Freemark Abbey Winery
It seems Freemark Abbey has quite the decision ahead – harvest now eliminating risk, or survive a possibly detrimental storm on the off-chance that it might carry the botrytis mold. A major concern is that by harvesting the not-quite-ripe grapes now, or surviving a storm that might not carry the mold, the likelihood of reaping a bad product is high, thereby increasing the possibility of not meeting the winery’s standards, leading to only half the estimated revenue.
This might not only affect the supply chain continuity by selling substandard product, but also hamper the reputation of Freemark Abbey with its clientele. Since the winery’s reputation is at stake either way, from purely the revenue aspect, if the storm does not bring the mold, selling 12,000 bottles annually at $2. 00/bottle, at the very least accrues $24,000. Even a damaged crop yields $12,000, which on the flip-side at only 4% of the annual revenue, is worth risking the possibly of producing a highly coveted botrytised Riesling.
Freemark Abbey Winery Essay Example
Alternately, at $8. 00/bottle, even at 30% less volume, this Riesling is exceedingly lucrative at $67,000; maintaining the winery’s reputation earned from its 1973 vintage. Furthermore, from the 50% chance the storm doesn’t strike, and sugar levels from past history probably rise between 20% and 25%, the likely revenue ranges from $36,000 – $42,000.
Alternately, even with a 20% probability of the acidity level dropping below 0.7%, the $30,000 revenue is still higher than if the not-quite-ripe grapes were harvested right away, did not meet standards, and were sold in bulk at half the price; indirectly affecting the winery’s reputation. Although the annual 4% revenue from Riesling production seems minute, it is recommended the winery wait because long-term reputation and profits earned from producing a botrytised Riesling immensely outweigh the possibility of harvesting now and maximizing short-term profitability.