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The Basics of Wine Costing

The Basics of Wine Costing

by | Feb 9, 2023 | Accounting, Bookkeeping, Business, Financial Services, Outsourced Accounting, Wine Industry

The cost of making wine can vary greatly depending on several factors, such as the type of grape used, the region where it’s produced, the size of the winery, and the production process.

For example, the cost of producing a bottle of wine can range from a few dollars for a low-end bulk wine to hundreds of dollars for a premium bottle of wine. The cost of grapes, labor, and equipment all contribute to the overall cost of making wine. Additionally, marketing and distribution costs and the winery’s profit margins can also affect the final price of a bottle of wine.

Generally, the cost of making wine is higher for small, premium wineries that produce high-end wines. The price is lower for large wineries that produce lower-end wines.

Protea Financial Wine Costing Basics

As a business owner who owns a winery or wine business, it is essential to know your wine’s actual cost. It is the most critical part of your business and the reason you decided to enter the industry.

Knowing the cost of making wine is vital for several reasons:

  1. Profit margins: Wineries need to clearly understand the cost of production to determine their profit margins. This information is crucial for setting prices and making business decisions.
  2. Budgeting: Knowing the cost of making wine allows wineries to budget accurately for future production and make informed decisions about expanding their operations.
  3. Cost control: Understanding the cost of production can help wineries identify areas where they can reduce costs, increase efficiency, and improve their bottom line.
  4. Competitive pricing: Wineries must be aware of the cost of production to set competitive prices in a crowded market.
  5. Sustainability: Knowing the cost of production can help wineries ensure that they are operating sustainably. They can identify areas where they may be overspending and make changes to reduce waste and lower costs.

Overall, a clear understanding of the cost of making wine is essential for ensuring a winery’s long-term success and profitability. If we all agree that getting the actual cost is critical, then we should all agree on what needs to be included in the cost of this wine.

The costs that are included in the cost of making wine are:

  1. Grapes or juice: The cost of purchasing or growing grapes is a significant component of the cost of making wine. In most cases, it will make up the most significant cost of each bottled wine. Being as specific as possible is important. All your wine should only have the same juice cost if you have one SKU. The information you need to allocate these costs is already being tracked for compliance. Use this information to allocate costs correctly.
  2. Dry goods: The cost of bottles, corks, labels and other packaging materials is another component of the cost of making wine. This is a fairly obvious cost as it is a cost you can see. A few complexities can arise, specifically with smaller wineries where minimum order quantities can create a scenario where the per-wine price is higher than the per-unit cost due to wastage. This is an area that can inflate on the balance sheet, so remember to do at least annual counts and flush out any additional costs building up on the balance sheet.
  3. Overheads: Depreciation on equipment, costs to run the winery, and other overhead allocations are often forgotten costs that tend to sneak up on winery owners. Including these costs based on monthly production will provide you with a true cost of the wine being produced.
  4. Labor: The cost of labor, including wages and benefits for winemakers, vineyard workers, and other employees, is another significant component of the cost of making wine. We often see the cost of the winemaker missing from the calculation as this is the owner, and they need to pay themselves. This can lead to a false sense of margin or create a situation where the wine has been priced incorrectly, leading to a situation where they never get paid.

Protea Financial The Basics of Wine Costing for Your Winery

It is important to obtain the correct costing and include all the relevant costs. Getting the costing wrong can have severe implications for the business, especially if you use these costings to develop your pricing. Another benefit of costing is understanding your margins and providing insight into areas where you can reduce costs.

 

Protea Financial Can Help Make Wine Costing Easier

Costing is critical for all businesses that sell inventory, but in a complex environment with long inventory cycles like a winery, it is important to hire an expert. Find someone with the expertise and experience to help you cost your winery accurately. For help, contact Protea Financial today!

Protea Financial Can Make Wine Costing Easier

Let Protea Financial teach you the basics of wine costing so that you can begin pricing wine properly for yourself. If you want help, our professionals can do that, too!

Call Protea Financial Today!
Wine Accounting 101: Understanding the Basics

Wine Accounting 101: Understanding the Basics

by | Feb 2, 2023 | Accounting, Bookkeeping, Business, Financial Services, Outsourced Accounting, Wine Industry

Wine accounting is an essential part of the wine industry, but it can often be daunting and confusing, especially for those new to the business. Protea Financial offers wine accounting services tailored to meet your needs and help you understand the basics.

