bcg capabilities book 020216 pv

An introduction to

BACCHUS CONSULTING GROUP

Business Consultants to the Wine Industry

February 2016

Confidential

Preface The following material has been prepared to answer quesJons about Bacchus ConsulJng Group. This booklet outlines our experiences,

capabiliJes, and methodology. We welcome the opportunity to discuss more specifically how we can assist you in achieving your unique objecJves.

Prepared: February 2016 2 Confidential

Content Who is Bacchus ConsulJng Group? / page 4 Our ConsulJng Philosophy / page 5 Our Focus / page 6

Winery ConsulJng / Advisory Service / page 7 Interim Management Services / page 13 Finance and Fundraising Advisory Service / page 14

How Does Bacchus Differ From Other ConsulJng Firms? / page 15 Select Clients of Bacchus ConsulJng Group / page 20 Bacchus Consultants / page 21


WHO IS BACCHUS CONSULTING GROUP?

Profile Founded in 2002

Network of wine industry professionals Offices in Napa, San Francisco, and Millbrae, California

Services Provided

Winery ConsulJng/Advisory Services Winery Interim Management Services

Finance and Fundraising Advisory Services

Philosophy of Holistic Approach and Experience Bacchus ConsulJng Group’s holisJc approach combines experJse across a range of funcJonal areas with a strategic perspecJve and cornerstone financial model that

reflects our extensive wine industry experience.


O U R C O N S U L T I N G P H I L O S O P H Y


BCG is defined by a holisJc, mulJ-‐funcJonal consulJng approach as opposed to pure specialty consulJng.

BCG underpins all of its consulJng services with a custom proprietary financial model based on each client’s specific needs and goals.

PROPRIETARY FINANCIAL MODEL EXPERIENCED

CONSULTANTS

STRONG INDUSTRY FOCUS

HOLISTIC APPROACH

O U R F O C U S

CONSULTING/ADVISORY SERVICES

INTERIM MANAGEMENT SERVICES


FINANCE & FUNDRAISING ADVISORY SERVICES

CONSULTING/ADVISORY SERVICES

Our consulJng services focus on assisJng wineries in the following funcJonal areas:

BUSINESS / STRATEGIC PLANNING

WINERY OPERATIONS OPTIMIZATION

DIRECT TO CONSUMER

WHOLESALE

FINANCE / ACCOUNTING


CONSULTING SERVICE: BUSINESS / STRATEGIC PLANNING

Strategic planning and the creaJon of a custom financial model are the first steps in the development of a results-‐based accountable organizaJon. The strategic planning process guides clients in an objecJve evaluaJon of the following quesJons: •  Where are we? •  What do we have to work with? •  Where do we want to be? •  How will we know we got there?

As a result of the strategic planning process, a client will have: •  A fact-‐based plan that takes into account market realiJes and the client’s

current situaJon. •  Focused strategic and operaJonal acJons to achieve short-‐term and long-‐

term goals. •  A targeted strategic plan with quarterly goals and metrics.


CONSULTING SERVICE: WINERY OPERATIONS OPTIMIZATION Winemaking is an art, a self-‐expression of terroir and the winemaker. OpJmizaJon ConsulJng is the discipline of adjusJng a process so as to opJmize some specified set of parameters without violaJng some constraint. The most common goal focuses on maximizing a winery’s unrealized potenJal. Our consultants review the entire process or a section of the process and make recommendations that are tied back to our proprietary financial model. Bacchus is focused on serving clients facing different types of operaJonal challenges which can be broken down to a financial metric or lack thereof. Our operaJon reviews can be grouped into the following categories:

•  Winegrower Management •  Winemaking efficiency and controls •  Bocling efficiency and controls •  Human Capital


CONSULTING SERVICE: DIRECT TO CONSUMER SALES The new life blood of wineries is DTC; it is where wineries can tell their story directly to consumers. Growth in the DTC channels has been tremendous the past 10 years; however, as Silicon Valley Bank notes, “The top 20% of wineries outperform the bocom 80%.” Our consultants first develop an integrated high level plan and then pull in operational subject matter experts to develop a tactical plan that is tied back to our proprietary financial model for a ROI review. Bacchus focuses on three main revenue centers:

•  TasJng Room (On –Property) •  Wine Club (On –Property) •  Other DTC

•  Tele-‐Sales (Off-‐Property) •  Internet driven sales (Off –Property) •  On-‐ and Off-‐site Events (depending on winery assets)


CONSULTING SERVICE: WHOLESALE SALES There is a symbioJc relaJonship between Wholesale and DTC in the sale mix of a winery’s revenue profile. The wholesale channel has changed; managing this channel takes a specific skill set that is foreign for many wineries. Our consultants first develop a national wholesale footprint map and overlay it with a “market by market profitability” template. Successful existing practices are paired with new tactics developed by leading industry experts, all of which are tied back to our proprietary financial model for a ROI review Bacchus focuses on:

•  Modeling wholesale channel profitability net of D/As, SPAs and other sales expense for each distributor/market.

•  CreaJng the “Sales Process” for the Wholesale Channel, which includes reviewing distributor performance.

•  CreaJng the “Top 500 Retailers and Restaurants” list which drives the Direct to Trade CommunicaJons Plan.


