case 21
Individual Case 21: Freemark Abbey Winery
Executive Summary:
The case is based on William Jaeger a partner in the Freemark Abbey winery. Due to recent weather forecast showing the possibility of a storm formation in the Nape Valley. There needs to be a decision made to either wait the storm out to see if the storm would help produce Botrytis mold, which allows for a wine with 11% alcohol and 13 % sugar. For this the winery is able to produce a complex wine that can be sold for $8 per bottle. However, if the storm does occur and the botrytis mold doesn’t occur then it will result in a thin wine that can only be sold for $2.00 a bottle, which is less than the retail value.
Introduction:
Freeman Abbey was originally created by Josephine Tychson. Tychson was the first female winery owner Napa in 1886. The winery later closed in 1939 for prohibition, it did not open back until three businessmen named Charles Freeman, Marquand Foster and Albert "Abbey" Ahem, purchased the winery and combined their names to name its current name Freemark Abbey. Later in 1968, seven partners came together to create the signatures style of chardonnay and cabernet, still used today.
Decision Problem:
According to the weather channel there is a 50-50 chance that rain will occur in the Napa Valley region. If the rain does occur there is a chance there it will produce a beneficial mold, botrytis cinerea to form on the Riesling grapes. That will result in a sweet wine. The decision needs to be made to harvest the grapes immediately or leave the grapes on the vine despite the storm.
Decision Alternatives:
If the storm hits and the botrytis forms, the vines will produce a sweet wine that can have a wholesale price of about $8 a bottle. However if the storm does hit and the botrytis doesn’t form, the grapes will swell due to the vines absorbing the rainwater. The outcome will yield a thin wine that would only sell
Executive Summary:
The case is based on William Jaeger a partner in the Freemark Abbey winery. Due to recent weather forecast showing the possibility of a storm formation in the Nape Valley. There needs to be a decision made to either wait the storm out to see if the storm would help produce Botrytis mold, which allows for a wine with 11% alcohol and 13 % sugar. For this the winery is able to produce a complex wine that can be sold for $8 per bottle. However, if the storm does occur and the botrytis mold doesn’t occur then it will result in a thin wine that can only be sold for $2.00 a bottle, which is less than the retail value.
Introduction:
Freeman Abbey was originally created by Josephine Tychson. Tychson was the first female winery owner Napa in 1886. The winery later closed in 1939 for prohibition, it did not open back until three businessmen named Charles Freeman, Marquand Foster and Albert "Abbey" Ahem, purchased the winery and combined their names to name its current name Freemark Abbey. Later in 1968, seven partners came together to create the signatures style of chardonnay and cabernet, still used today.
Decision Problem:
According to the weather channel there is a 50-50 chance that rain will occur in the Napa Valley region. If the rain does occur there is a chance there it will produce a beneficial mold, botrytis cinerea to form on the Riesling grapes. That will result in a sweet wine. The decision needs to be made to harvest the grapes immediately or leave the grapes on the vine despite the storm.
Decision Alternatives:
If the storm hits and the botrytis forms, the vines will produce a sweet wine that can have a wholesale price of about $8 a bottle. However if the storm does hit and the botrytis doesn’t form, the grapes will swell due to the vines absorbing the rainwater. The outcome will yield a thin wine that would only sell
References: Bodily, S. E. (1998). Case 21. Quantitative business analysis: text and cases (). Boston, Mass.: Irwin/McGraw-Hill. Timeline (Estate History) http://www.freemarkabbey.com/estate-timeline