Our goal is to help break down the complexities of wine accounting into simple terms so you can make better-informed decisions. We want to share the basics of wine accounting, what it entails, and why it’s important in today’s competitive market. Read on to develop a strong understanding of wine accounting and take advantage of our expert advice.

 

What is Wine Accounting?

Wine accounting is the process of tracking and managing the financial information associated with a business within the wine industry. This includes vineyards, wineries, retailers, and distributors. Wine accounting can be a complex and challenging task due to the unique nature of the wine industry. However, it is essential for businesses in this sector to maintain accurate financial records to make sound business decisions.

Protea Financial is here to help you navigate the world of wine accounting. We have a team of experts who are familiar with the ins and outs of this industry. We can provide the tools and resources you need to manage your finances effectively. Our team can confidently answer your questions and guide you through the process easily, and we are here to help wherever we can.

 

Accounting Basics Every Business Needs to Remember

You don’t need to be an accountant to understand your business’s accounting basics. Whether you’re just starting or have been in business for years, keeping track of your finances and making sure your books are in order is essential. Here are a few accounting basics every business needs to remember:

  • Income: This is money that your business brings in, also known as revenue. Money can come in from sales, services, interest, investments, and more. It’s important to keep track of all income, so you know how much money your business is making.
  • Expenses: This is money that your business spends, also known as overhead. Expenses include rent, utilities, inventory, supplies, advertising, and payroll. Keeping track of expenses helps you see where your money is going and where you can cut costs.
  • Profit: This is the difference between your income and expenses. If your income is greater than your expenses, you have a profit. If your expenses are greater than your income, you have a loss. Your profit (or loss) determines whether or not your business is successful.

By tracking your income and expenses and knowing your profit (or loss), you’ll have a better handle on the financial health of your business. Since the wine industry can be fickle, it is essential to make sure you track everything carefully. Prices can change for each item, season, and even each batch of wine.

Protea Financial accounting for wineries

The Different Types of Wine Accounting

There are three types of wine accounting: cellar accounting, production accounting, and tax accounting.

  • Cellar Accounting: This type of accounting tracks the inventory in a wine cellar. This is important for individual wine collectors and commercial businesses selling wine. Cellar accounting can help track how much wine is being consumed, how much wine is being bought or sold, and the value of the wine cellar’s contents.
  • Production Accounting: This type of accounting tracks the costs associated with producing wine. This includes things like the cost of grapes, barrels, and labor. Production accounting can help wineries keep track of their expenses and make sure they are making a profit on each batch of wine they produce.
  • Tax Accounting: This type of accounting deals with the taxes associated with selling wine. This includes excise taxes, import/export taxes, and sales taxes. Tax accounting can be complex, but businesses must understand the taxes they will need to pay on their wines.

Knowing which category or categories you fall into will help ensure that you track the correct numbers. That way, you can price your products correctly and avoid having a loss for your business.

 

The Basics of Wine Accounting

Wine accounting is a complex and ever-changing process. Protea Financial is here to help you understand the basics of wine accounting so that you can make informed decisions about your business.

The first step in wine accounting is understanding the different types of wines. There are four main types of wines: red, white, sparkling, and fortified. Each type of wine has unique characteristics that must be considered when creating financial statements.

The second step in wine accounting is understanding the cost of goods sold (COGS). COGS includes the cost of the grapes, the cost of production, and the cost of packaging and shipping. All these costs must be considered when calculating your final price per bottle.

The third step in wine accounting is understanding inventory valuation. Inventory valuation is used to determine the value of your stock at any given time, which is important for making informed decisions about buying and selling inventory.

Protea Financial has a team of experienced professionals who can help you navigate the complexities of wine accounting. We will work with you to create accurate financial statements and provide guidance on making sound business decisions.

