Calaveras Vineyards Harvard Case Solution & Analysis

Calaveras Vineyards


In 1994, Goldengate Capital's VP, Anne Clemens was offered and proposed by Tom Howell, who was employing in NationsBank’s as an overseeing executive to seek after financing of sum $4,500,000 for the expectation of Calaveras Vineyards' procurement. Goldengate Capital was in West Coast that gave stores to distinctive and different associations. Calaveras Vineyards was located in California. Calaveras Vineyards was founded by Esteban Calaveras to produce wine in the year of 1883 for the dispersion of Catholic Church. Later on, Calaveras Vineyards was procured by Stout PLC. Dr. Lynna Martinez was administering the process of Calaveras Vineyards and she was also acting as the VP of Stout PLC. Further, Peter Newsome was dealing with the obligations of operation chief. Dwindle was holding the offer of 15% although Dr. Lynna would acquire 85% of value.

Decision has to be made by Anne Clemen instantly about whether to deny or acknowledge the advance offer on the premise of quantitative and qualitative parts of business, monetary and the element influence on organization execution. Anne was truly worried about the accompanying key variables:

  • Degree of risk involved in participation in Calaveras Vineyards
  • Value of Calaveras Vineyards
  • Viability and acceptability of loan offer

Problem Statement

Anne Clemens wishes to discover the value and quality of Calaveras Vineyards by utilizing distinctive financial and monetary tools and she was truly worried regarding the risk and threat of financing. Besides, investigation is completed regarding whether Goldengate Capital ought to take part to give financing or not.

Qualitative Analysis of Calaveras Vineyards

Output of Calaveras Vineyards was arranged into five primary sorts of wine. Wine of uncommon records was prepared by the request of hotels and airlines. California wines were the mid-range quality wines. Selected-vineyards and Wines of Estate were sold in premium cost. Total revenue of two-thirds was sold through wholesale channel of system although one-third deals were made straightforwardly to consumer. 60% of aggregate wholesale deals made to hotels and restaurants and 40% to retail outlets.

It was a business practice to fragment wine demand by cost as point by point in supplement 1. The demand in US for alcohol mixed beverages was idle with declining sales in unit. Moreover, sales expansion rate of dollar was just 2.2% in 1992, short of what swelling rate, though sales of premium sections wine had an enduring expansion rate of 7.4 % in stores. Moreover, red wine sales saw huge upturn as  '60 minutes' accounted of CBS's for on logical studies that reasoned that direct utilization of red wine could lessen danger of coronary illness by 50%. A few of Calaveras Vineyards ' rivals, most prominently Gallo and the Wine Group had gone into the premium varietal business sector to earn more profits.

Dr. Lynna Martinez was delegated with the end goal of executing the system that takes the position of Calaveras Vineyards to premium-brand in business sector. After the execution of premium business sector technique, the Calaveras Vineyards was being progressed by increase in price. There was rivalry in both classes and 'High visibility' brand reveled in a focused position in the super premium and premium section.

Changes in the responsibility for Vineyards in late 1980s and ahead of schedule of 1990s were joined by different organizations' business orgs. Front office of organization designated another settled wine showcasing organization namely 'Winston Fendall' that would place Calaveras Vineyards as its lead account. Winston would additionally give receivable recovery services and give Calaveras Vineyards on non-plan of action premise by securing its receivables. These significant administrations reduce the risk of doubtful debts and money prerequisite issues. Convenient and persistently vital supply of material was key factor for enhancing the operation. The grape prerequisites of winery were 50% that were accomplished by its vineyards and the rest required supply prerequisite satisfied from other resource. In this worry, Calaveras Vineyards made long-term agreements with Stout PLC.

More or less 65000 cases plant's ability was thought to be adequate and bearable. Some distribution center and storage spaces procured on the basis of lease from an adjacent winery and all completed container stock were put away there.

Quantitative Analysis of Calaveras Vineyards

Past facts and figure information furnish a decent backing with a perspective to distinguish finance related position of an organization, yet it may not be a fiscally feasible marker for future execution in light of the accompanying reasons:

•           Changeable future conditions and economic situations.

•           Corporate legislation of organization.

•           Changes in supply, demand, growth and prices of products.

Figure needs numerous suspicions alongside supposition and these ought to be as viable as could be expected under the circumstances for the estimate to be reasonable and great.

Solvency ratio

Investigation of liquidity ratio (see EXHIBIT 4) shows huge reduction in present and fast proportions for anticipated budgetary explanations as contrasted with authentic monetary articulations. At the point when contrasted with business sector relative data (Exhibit 15) these proportions compared to lower quartile of information extent. However, comparative makers as Calaveras Vineyards are exclusive and mysterious about their budgetary information so advertises correlation gets troublesome subsequently...............................

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