Preliminary design

1
Lone Star Vineyards
A Lone Star With A Bright Future Creating Fine
Wines
2
Presentation Overview
Lone Star Vineyards

• Company Overview
• Mission Statement
• Competitive Priorities
• Environmental Scanning Results
• Detailed Product Description
• Product Choice
• Financial Forecast
• Production Capacity Planning
• Production Measurements

3
Company Overview
Lone Star Vineyards

• Small Premium Winery
• Located in Lubbock
• Initial annual production 1,850 cases
• Production increase to 9,250 cases in year five
• Five types of wines
• Sold locally and globally to high-end
  restaurants, wine shops, and directly to the
  consumer via the internet
• Key to the winery's success will be its high
  quality wine.
• Capitalize on research showing that consumers are
  drinking more expensive and higher quality wines
  today

4
Mission Statement
Lone Star Vineyards

• Lone Star Vineyards will sell wines of high
  quality and individual character to quality
  conscious customers throughout the civilized wine
  consuming world, operate an efficient and cost
  effective business to provide maximum returns on
  investments to our stockholders, and provide a
  stable, financially secure, family oriented, and
  enjoyable job environment for our employees.

5
Type of Business
Lone Star Vineyards

• Manufacturing
• Bottling
• Distribution

6
Our Customers
Lone Star Vineyards

• Local
• National
• International

7
Defined By Basic Beliefs
Lone Star Vineyards

• Our products will be very competitive in the
  global marketplace
• Our company will be very attractive to outside
  investors
• Our company will maximize the well-being of our
  employees

8
Competitive Priorities
Lone Star Vineyards

• Focus will be on high-quality products and
  process design

9
Cost
Lone Star Vineyards

• Low-cost production strategy will result in
  higher profit margins
• Cost efficient production without sacrificing
  product quality

10
Quality
Lone Star Vineyards

• Focus will be on
• Premium quality product design
• Process quality

11
Time
Lone Star Vineyards

• Creating premium quality wine takes time
• Important to ensure timely delivery throughout
  our sales channels

12
Flexibility
Lone Star Vineyards

• Least important priority
• Repetitive, line production process
• High standardization level

13
Environmental Scanning
Lone Star Vineyards
14
Marketplace Trends
Lone Star Vineyards

• Threat
• There is a lot of competition in Texas
• Opportunity
• Highest restaurant per capita ration in the state

15
Economic Trends
Lone Star Vineyards

• Threat
• Winter freezes
• Opportunity
• Good soil and climate
• Wine market is exceptionally lucrative

16
Political Trends
Lone Star Vineyards

• Threat
• Located in a dry county
• Opportunity
• The interstate sale of wine

17
Social Trends
Lone Star Vineyards

• Threat
• None so far have been identified
• Opportunity
• Baby boomers

18
Detailed Product Description
Lone Star Vineyards
19
Products
Lone Star Vineyards

• Three Reds
• Cabernet
• Zinfandel
• Shiraz

• Two Whites
• Chablis
• Riesling

20
Production Volume
Lone Star Vineyards
21
Two Label Strategy
Lone Star Vineyards

• First Label Reserve (of higher quality)
• 15 To Be Bottled
• Second Label
• 85 To Be Bottled

22
Wine Label
Lone Star Vineyards
23
Bottles
Lone Star Vineyards

• Cabernet
• Bottles with shoulders
• Green in color

• Zinfandel Shiraz
• Bottles with sloping sides
• Green in color
• Riesling Chablis
• Tall skinny bottles
• Amber in color

24
Corks
Lone Star Vineyards

• Natural 2 corks

25
Capsules
Lone Star Vineyards

• Traditional foil capsules

26
Boxes
Lone Star Vineyards

• Cardboard 12 bottle cases

27
Product Choice
Lone Star Vineyards
28
Idea Development
Lone Star Vineyards

• Sources
• Customers
• Competitors

29
Idea Development
Lone Star Vineyards

• Benchmarking
• Other successful wineries

30
Idea Development
Lone Star Vineyards

• Reverse Engineering
• Competitors wine tasting events

31
Idea Development
Lone Star Vineyards

• Early Supplier Involvement
• Working with the companies that supply us

32
Product Screening
Lone Star Vineyards
33
Product Screening
Lone Star Vineyards
34
Preliminary Design Testing
Lone Star Vineyards
35
Preliminary Design Testing
Lone Star Vineyards

• Private Wine Testing
• Invited wine experts
• Invited future customers

36
Test Group Results
Lone Star Vineyards

• They enjoyed the wine
• Would buy it
• Did not prefer the screw off top
• Preferred the natural 2 cork

37
Final Design
Lone Star Vineyards
38
Wine Making
Lone Star Vineyards

• Taking Care of the land and harvest
• Collecting each grape group and distilling them
  for a particular wine
• Age specific wines for specific time periods
• Bottle each wine in specific bottle

39
Packaging
Lone Star Vineyards

• Order bottles and labeling
• Run Bottling line
• Order cases
• Transportation

40
Marketing
Lone Star Vineyards

• Run advertisement - to get the name out
• Taste tests - advertisement and recognition
• Wine competitions - for recognition
• Increase Advertisement - to focus on particular
  groups that are interesting in the wine

41
Production
Lone Star Vineyards

• Invest in Proper Equipment
• Calculate Estimated Production Costs
• Calculate BEP

42
Forecasting
Lone Star Vineyards
43
What Was Forecast
Lone Star Vineyards

• Projected Operating Costs
• Projected Revenues
• Projected Profits

44
Data Evaluation Analysis
Lone Star Vineyards

• Used existing wine cost and revenue data for
  Texas wineries

45
Annual Operational Costs Trend
Lone Star Vineyards
46
Annual Revenue Trend
Lone Star Vineyards
47
Forecasting Model Selection
Lone Star Vineyards

• Quantitative Model
• Linear Regression
• Starting out with 3 of competitors aggregate
  costs and revenue

48
Financial Forecasts
Lone Star Vineyards
49
Projected Operating Costs
Lone Star Vineyards
50
Projected Operating Costs
Lone Star Vineyards
51
Projected Capital Assets
Lone Star Vineyards
52
Projected Revenues
Lone Star Vineyards
53
Projected Profits
Lone Star Vineyards
54
Forecasting Measures
Lone Star Vineyards
55
Forecasting Accuracy
Lone Star Vineyards

• Will use both the Mean Absolute Deviation (MAD)
  and the Mean Squared Error (MSE) error
  measurements when actual data is available

56
Seasonal Forecasting
Lone Star Vineyards

• Seasonal forecasting was initially inherent in
  the forecasting model used to derive the previous
  financial forecasts
• Seasonal forecasting will be used in the future
  to adjust the current forecasts

57
Production Capacity
Lone Star Vineyards

• 5 YearProjected Market Demand in Texas
• 133 million
• Projected Market Share in 5 years
• 3
• Forecasted Capacity
• 3 X 133 million 3.99 million
• Impact
• Up front capacity cushion will support our future
  capacity requirements

58
Productivity Measurements
Lone Star Vineyards

• Labor Productivity
• of cases per hour of labor
• Machine Productivity
• cases per hour of line time
• Multifactor Productivity
• cases per hour of labor line time

59

Lone Star Vineyards

• Business, more than any other
• occupation, is a endless dealing with the
• future a continual calculation an instinctive
  exercise in foresight.
• Henry R. Luce

60
Questions???
Lone Star Vineyards