CONSULTING SERVICES: FINANCE and ACCOUNTING Our proprietary Financial Model is the cornerstone our consulJng pracJce; it is the tool and fact base we use to evaluate each client’s current and future situaJon. Through the model, we develop a fact-‐based understanding of each client’s current situaJon and how to grow their business. We have developed a comprehensive model that evaluates the following inputs to help us produce an accurate picture of the business:

•  Current and Future Sales Trends •  Current Inventory (Bulk and Bottled) •  Annual Grape Intake Sheet

Deliverables include the following:

•  Long Term Plan (5-‐Year forward-‐looking model) •  P&L Statement, Balance Sheet, and Cash Flow Analysis •  Margin Analysis by Channel by SKU •  “What if Scenario” funcJonality to measure impact of different strategies •  The Monthly Management Package


INTERIM MANAGEMENT SERVICES

Interim management is the “loaning” of human capital. Our team works in a variety of situaJons, from an organizaJon that needs help due to financial difficulJes (turnaround situaJon) to organizaJons that are growing and need the help of a seasoned execuJve on a part-‐Jme basis. These engagements may range for two days per week to full months and beyond. The posiJon may include:

Interim CEO / Interim CFO / Interim CMO / Interim Controller / Interim DTC Professionals


FINANCE AND FUNDRAISING ADVISORY SERVICES

Our specialized finance experience includes the following areas:

DEBT FINANCING •  1st Lien

•  Mezzanine

PRIVATE EQUITY

ALTERNATIVE FINANCING •  EB -‐ 5

•  Crowdfunding and DPO

TURNAROUNDS AND RESTRUCTURING

COURT APPOINTED RECEIVERSHIP PROJECTS


HOW DOES BACCHUS DIFFER FROM OTHER CONSULTING FIRMS? “The Bacchus Process” assist clients by: Providing a network of consultants who have experienced as General Managers or FuncJonal Managers in well-‐known, successful wineries. Customizing our proprietary financial model to provide clients with a quanJtaJvely sound system for evaluaJng their current situaJon and planning for future growth. Providing objecJve analysis in areas where outsiders can be more effecJve, especially in external assessments of the winery operaJons, customers and compeJJon. Energizing and focusing the team process. Bacchus can facilitate an effecJve process, diffuse poliJcal tension, and create enthusiasm through the experience of success. Synthesizing the results. The most successful strategy efforts pull together findings into a coherent and concise “story” that the team convincingly communicates. Bacchus provides this synthesis. ImplemenJng our system which has proven to reduce the stress of transiJons and has led to faster, economically sound decisions, companywide alignment, and competent execuJons.


T H E B A C C H U S P R O C E S S

Are my goals well defined? Personal aspirations

Tolerance for risk Size or type of business we want to be

Where are we going? Access to capital

Do we have the right strategies? Clear definition

Profitability and potential for growth Rate of growth

Strategies for the plan

Do we have the right tactics? Can I execute the plan? Resource deployment

Organizational infrastructure The Winery Executive’s role

If the answer is yes ...

If the answer is no ...

The Business Plan

The Opera0ng Plan

If the answer is yes ...

If the answer is no ...

Define the Goal


T H E B A C C H U S F R A M E W O R K

Phase I Gather the Facts by FuncJon Area

&

Analyze, Synthesize, and Develop Strategic IniJaJves by FuncJonal Area

Phase II Aggregate and Integrate into the Business Plan

& Build Financial and OperaJng Model

&

Develop TacJcs and the OperaJng Plan

Phase IV ExecuJon of Project Plan

&

Interim Management to Execute the Plan

Phase III PresentaJon of Deliverables to Management and Advisor



VINEYARD WINEMAKING MARKETING and BRANDING

BUSINESS PLAN

FIN MODEL

OPERATING PLAN

DIRECT TO CONSUMER

WHOLESALE SALES

Gather the Facts by Function Area &

Analyze, Synthesize, and Develop Strategic Initiatives by Functional Areas

Phase I Phase II



Phase I Gather the Facts by FuncJon Area

&

Analyze, Synthesize, and Develop Strategic IniJaJves by FuncJonal Area

Phase II Aggregate and Integrate into the Business Plan

& Build Financial and OperaJng Model

&

Develop TacJcs and the OperaJng Plan

Phase IV ExecuJon of Project Plan

&

Interim Management to Execute the Plan

Phase III PresentaJon of Deliverables to Management and Advisor


SELECTED WINERY CLIENTS



Avi Gallant has over 15 years of experience providing financial analysis and business consulJng services to wine industry clients. Specific areas of experJse include building complex business models that incorporate all aspects of winery supply and demand, project-‐comprehensive financial statements, and cost of goods sold. He has also developed several winery acquisiJon models that have resulted in posiJve cash flow and equity for the acquirer. Throughout his career, Avi has worked and consulted in accounJng, finance, and sales operaJons for Napa and Sonoma wineries, including Huneeus Vintners, Diageo, Icon Estates, Ravenswood, Beringer, Artesa, and others. He earned a Bachelor of Science degree in Finance from the University of Maryland.

AVI GALLANT

Quinton is Managing Director and Founder of Bacchus ConsulJng Group. Concurrently, Quinton is the Proprietor of Bacchus Wine Shop (BWS), a full-‐service retail merchant of fine wines and crao beers located in Millbrae, CA. Prior to BCG and BWS, Quinton was Managing Director of Bacchus Capital Management, a niche private equity firm that specialized in wine industry investments. Quinton’s winery management experiences include: President and NaJonal Sales Manager at Panther Creek Cellar, General Manager at Artesa Winery, Business Manager at Etude Wines and General Manager at Bonny Doon Vineyards. Prior to the wine industry, Quinton worked at The Coca-‐Cola Company and Bank of America. He holds an M.B.A. from J.L. Kellogg School of Management at Northwestern University and B.S. degree in finance from California State University Long Beach.

QUINTON JAY

CONTACT


Director Financial Analysis T: 707-812-8898 [email protected]

Managing Director T 415-828-8898 [email protected]

AVI GALLANT

QUINTON JAY

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