Issue link: http://read.dmtmag.com/i/155925
attraction in the marketplace, and their buyer could expand upon that," Motto said. "A brand really needs a reason for being. Either it's profitable, has clear potential for profitability and is scalable, or it doesn't make sense for anyone to buy it." While Motto said that most brands sell for little more than the value of inventory, those that command top dollar have created something unique. "Most wineries looking to buy a brand don't need more wine," he said. "They need something that can catch fire." So, what does one do to effectively turn up the heat and increase brand value? "The same things they should do if they want to be successful," Motto said. "Make good wine. Distinguish yourself and be known for something. Have a system of getting your wine to market that is profitable, and manage your route to market in a way that has room for growth." LIMIT SKUs VARIETAL, APPELLATION, PRICE-POINT When it comes to increasing brand value, "varietal, appellation and price-point" are key factors, according to Franklin of Zepponi & Co. In addition, he said, limiting the number of SKUs in a brand's portfolio and truly focusing on one or two varieties is one of the best ways to increase the value of a brand. "Think of Rombauer Chardonnay, La Crema Pinot Noir or Silver Oak Cab. You say the name of those wines to a consumer and they know exactly what it stands for," Franklin said. Then ask yourself: Does my brand have a core identity? "If you have a portfolio with a plethora of SKUs, hone in and focus on a couple and nurture them in the marketplace," he advised. "A potential buyer is going to be looking to fill a hole in varietal, geography or pricepoint. Fill the buyer's need." THE NAME GAME FILL IN "Your brand is your reputation, your label, your product. It's a lot of things, so if your wine doesn't stand out, it is definitely something to think about," said Jeff Gutsch, partner and national wine industry practice leader with the Seattle, Wash.-based public accounting firm Moss Adams LLC. "While the excitement for something like critter brands has died down, the principle of standing out on THE GAP SELLER'S CHECKLIST If you are considering selling in the next few years, now is the time to get your ducks in a row and maximize brand value. Franklin of Zepponi & Co. suggested examining the following: 1. Are your gross margins appropriate? In general, wines priced at $10-$12 per bottle at retail should see gross margins of 40% or more. With more expensive bottles ($15-$20 and up), you want to see gross margins of 50% or higher. 2. Does your product have a clear path to market through the distribution channel? What's the quality and strength of your 38 V I N E YARD & WINERY MANAGEMENT | distribution network, how flexible is it, and how much of your business is on-premise and offpremise? (Successful brands typically have established a good on-premise business that is supplemented by off-premise, Franklin said.) 3. Consider the level of promotions and discounting you are offering. "A really strong brand won't have to rely on price concessions to maintain or grow sales," he said. 4. "Continue to push the brand in the marketplace," Franklin said. Whether that means opening new markets, Sept - Oct 2013 launching brand extensions or new packaging, "It's a great way to show to a buyer proof of concept." 5. Button up your grape sourcing. Are you in a position to help a potential buyer with grape sourcing for the next two or three years? "Last year, sourcing was one of the first questions buyers of a brand would ask. They still want to know how they'll get access to grapes and bulk wine for production. It's important to show someone that you have contracts in place that will help them to move forward." – J.S w w w. v w m m e d i a . c o m