 

Common Mistakes Wine Businesses Make in Their Accounting and How to Avoid Them

There are several common mistakes businesses make regarding their accounting and bookkeeping. Here are some of the most common mistakes and how you can avoid them:

  1. Not knowing your numbers. This is perhaps the most serious mistake you can make. You need to know your numbers to make informed decisions about your business. Keep tabs on your income and expenses, and ensure you understand where your money is coming from and going.
  2. Not keeping accurate records. This ties in closely with needing to know your numbers. If you don’t have accurate records, it won’t be easy to get a precise picture of your financial situation. Make sure you keep track of all income and expenses, no matter how small.
  3. Not staying up-to-date with changes in tax laws. Tax laws change regularly, so it’s important to stay on top of any changes that could impact your business. This includes keeping track of deductions and credits available to you.

Protea Financial wine accounting basics

Protea Financial’s Wine Accounting Services

Protea Financial is a leading provider of wine accounting services, and we can help you with all aspects of your wine business, from grape to glass. We understand the unique challenges that wineries face and have the experience and knowledge to help you overcome them. We offer a full range of financial services, including:

  • Financial statement preparation
  • Tax planning and compliance
  • Grape-to-glass inventory management
  • Cost analysis and margin optimization
  • Cash flow management
  • Winery financial modeling and forecasting
  • Business valuations
  • Exit planning

 

Turn to Protea Financial for Help with Your Wine Accounting Needs

If you are in the wine industry and have questions about accounting or bookkeeping, Protea Financial is here to help. We understand the unique needs of the wine industry and can provide expert guidance on all financial matters. Whether you need assistance setting up your books or preparing for tax season, we can help you navigate the complexities of the wine business. Contact Protea Financial today to learn more about our services and how we can help you run your business more efficiently.

Protea Financial Is Here to Help with Your Wine Accounting and Bookkeeping

Reach out to Protea Financial if you need help with your wine accounting or bookkeeping, or even if you aren’t sure what the next step for your business should be. Our experienced professionals are here to help. 

Call Protea Financial Today!
Protea Conversations: Theresa Wray

Protea Conversations: Theresa Wray

by | Jan 26, 2023 | Business, Protea Conversations

Protea Financial was founded in 2014 to provide high-quality outsourced accounting at an affordable price.  Given Protea’s flexible work environment, the Company especially appealed to accountants who wanted to re-enter the workforce after taking time off to start a family. This allowed Protea to attract extremely talented individuals who were previously overlooked.  Protea strives to represent people from all backgrounds and provide an environment for them to grow and succeed in a setting that provides the flexibility and acceptance of who they are as people.

We selected the name Protea because is the national flower of South Africa and is a symbol of our connection. The Protea flower has become an ornamental flower because of this striking beauty and is included in arrangements and bouquets as a symbol of courage or daring to be better or a sign of positive transformation.

Protea Conversations in 2023 will focus on positive transformation and representation from all backgrounds. We are broadening our Conversations with the hope that these conversations will continue to create a forum to discuss the experiences, opportunities, and challenges leaders face, and how we can build a more diverse, inclusive, and successful environment for everyone.

In January 2023 we spend time with Theresa Wray owner of Clarity & Co.

Theresa’s career in the wine industry spans 17 years, helping wineries, importers and distributors turn their marketing challenges into successes. Her corporate experience includes 13 years with Maisons Marques & Domaines, leading marketing operations for the renowned luxury portfolio of brands.

She started Clarity & Co in 2020 to continue this work with a more custom approach. Clarity & Co specializes in marketing and US market consulting for wine & spirits, and partners with both domestic and imported brands. Theresa graduated from Cal Poly – San Luis Obispo on California’s Central Coast, and holds the WSET III Advanced wine certification. Learn more at www.clarityandco.com.

Tell us a little more about your decision to focus on marketing and how you specifically got involved in the wine industry? What made you decide to start your own business?

I graduated from Cal Poly – San Luis Obispo on California’s Central Coast with a major in Business/Finance and a minor in Spanish. Early on, I did short stints at investment and insurance companies, peppering in some travel. These positions didn’t quite feel like the right fit, so after a little soul-searching, I decided to pursue work at a Communications agency servicing many industries. I later moved to a marketing & communications role at a fantastic wine importer. Working with a portfolio of international wineries is where I felt at home and thrived on the challenges it presented.

