Wine Producer Yarraman Estate Wines Talks About Cash Flow Management in the Wine Industry Part 1

We travel to the Upper Hunter Valley this week to bring you some sound advice from the Chief Winemaker, Ian Long at Yarraman Estate Wines.

I have summarised the video below:

  • Most of their sales come from their winery in the Upper Hunter Valley
  • Their clients are mainly hotels, clubs, restaurants, independent bottle shops
  • They are going through a distributor to give themselves a bit more national distribution
  • If you want to buy wine for your self you can go direct to Yarraman (through cellar door or over the phone)
  • The winery at the moment is about 90% full due to the fact that they have just come out of vintage
  • This is the peak inventory holding time
  • They only process grapes for about 5 or 6 weeks of the year
  • There is a lot of money tied up in machinery
  • Wineries have to have the equipment and it is expensive and can only be used in the wine industry
  • Most of the year it just sits there and does nothing
  • Anybody looking to enter the wine industry has to invest a lot of money in equipment, return on investment is quite low
  • To help mange their cash flow better on a day to day basis is use invoice finance so access to cash can be delivered faster
  • A challenge for the wine industry is most suppliers look for payment within 30 days
  • Most customers in Australia look to pay for their wine in 60 days (overseas customers want 90-120 days of credit)
  • Off shore risk is managed using Letter of Credit
  • Most of their offshore customers are on open credit (so Yarraman invests heavily in inventory)
  • Dealing with AR Cash Flow helps as a lot of that cash can be accessed immediately
  • Outsourcing and minimising capital investment is another way cash is managed
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