The Challenge
When an estate-owned winery entered the process of being divided among multiple beneficiaries, the future of the business became uncertain.
While one family member remained actively involved in the winery, the other owners intended to sell the property. To maintain operations during the transition and avoid a rushed sale, the business secured financing through a multi-year HELOC facility that released funds in stages over a three-year period.
The challenge was clear: the winery needed to continue operating, carefully manage liquidity, and ensure sufficient cash would be available until each future funding tranche became accessible.
At the same time, slowing sales and changing market conditions were creating additional pressure on cash flow and profitability.
The owner needed visibility into both the business’s short-term cash requirements and the long-term viability of the winery operation.
What’s at Stake?
Without a clear understanding of future cash needs, the business risked exhausting available funds before additional financing became available.
A liquidity shortfall could have forced difficult decisions, including reducing operations or accepting unfavorable terms in a potential sale process.
Beyond managing cash, the owner was also evaluating whether the winery business could become a sustainable long-term opportunity following the eventual sale of the property.
Understanding profitability drivers, product mix, and cost structure became critical to preserving future options.
The Solution
Building a Long-Term Cash Roadmap
The first step was developing a rolling three-year forecast that incorporated cash activity across three separate business entities.
The model was designed to:
- Forecast future cash requirements and funding timing
- Ensure adequate liquidity exists until each HELOC tranche becomes available
- Incorporate changing sales assumptions and operating expenses
- Update forecasts regularly using actual financial results
- Provide management with visibility into future decision points
As market conditions evolved and sales slowed, the forecast became an important decision-making tool rather than simply a budgeting exercise.
The updated projections helped identify periods of increased cash pressure and prompted discussions around additional revenue opportunities, including:
The forecasting process provided the client with something extremely valuable during an uncertain period: time.
Rather than reacting to cash shortages, the owner could plan and make decisions from a position of greater control.ataset.
Improving Profitability Through Cost Insight
At the same time, the client wanted to understand the economics of the winery operation better and explore whether it could become a more sustainable, standalone business in the future.
Building on Protea’s existing inventory costing work, the team began evaluating the primary drivers of cost of goods sold and modeling different production scenarios.
One area of focus involved balancing the use of estate-grown fruit with purchased bulk wine.
The winery had recently introduced a lower-priced red wine that quickly became its strongest sales driver, opening new customer opportunities and additional distribution channels.
Producing that wine economically required purchasing bulk wine at a price lower than the winery’s estate-grown fruit could support.
The challenge became finding the right balance:
Protea developed multiple scenarios to help the client evaluate production decisions and understand the financial impact of different blending and sourcing strategies.
The discussions also extended beyond production costs to include
The Outcome
By combining rolling cash flow forecasting with detailed profitability analysis, the client gained the visibility needed to navigate a highly uncertain period.
Results
Looking Ahead
Ownership changes often bring new compliance obligations that can be easy to overlook while leadership focuses on running the business.
A combination of management’s commitment to strong financial records and controls, with the speed and flexibility of Protea’s support, enabled the winery to meet this deadline, reducing compliance risk, penalties, and interest. Success allowed the new ownership structure to move forward with confidence.