Launching my own business was a goal I had considered for a while, but I didn’t act on it until 2020. This decision was driven by wanting more control over my schedule (something especially important for parents in 2020!) and wanting to help clients with a more custom approach. After many years in corporate positions, it was a challenge that I was ready to take on.

Protea Financial Wine Marketing

What has been the biggest challenge you have experienced in reaching your current success (personally and professionally)?

I always strive to find the right mix of family time and professional endeavors.

There is never a perfect mix, so the challenge is to manage it well. I believe strongly in making time for exercise and continuous education, so I’m also always looking to carve out time for those things.

What are your short-term goals for your career and yourself?

I’m continually trying to identify specific challenges that small to mid-sized wineries face related to marketing and operations in the US market.

Pin-pointing those challenges and offering specific solutions is the short-term goal. I enjoy connecting with other like-minded professionals about this!

What is the best piece of advice you have ever received that has helped you in your success?

Sometimes you have to step back to see the big picture, and you can only sometimes see the answer when you are laser-focused and moving too fast. Give yourself space to reflect and be true to yourself.

What is the piece of advice that you wished you had gotten when you were starting out?

It’s OK to make mistakes. Early on, I was a bit timid and worried about asking the wrong thing. It’s true for any industry or challenge: It’s smart to observe first, but don’t be too shy. Try new things. Reach out and ask questions.

What advice do you give to others to help them be better leaders?

First, talk to your team to see how you can help them be more effective. Next, talk to people outside your discipline and your industry; you will always walk away with a new perspective.

Protea Financial Theresa Wray

Can you share something interesting about yourself that will provide insight into who you are outside of the professional space?

Growing up, I spent a lot of time on the basketball court and soccer field. Now I find myself doing the same, but this time it’s for my 2 daughters. My husband and I laugh at ourselves often, showing up with everything – chairs, water bottles, snacks, you name it!

As a thank you to our interview and Protea’s commitment to more diverse and inclusive leaders, Protea will donate to Canine Companions (https://canine.org/). Canine Companions is leading the service dog industry so their clients and their dogs can live with greater independence. They provide service dogs to adults, children and veterans with disabilities and facility dogs to professionals working in healthcare, criminal justice and educational settings. Since our founding in 1975, our dogs and all follow-up services are provided at no cost to our clients.

Independence shouldn’t be limited to those who look or live a certain way. Disability reaches all races, classes and backgrounds, and Canine Companions will too. Clients come to Canine Companions because of our reputation, the quality of our dogs, the experience of our training staff and the desire to lead life with greater independence. We are committed to providing services to all qualified clients. 

Protea Conversations Let You Expand Your Network

Connect with industry leaders and expand your network. Our goal here at Protea Financial is to work with people from every industry possible. Reach your goals with the help of people who care. 

Contact Protea Financial Today

Listen to this article here:

Protea Financial was founded in 2014 to provide high-quality outsourced accounting at an affordable price.  Given Protea’s flexible work environment, the Company especially appealed to accountants who wanted to re-enter the workforce after taking time off to start a family. This allowed Protea to attract extremely talented individuals who were previously overlooked.  Protea strives to represent people from all backgrounds and provide an environment for them to grow and succeed in a setting that provides the flexibility and acceptance of who they are as people.

We selected the name Protea because is the national flower of South Africa and is a symbol of our connection. The Protea flower has become an ornamental flower because of this striking beauty and is included in arrangements and bouquets as a symbol of courage or daring to be better or a sign of positive transformation.

Protea Conversations in 2023 will focus on positive transformation and representation from all backgrounds. We are broadening our Conversations with the hope that these conversations will continue to create a forum to discuss the experiences, opportunities, and challenges leaders face, and how we can build a more diverse, inclusive, and successful environment for everyone.

In January 2023 we spend time with Theresa Wray owner of Clarity & Co.

Theresa’s career in the wine industry spans 17 years, helping wineries, importers and distributors turn their marketing challenges into successes. Her corporate experience includes 13 years with Maisons Marques & Domaines, leading marketing operations for the renowned luxury portfolio of brands.

She started Clarity & Co in 2020 to continue this work with a more custom approach. Clarity & Co specializes in marketing and US market consulting for wine & spirits, and partners with both domestic and imported brands. Theresa graduated from Cal Poly – San Luis Obispo on California’s Central Coast, and holds the WSET III Advanced wine certification. Learn more at www.clarityandco.com.

