I wasn’t going to read the article until I read that. Bryant has a net revenune of $1.7M? WTF are they doing or do they make WAY less wine than I am imagining? Or, perhaps, they are selling way less wine than I would have suspected.
Just because someone may have a $300M art portfolio doesn’t mean that they haven’t borrowed a similar amount using the art as collateral. In my line of work I run into multi multi millionaires all the time. The asset side of the balance sheet looks great but when I look at the liability side, then suddenly the Net Worth figure doesn’t look nearly as impressive…
That’s true. In this case, they pledged $300M in art against a $98M loan. It came up for renewal and they wanted to renegotiate it. When the bank wanted access to their income, rather than just the art, they claimed that the winery income had decreased over the past couple years and was worth less than previously. Ridenhour told them they’d have to disclose that to the banks and she alleges that consequently they fired her.
Who knows if they’re intentionally undervaluing the winery to discourage banks to look at it, or whether it really is of less value than it was. But the winery has lost some cachet. Once your wine is available at Total Wine you really can’t call it a “cult” wine any more.
The story is a bit confusing about the financial results. According to the complaint, p. 38, para. 39, net income (i.e., after expenses) for 2017 was $2.5 million. But the plaintiff contends that, because of declining sales, the plaintiff believed that net income was likely to fall to something like $1.8 million in 2018. (I’m not sure if these are calendar year figures, or if the fiscal year ended mid-year. The complaint says the 2017 financials were only finalized in the fall of 2018, which seems late if the fiscal year ended 12/31/17, but if it ended in the summer, you’d call that FY2018 results.)
The complaint alleges that the $6-$7 million in “income” the Bryants wanted to report to the bank was mostly revenue, before costs were subtracted.
How does $6-$7 million in sales compare to your expectations, Jim? $2.5 million in net income on that would be good – more than a 35% profit margin.
I couldn’t help wondering why the bank wouldn’t insist on tax returns, where the Bryants would have an incentive to show a lower net.
Well at full price its $9000 a case, so 1000 cases would be $9M. Obviously they dont sell at full price due to three tier system etc so that will reduce it. No idea how many cases they sell. But if they only do $7M in top line sales how in the world is it valued at $125 M ? unless they hold like 100 acres plus of prime vineyards
That is the question.
A warming climate and California wildfire season may have the final word on that…
On the mailing list, it is $6600 per case ($550 bottle), for the 2016.
Who (other than you) said anything about Napa having an apocalyptic ending? 
What is the three tier system?
2.5 net on 7 million in sales would be absolutely outstanding in my experience in the wine biz. I would think what is more likely at issue is 2.5 net on 7 million in gross profit (ie after COGS). Or perhaps 7 million before all the “other” expenses owners sometimes run through the business get put on the P&L. Look at Constellation or Treasury’s or Willamette Valley Vineyards’ 10-Ks for some general ideas on nets vs sales, etc. Obviously not apples to apples with Bryant, but they also have the economies of scale.
Not by an EBITDA multiple, certainly. My bet is that valuation is a “market valuation” including tangible (vineyard/winery) and intangible (brand goodwill) assets with comps. And, honestly, it probably is not all that far off. I suspect the 60% of Colgin LVMH bought is #1 with a bullet on the list of comps.
They have 13 acres on Pritchard Hill next to Chappellet and Colgin and close to Ovid and David Arthur. A few years ago top Napa vineyard land was nearing $1M an acre and I imagine this could go for substantially more.
The other things to remember is that it’s not only the land itself. If it’s already planted to Cab, which it is, and the vines are in producing mode, which they are, it’s more valuable. And if you have an existing winery license with a good facility, that’s a further plus.
However, the most expensive vineyard land is still in Bordeaux. I believe Paulliac has the most expensive land at $2M an acre, based on the most recent sales prices.
So even at that level, is Bryant pricing in goodwill for $100M?
Colgin sold 60% recently at some undisclosed price. Does anyone know what they actually got? That would probably be the most recent comp.
What is the three tier system?
Seriously? It’s producer-wholesaler-retailer. Do a search on this forum or Google.
Poster probably lives in one of those socialist countries with lower wine prices.
The complaint says the Bryants were basing their $125M valuation on the price that LVMH reportedly paid for Colgin, but I’ve just searched now, and i can’t find any reports of a price.
I’ve only seen speculation and rumor, but it was, well, enough to make the Bryant valuation not too unreasonable.
Unfortunately, LVMH’s drinks division has revenue of about 5 billion euros, so this is far below their materiality threshold for disclosure.
The Bryants are getting pretty old. They built the winery using the same game plan as they had to build their original fortune. They even over paid employees. The popularity of the wines dipped five or more years ago. Now, they are fair game for those same employees, whether it is their actual actions/lifestyle or the vulnerability of their current situation. I hate to see an Icon fade for whatever reason.
Even if its greed ?
$750 a bottle ? really
I literally know zip here. I Googled it and saw a production of 3-4,000 cases. Found pricing and figured some mix of DTC and FOB skewed to the former. Maybe I’m wrong but cannot see why I would be. In the middle of the production level with normal sales you’re well into 8 figures of revenue. How are they only generating under $2 million from that? Maybe they’re selling WAY less or aren’t producing at the levels I was basing stuff on. I have no idea. But even 3,000 cases at $4.000/CS which really presumes a heavy FOB reliance is still $12M gross. Doing less than $2M on that would seem weird. Then again I’ve never made high end CA Can so WTF do I know?
Winemaker----Distributor-----retail (store, restaurant, don’t think online sales count, secondary market)
shocking- bettina seems to be so fiscally conservative.