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

Posted August 10, 2009

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