A Votre Santé Case Analysis

Nic Bekkers

Marketing 611
Dr. Rachel Yon
10 October 2014

Executive Summary A Votre Santé (AVS) is a family owned vineyard and winery in the Napa Valley California Area. The small independent winery, owned by Kay Aproveche, was started as an extension of the family’s grape growing business. A Votre Santé processed generic white grapes and chardonnay grapes into three types of wine: regular Chardonnay ($16), Chardonnay-Estate ($22), and a Blanc de Blanc ($11). In 2010, and 11.1% profit margin was earned on sales of $848,000. Kay was concerned the 2010 profit margin had declined from the 14% profit margin in 2009. Contribution, decision, and product profitability analyses were performed to better help Kay Aproveche better understand the performance of her business. The contribution margin income statement that was prepared for AVS showed that they could produce 24,000 bottles of Chardonnay-Estate, 9,000 bottles of regular Chardonnay, and 16,000 bottles of Blanc de Blanc annually. To find the maximum amount that A Votre Santé would pay to buy an additional pound of Chardonnay grapes; the benefit from additional Chardonnay sold, the opportunity cost of not producing as much Blanc de Blanc, and the relevant costs related to producing the wine were all taken in to consideration. Therefore, 9,000 bottles of regular Chardonnay would be produced but there would be a 3,000 bottle decrease in the amount of Blanc de Blanc produced. After looking at Table 2, it is obvious that Blanc de Blanc is dragging A Votre Santé down with its terrible profit margin of -18.9%. On the other hand, Chardonnay-Estate is clearly driving AVS’s profitability with its profit margin of 24.6%. Chardonnay-Regular is floating right around the breakeven point with a profit margin of .7%. Recommendations to Kay Aproveche regarding the product profitability