? The cost difference between payment in April or September, as shown in the first row, cumulative over 15 years of purchasing, is not significantly different, though year-to- year differences do exist. This choice likely differs by winery based on their own storage costs and cash flow. Space can be tight (as well as cash) in the spring and summer. The savings are significant for those wineries that make room for the next-vintage barrels. For more information contact your sales representative or email us at info@seguinmoreau.com