Issue link: http://read.dmtmag.com/i/764739
w w w. v w m m e d i a . c o m J a n - F e b 2 017 | V I N E YA R D & W I N E RY M A N A G E M E N T 5 3 For the last three years, Braunel has worked with H&A Financing to manage his winery's barrel pur- chases. The idea of leasing isn't new to the wine industry, he says, but it was new to Dusted Valley. "At first, the approach was like a foreign language," he laughs. "H&A has been operating in France for years but was new to the U.S. market." Previously, Braunel had financed his barrel purchases with a traditional three-year loan from a bank. But when an H&A salesper- son cold-called his winery in 2013, Braunel was intrigued. "The biggest value that H&A brought to the table was that it's a service-oriented partner," he says. Leasing is common in the wine industry, but has been used most- ly by wineries with limited cash or credit. It was also often written with little or no transparency about the costs. But H&A's approach was different. "They really helped con- solidate the order, purchase and transfer of our barrels, specifically new barrels," he says. HOW IT WORKS In 2016, Dusted Valley pur- chased 85 new barrels from 10 dif- Spain and Italy. It's been in opera- tion in the United States since 2010, and Managing Director Ken Seymour says business is booming. The group claims around 200 cus- tomers and has doubled its busi- ness every year since 2011. According to Seymour, H&A isn't a leasing agent. Instead, it man- ages a winery's leases. It offers a three-pronged approach: financing services, barrel management and resale. Customers work with the cooperages of their own choice, maintaining what are often very personal relationships. But instead of billing the winery, the cooper- ages send invoices to H&A, which manages the payments for each client — often to several different cooperages, in either euros, U.S. dollars or both. In Dusted Valley's case, Braunel says, "I don't have to worry about paying a bunch of dif- ferent invoices." Lease terms are typically three years — the average active life of a new barrel before it's rotated into neutral storage. But H&A also offers a resale program for bar- rels at the end of their usefulness. "When you have a lot of extra bar- rels in your cellar, space can be a real problem," Seymour points out. H&A repurchases barrels even when the market for them is down, he says, transporting and selling them on the secondary market for decorative products, like furni- ture or flooring, or to wineries that need to augment their aged barrel inventory. ferent coopers, about one-third of the inventory needed for its 7,000- cases of annual production. Braunel is financing about $100,000 annu- ally with H&A Financing; the cost is about the same as the loans he formerly used for barrel purchase, but instead of dealing with multiple invoices and contracts from various coopers, H&A facilitates the pay- ments to all coopers for Dusted Val- ley each year. H&A Financing and Services is the American arm of a French group, formed in 2004, called H&A Location SAS. It also has offices in Dusted Valley Winery's winemaking team: Corey Braunel, winegrower/co-owner; Chad Johnson, winegrower/co-owner; and Griffin Frey, portfolio winemaker.