Tell us a little more about your decision to focus on marketing and how you specifically got involved in the wine industry? What made you decide to start your own business?

I graduated from Cal Poly – San Luis Obispo on California’s Central Coast with a major in Business/Finance and a minor in Spanish. Early on, I did short stints at investment and insurance companies, peppering in some travel. These positions didn’t quite feel like the right fit, so after a little soul-searching, I decided to pursue work at a Communications agency servicing many industries. I later moved to a marketing & communications role at a fantastic wine importer. Working with a portfolio of international wineries is where I felt at home and thrived on the challenges it presented.

Launching my own business was a goal I had considered for a while, but I didn’t act on it until 2020. This decision was driven by wanting more control over my schedule (something especially important for parents in 2020!) and wanting to help clients with a more custom approach. After many years in corporate positions, it was a challenge that I was ready to take on.

Protea Financial Wine Marketing

What has been the biggest challenge you have experienced in reaching your current success (personally and professionally)?

I always strive to find the right mix of family time and professional endeavors.

There is never a perfect mix, so the challenge is to manage it well. I believe strongly in making time for exercise and continuous education, so I’m also always looking to carve out time for those things.

What are your short-term goals for your career and yourself?

I’m continually trying to identify specific challenges that small to mid-sized wineries face related to marketing and operations in the US market.

Pin-pointing those challenges and offering specific solutions is the short-term goal. I enjoy connecting with other like-minded professionals about this!

What is the best piece of advice you have ever received that has helped you in your success?

Sometimes you have to step back to see the big picture, and you can only sometimes see the answer when you are laser-focused and moving too fast. Give yourself space to reflect and be true to yourself.

What is the piece of advice that you wished you had gotten when you were starting out?

It’s OK to make mistakes. Early on, I was a bit timid and worried about asking the wrong thing. It’s true for any industry or challenge: It’s smart to observe first, but don’t be too shy. Try new things. Reach out and ask questions.

What advice do you give to others to help them be better leaders?

First, talk to your team to see how you can help them be more effective. Next, talk to people outside your discipline and your industry; you will always walk away with a new perspective.

Protea Financial Theresa Wray

Can you share something interesting about yourself that will provide insight into who you are outside of the professional space?

Growing up, I spent a lot of time on the basketball court and soccer field. Now I find myself doing the same, but this time it’s for my 2 daughters. My husband and I laugh at ourselves often, showing up with everything – chairs, water bottles, snacks, you name it!

As a thank you to our interview and Protea’s commitment to more diverse and inclusive leaders, Protea will donate to Canine Companions (https://canine.org/). Canine Companions is leading the service dog industry so their clients and their dogs can live with greater independence. They provide service dogs to adults, children and veterans with disabilities and facility dogs to professionals working in healthcare, criminal justice and educational settings. Since our founding in 1975, our dogs and all follow-up services are provided at no cost to our clients.

Independence shouldn’t be limited to those who look or live a certain way. Disability reaches all races, classes and backgrounds, and Canine Companions will too. Clients come to Canine Companions because of our reputation, the quality of our dogs, the experience of our training staff and the desire to lead life with greater independence. We are committed to providing services to all qualified clients. 

Protea Conversations Let You Expand Your Network

Connect with industry leaders and expand your network. Our goal here at Protea Financial is to work with people from every industry possible. Reach your goals with the help of people who care. 

Contact Protea Financial Today

How To Create A Budget

How To Create A Budget

by | Dec 29, 2022 | Accounting, Bookkeeping, Business, Financial Services, Outsourced Accounting, Wine Industry

We are entering the new year, which means many people are setting goals for the new year. As a business owner, you should be doing the same thing. Creating a budget is one of the best practices you can start for your business.

 

What Is a Business Budget and What Are Its Benefits?

A business operating budget is a financial plan that outlines a business’s projected expenses and revenues over a specific period, usually a year. A budget is a key tool for business owners and managers to understand the financial performance of their business, make informed decisions, and plan for the future.

