Calaveras Vineyards

NATASHA GARDNER

02/20/2010

CALAVERAS VINEYARDS

The other alternative is to support the loan proposal. Although it is true that Calaveras Vineyards is smaller than the majority of the current companies that are in the wine business it appears that they have had a lot of positive growth in spite of the constant change in ownership. If a company is still able to maintain its growth and brand image during challenging times like that, how much more growth can you expect when the company finally gets owners in there that want to invest and stay with it. In the past year, 1992, Calaveras Vineyards did have a drop off in sales but this was due in part to their lack of representation by a sales organization.

I agree that Goldengate Capital should invest in Calaveras Vineyard. This is based on several factors such as the Net Present Value of the firm, the projected sales, and the potential growth of the company in their market. Currently Calaveras was currently being held on Stouts PLC books as $7 million and the purchase price of $4.1 million would be considered a significant discount. All of these factors, and more, pointed toward going ahead with the loan.

Ninety-five percent of U.S. wine exports are from California. This is expressed statistically in the following manner: $1 billion winery revenues in 2008 (again, a 630% increase from $137 million in 1990), and 55 million cases sold to 125 different countries (which is up 630% from 12 million cases sold in 1990). 526,000 acres of California’s land is used for wine grapes, despite the fact that vineyards cover less than 1% of the state’s terrain. Additionally, 3.06 million tons of harvested wine grapes and $1.84 billion is the worth of the Farm Gate value of wine grapes are to additional figures that show the importance of the wine industry in California.2

In addition to enhancing the quality of life and other intangible benefits offer to Californians and Americans in general, there are even more raw...