What are Truett-hurst's Business Segments?
Wine Production
The Company operates two wineries where wine is produced from many varieties of
grapes principally grown or purchased in Sonoma County’s Russian River Valley
and Dry Creek Valley appellations. The VML winery, which is leased through May
2017, can crush, ferment and oak barrel age approximately 500 tons (35,000 cases)
of ultra-premium grapes annually, with capacity to increase to 2,000 tons with
additional capital improvements. For increased production capacity, the Company
outsources to a variety of specialist wineries and bottling facilities. The Company
has been able to satisfy the production requirements to date and considers its
sources to be adequate at this time. However, the inability of any of the suppliers
to satisfy the Company’s requirements could adversely affect operations.
Grape and Wine Contracts
The majority of annual grape requirements are satisfied by purchases from each
year’s harvest which normally begins in August and runs through October.
In addition to purchasing grapes, the Company supplements its needs with bulk
wine purchase contracts based on sales and production requirements. Depending
upon overall demand and availability of bulk wine, the Company could experience
shortages and/or increased prices.
The Company enters into grape contracts with terms generally of one to four years,
which requires payment of an agreed upon price per ton that varies according to
the type of grape, its appellation and in certain cases, the vineyard block in
which the grapes are grown. Contracts are typically terminable after a specified
term, unless earlier mutually agreed by the parties.
|