Issue link: http://read.dmtmag.com/i/724494
w w w. v w m m e d i a . c o m S e p t - O c t 2 016 | V I N E YA R D & W I N E RY M A N A G E M E N T 5 5 "What's going to happen? Your guess is as good as mine," says Trae Ottmers, senior vice presi- dent for lending for Capital Farm Credit in Fredericksburg (in Texas' Hill Country wine region). "Even after the election, is there going to be a big change in interest rates? Maybe, maybe not, but that doesn't mean you shouldn't be prepared." BEST OF TIMES It's not just that interest rates are at historic lows and have been so since the recession, says Rob McMillan, executive vice presi- dent and the founder of the wine division for Silicon Valley Bank in St. Helena, Calif. It's that negative interest rates — something most economists and bankers never even considered a decade ago — are common and show no signs of going away. smaller producers. The bigger com- panies are also better able to deal with the flat sales that have accom- panied premiumization, as wine drinkers buy more expensive wine but drink less of it, wreaking havoc on cash flow. Meanwhile, direct-to-consumer (DTC) sales have become increas- ingly important, especially for small- er producers, a success that's also brought difficulties as producers try to increase DTC sales — something very few have long experience with and may not understand well enough to boost sales quickly. And no one is quite sure what will happen as the baby boomers, who've fueled U.S. wine growth for 40 years, drink less and eventually die off. "That's why it's so confusing and so difficult to discuss in generalities, because there are so many variables for big and small producers," says McMillan. "It's almost, when talking Throw in premiumization, in which U.S. wine drinkers have traded up to more expensive bot- tles over the past couple of years, a trend that's seen the average price of a bottle of a wine approach $10 for the first time ever, and it's easy to see why there's so much optimism. But as McMillan notes, one size does not fit all. The Federal Reserve, which oversees interest rate policy, has been hemming and hawing over what to do for almost a year, and several anticipated increases have turned into just one in the face of all those data points. Fed Chief Janet Yellen told Con- gress in June that she didn't antici- pate a recession, but it was better to be safe than sorry when it came to increasing interest rates. Consider that bigger producers, whose deeper pockets make it eas- ier for them to handle rising grape and land costs, have an edge on Prospero Equipment proudly presents the new GAI electro-pnuematic filling system. This is a state of the art machine that can fill both carbonated and non carbonated products. Corporate Office 123 Castleton Street Pleasantville, NY 10570 Phone: (914) 769-6252 Fax: (914) 769-6786 info@prosperocorp.biz West Coast 7787 Bell Road Windsor, CA 95492 Phone:( 707) 838-2812 Fax: (707) 838-3164 westcoast@prosperocorp.biz Northwest 1722 SW HWY 18 Suite B McMinnville, OR 97128 Phone: (503) 472-6767 Fax: (503) 472-6768 northwest@prosperocorp.biz Canada 438 Isabey Suite 270 Montreal, Quebec H4T 1V3 Phone: (514) 336-7117 Fax: (514) 418-2605 canada@prosperocorp.biz British Columbia Authorized Agent Stefan Buhl Phone: Phone: (250) 317-4378 bc@prosperocorp.biz North 2204 State Route 14 N Geneva, NY 14456-9510 Phone: (315) 719-0480 Fax: (315) 719-0481 geneva@prosperocorp.biz PROSPERO EQUIPMENT OFFERS MANY SOLUTIONS AND CUSTOMIZATION FOR ALL WINE, BEER, SPIRITS AND BEVERAGE NEEDS. NEW GAI LINEAR FILLER Linear fully-automatic bottling machine in stainless steel with 4 or 6 nozzles of rinsing, 4 or 6 nozzles of filling and single head for crowning, corking or corking.