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19
It should be noted that in 2007, cased goods sales grew nearly 32 percent over 2006, but increasing
expenses for direct marketing led to declines in operating income (–12 percent over 2006) and pretax
Ceja’s performance in 2008 was noteworthy, as 2008 was an unusually difficult year for the premium
wine industry due to the global economic downturn, which caused consumers to trade down from higher
The downtown Napa tasting room was opened on schedule during winter 2008. Ceja received permission
to build its new winery in September 2009.
Another of Amelia’s three children, Dahlia, graduated from San Francisco State University in 2009 with a
degree in communications and now works full time for the business, and is hoping to to begin to study for
The Ceja Vineyards Web site reinforces the revised message it is sending to potential Hispanic customers.
Immediately, it is obvious that the winery is beautiful, and the grounds are well cared for. The love of the
Also on the Internet, students can find videos of Amelia Ceja cooking Mexican recipes
(http://www.youtube.com/watch?v=vr8RWVOC5uI) in the Ceja tasting room kitchen, and a link to recent
blog about its bicultural, bilingual online cooking show that will debut in summer 2010
www.saludnapa.com.
For those instructors seeking further updates, the following articles on Ceja recently appeared.
Hidden, Affordable Napa Valley—Profile of Ceja Vineyards in FoodandWine.com
http://www.foodandwine.com/articles/hidden–affordable–napa–valley
2010 The Year of the Woman in Wine—Profile of Amelia Moran Ceja in TastingPanelMag.com
(January–February 2010)
http://www.tastingpanelmag.com/Publication/TP/2010/January–February–2010/2010–Year–of–the–
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Exhibit IM–1 Ceja’s Success Factors
Favorable factors
Unfavorable factors
Story—“American Dream”
Limited branded wine production
Quality product/appellation of origin
High price point ($20–50 per bottle)
Reputation
Distribution channels
Diversification: branded and bulk wines
Undeveloped Hispanic market
Wine club and Web site
Changing consumption trends
Family commitment/involvement/passion
Rival wine brands and foreign imports
Exhibit IM–2 Key Financial Indicators for Ceja Vineyards, 2004–2006
2004
2005
2006
Profitability
Gross Margin %
55.6%
56.8%
60.0%
ROS %
33.8%
31.3%
21.8%
Operating ROA %
14.2%
13.3%
12.8%
ROE %
19.2%
20.9%
20.5%
Activity
Total Asset Turns (x)
0.42
0.43
0.58
Inventory Turns – total (x)
0.6
0.7
1.2
Inventory Turns – finished goods (x)
1.2
1.7
2.4
Avg Collection Period (days)
41
33
28
Fixed Asset Turns (x)
9.4
6.6
9.7
Liquidity
Working capital ($)
$919,913
$1,106,569
$1,310,456
Current ratio (x)
4.2
2.8
2.6
Quick ratio (x)
1.3
1.0
1.2
Growth rates
Revenues, year on year:
Cased goods sales, net
45.9%
65.4%
Special events & tastings
220.2%
121.9%
Other
84.0%
83.2%
Total revenues, year on year
49.1%
67.5%
Gross profit, year on year
52.5%
76.7%
Operating expenses, year on year
79.1%
146.5%
Operating profit, year on year
35.6%
18.2%
Net income, year on year
38.4%
16.3%
Source: Calculated from case Exhibits 7 and 8.
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21
Exhibit IM–3 Sample Screening Criteria for Decision-Making
Quantitative
Qualitative
Sales
Congruence with mission
Case production
Family ownership & control
ROI
Market scope
Efficiency
Heritage
Exhibit IM–4 Applying Sample Screening Criteria to Ceja’s Potential Target Segments
Quantitative Criteria
Qualitative Criteria
Potential
target
segment
Sales
Case
production
ROI
Efficiency
Mission
Control
Scope
Heritage
TOTAL
Hispanic
consumers
5
5
5
5
10
5
10
10
55
High–end
restaurants &
hotels
5
5
5
0
5
5
5
0
30
Special
occasion
shoppers
(tourists,
events)
5
5
5
0
5
5
5
10
40
Wine
club members
10
10
10
5
10
10
5
5
65
Evaluation Key: Yes = 10, Possibly = 5, No = 0
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22
Exhibit IM–5 Strategic Marketing Options for Ceja Vineyards
Strategic alternative
Pros
Cons
1. Do nothing—continue current
strategy
• Least costly option
• Preserves existing brand positioning and
profitability
• Unlikely to attract or retain growing Hispanic consumer base
• Slow ramp in sales and recognition
• Relies heavily on maintaining existing relationships with
boutique distributors
• None of the partners is enthusiastic about this idea
2. Build sales via large
distributor
• Positions Ceja brand for sales to mass
markets
• Potentially faster ramp in sales
• Pedro and Armando like this idea
• Difficult for small producers to capture attention of large
distributors and shelf space at retail level and wine list
recognition in on–premises channel
• Requires re–positioning of Ceja products at lower price points to
move inventory, with attendant lower gross margins
• Requires significant production increases, likely beyond 25,000
cases
• Unlikely to attract or retain growing Hispanic consumer base
Internet and wine club
mainstream customers and niche markets
• Most likely to attract and retain high–end
Hispanic consumer base
• Only Amelia is in favor of this idea
• Unknown opportunity costs due to foregone relationships with
distributors
• Requires significant commitment to marketing expenditures and
time to build wine club memberships
4. Continue using boutique
distributors and redirect income
into direct marketing via Internet
and wine club
• Allows sales to both mainstream and
non–mainstream customers
• Most likely to attract and retain multiple
Hispanic consumer segments
• Potentially faster ramp in sales
• All of the partners could come to a
• Relies heavily on maintaining existing relationships with
boutique distributors
• Requires significant commitment to marketing expenditures and
time to build wine club memberships
• Could necessitate re–positioning of Ceja products at lower price
points to appeal to middle–tier Hispanic segment(s)
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23
Exhibit IM–6 Ceja Vineyards’ Income Statements, 2007 and 2008 (unaudited)
For the year ending December 31
2007
%
growth
over
2006
2008
%
growth
over
2007
Cased goods sales, net
$1,616,012
31.6%
$1,806,300
11.8%
Special events & tastings
40,787
–15.2%
77,350
89.6%
Other
20,330
–53.6%
78,170
284.5%
Total Revenues
$1,677,129
27.1%
$1,961,820
17.0%
Cost of Goods Sold
547,171
3.6%
642,348
17.4%
Gross Profit
1,129,958
42.8%
1,319,472
16.8%
Operating Expenses
876,561
74.1%
910,770
3.9%
Operating Profit
$253,397
–12.0%
$408,702
61.3%
Interest
19,078
6,612
Other income/expense
(33)
(230)
Income before taxes
$272,442
–8.9%
$415,084
52.4%
Source: Ceja Vineyards.