Vina San Pedro

Topics: Investment, Asset, Balance sheet Pages: 4 (1357 words) Published: July 8, 2012
Vina San Pedro

2. Vina San Pedro is part of the 3 largest wineries of Chile. In 1994 Compana Cervecerias Unidas purchased 48.4 % of VPS shares, gaining partial ownership. Through several different implementations CCU increased the number of customers and increase domestic sales, something VPS had been struggling with. In 1997 Matias Elton was appointed president and was put in charge of growing furthermore the domestic market, increase quality, expand sales and achieve further economies of scale. How should he go about it and how fast?

3. In order, to come to a decision it’s important to first look at both markets the domestic and international to see where the opportunities lie. Chilean market is said to be mature only 4 % growth potential and that needs to be split with other wineries. VSP wines in Chile are sold 5 % lower than competitors but the quality is not appreciated. From exhibit 10 we notice that sales have grown everywhere else except for Portugal and Chile. Table 2 demonstrates that there’s a profit loss in the domestic as to the export one. Therefore this can help answer the question whether VSP should continue investing into the domestic or leave it as it is? Exhibit 10 shows a lot of opportunity in Greece, Russia, Poland and UK, as well as the pacific regions. They had entered Japan but opportunity was muted by the economic downturn so VSP needs to look into the economics of these new markets and decide which appear most attractive. Then it VSP needs to look at its financial to determine whether they can handle the expansions, Exhibit 4, balance sheet, demonstrates an increase in assets, they have made purchases in net property, plant and equipment. What are the effects on capacity? Cash availability as noticed on exhibit 4 has decreased extensively from year 97 to 98 and accounts receivables have increased. International markets demand higher quality and are less price-sensitive. Therefore can VSP achieve so without increasing its...
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