A well-thought-out and designed budget will allow you to make better business decisions and feel more in control of your future. If you are still not sure you need a budget, here are some of the key benefits of having a budget:

  1. Improved financial planning: A budget allows you to plan for the financial needs of your business, including projected expenses and revenues, if you need to hire, if you need to invest in new assets, and, more importantly, if you have the cash flow for your business goal. By creating a budget, you can identify potential financial challenges and opportunities and take steps to address them.
  2. Enhanced decision-making: A budget can help you make informed decisions about allocating resources and making trade-offs between different priorities. The budgeting process should inform you what you are limited to doing by your current business setup and if you need to take action if you want to expand or grow.
  3. Increased accountability: A budget can help you hold yourself and your team accountable for meeting financial goals and targets. By regularly reviewing your budget and comparing it to actual performance, you can identify areas where you are over or under budget and take corrective action. It will also provide the road map on how your team can spend and give them direction to execute their goals.
  4. Improved communication: A budget can help you communicate your financial goals and plans to your team and stakeholders, such as investors or lenders. This can help ensure that everyone is aligned and working towards the same financial objectives. It can act as an early warning system for potential issues and provide guidance on financial needs if you are planning for growth or expansion.

Now that we have established that a budget is important and a worthwhile exercise, the question is, how do I create a budget?

Protea Financial Creating a Budget for Your Business

Budget Creation Basics

Here are the basics of building a business budget:

  1. Determine your budget period: For most, this will be the next calendar year but the first step is to choose a budget period that aligns with your business goals and objectives. For example, if you are starting a new business, create a budget for the first six months, the first year, the remainder of this calendar year, and the next. Setting the budget period allows you to think about a period and focus on those goals and expectations.
  2. Identify your budget categories: You will need to determine the categories of expenses and revenues relevant to your business. Common types of expenses include payroll, rent, utilities, marketing, and supplies. For income, the categories include sales of products, service fees, and grants. There may be subcategories under each of the main categories. By know which revenue and expenses you plan on budgeting for allows you to become more granular and focused in your approach to building this plan.
  3. Gather financial data: Collect financial data from past periods or other sources, such as market research or industry benchmarks, to help you estimate the amounts for each budget category. For most businesses, starting with historicals is a great place to begin. Your history will give you an idea of your future and allow you to adjust based on the information you have or the new projects you plan to implement.
  4. Create a budget template: Use a spreadsheet or budgeting software to create a budget template that includes all the budget categories and subcategories relevant to your business. You can either build your own, hire someone to build a template, or download one from a reliable source.
  5. Estimate expenses and revenues: Using the financial data you have gathered, estimate the amounts for each budget category for the budget period. This is the work part. Once you know what you plan to budget for, you can do the hard work. Most good budgets will take into account information from your team. Gathering insight and information from the people who are meant to execute the goal will allow you to gain buy-in. Also, most good budgets will take a few rounds. This is a necessary process and not one that should be rushed. Once all information is gathered, it should be reviewed with all stakeholders and adjusted as necessary. Obtaining insight from others will help get everyone’s approval that it is achievable and ensure everyone is working towards the goal of execution. 
  6. Monitor and update the budget: Budgets are a tool that should be used to drive the business towards its goals. It is important to regularly review and see how you are performing towards these goals. The review should provide insight into where you need to improve and where you are doing well. It is also necessary to update the budget as required. Your business environment might change, and different opportunities and pitfalls may arise. It is critical that the budget stays accurate and reflects these changes in your business’s financial position or goals.

With these steps, you can create a comprehensive and accurate business operating budget that will help you understand and manage the financial performance of your business. A well-executed budget will provide you and your business insight to move toward your goals.

Protea Financial Business Budget

Protea Financial Can Help You Create a Budget for Your Business

Now, remember, the budgeting process takes work. Sometimes you will need to get help. If you do not have the capabilities internally or want additional insight into the process, consider outsourcing your needs. Reaching out to an outsourced option like the professionals here at Protea Financial might be a great way to get the best out of your budgeting process by bringing in experts. Contact us today and we can help!

Let Protea Financial Help You Create a Budget for Your Business

If you want help learning how to create a budget for your business, or you need someone to do it for you, contact the professionals here at Protea Financial. 

Call Protea Financial Today!