Delamere Vineyard struggles to generate a consistent net income during the company’s quest for quality wine. Richard Richardson, owner, manager, and winemaker is concerned about the long term future of Delamere Vineyard.
Develop the highest quality of Wine
Richardson has been known for developing great wine and is constantly looking for ways to improve the overall quality. In 1994, customers even stated that his Reserve Pinot Noir was amazing and far superior to their competition. Richardson currently believes in three potential improvements exist and I have outlined his potential projects (highlight below).
Option 1: Prevent Excessive Oxidation (Determine optimum SO2, level) a.)Potential Benefit: Prevent oxidation; improve the consistency and “fruitiness” b.)Risk: Decrease complexity c.) Capital Expenditure: Zero dollars d.)Production: 10%-30% scrap
This option would allow Richardson to produce a consistent wine on a year to year basis. Wine that uses SO2 will still command a high price and sell very well on the market. Less risk can be associated with this method as well. On the downside, by producing wine using SO2 you tend to reduce the individual character of the wine. Initially Richardson will risk the chance of losing some of his harvests; given Richardson previous chemistry back ground, he should be able to develop a formula faster than others.
Option 2: Deepen Red Wine Color (Implement Rotofermenter)
a.)Potential Benefit: Improve customer reception; 10% price increase b.)Risk: Altered taste c.) Capital Expenditure: Rotofermenter $30,000 d.)Production: 10%
Richardson has stated that customer’s traveling to his region and surrounding markets prefer wine with darker color. By using the rotofermenter, Richardson will be able to create a darker wine, which he believes will increase his retail by up to 10%. Based on Richardson’s revenue from 1997 this method would