Item 7.01 Regulation FD Disclosure.
The Management is filing this 8-K on the day before its Annual Meeting to report the impact of COVID-19, government shutdowns and changes in consumer behavior prior to the release of the 10-Q stating second quarter results. The financial information provided here is not reviewed or audited by its auditors nor does it provide or suggest earnings performance.
The Company will hold its first virtual Annual Stockholder Meeting on
The previous 30 Annual Meetings were held at the winery drawing hundreds of Company stockholders each July with a weekend filled with updates on developments and events featuring food and wine pairings. COVID-19 has prevented the festive annual stockholder gathering this year, but the winery has arranged for special wine tasting presentations to follow the virtual meeting via Zoom.
The long-term impacts of the COVID-19 pandemic to the wine industry and the Company are unknown. The Company took a cautious approach to spending cash as the various economic and market impacts of the pandemic and government actions were not able to be estimated. All construction and capital purchases were put on hold at the beginning of the shutdown as the Company's planned Preferred Stock Offering was delayed due to the then condition of the capital market.
The Company has since reinitiated winemaking and vineyard equipment purchases to
improve efficiencies as well as the widening of Highway 99W for access to the
new winery construction near Dundee, scheduled to be completed by
The Company qualified and obtained a PPP loan for
While the Company was required to close its five tasting rooms for more than 66
days and furlough some retail employees not able to transition to other roles,
total employment has grown from pre-pandemic levels at
As on-premise restaurants were no longer ordering wine from distributors, the Company focused on the sales channels still available. Case sales to distributors in the second quarter were up slightly at 31,685 compared to 31,413 during the same time period in 2019. Case sales to distributors for the first six months of the year was 71,145 as compared with 59,122 for the prior year.
These cases included sales of the charitable project Oregon Solidarity, which amounted to 448 cases for the second quarter of 2020 as compared with the same period last year with 1,191 cases. For the first six months of 2020, the Oregon Solidarity portion was 448 cases as compared with those of the prior year of 3,118.
Removing the charitable sales of Oregon Solidarity from both years results in
Company branded wine sales to distributors of 31,237 cases in the second quarter
of 2020 as compared with the same period of 30,222 cases last year and for the
first six months of 2020 of 70,697 cases as compared to 56,004 cases from last
year. During the pandemic second quarter of
Case depletions from distributors to their accounts during the second quarter of 2020 is estimated to be 32,492 cases, up 1,965 cases or 6.4% from the same time period in the prior year. The six month 2020 depletions are estimated to be 61,165 cases, up 5,316 cases or 9.5% over the first six months of 2019.
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Direct sales volumes also increased during the second quarter of this year to
6,687 cases compared to the same quarter last year of 6,528 cases as the closing
of the Company's five tasting rooms, hospitality and kitchen were made up by
increases in sales from their Winery Ambassador program and internet orders. As
The Preferred Stock Offering, scheduled for mid-March, was delayed until
mid-June, and first announced to current stockholders and waiting list contacts
where
To meet the government restrictions, the Company's tasting room operations were limited to pick-up and delivery options only. The Management transitioned much of the guest-facing staff to other roles within the winery and focused on remaining sales channels and new marketing initiatives, including pick-up food and wine orders, curbside pick-up; local direct delivery; virtual wine tastings; outbound phone sales; e-commerce sales; email and social media communications and promotions.
The Willamette Wineworks located in Historic Folsom opened to the public in
mid-February before the first shut down in mid-March. The
Prior to reopening of the tasting rooms, safety measures were implemented for
the well-being of the Company's employees, Owners, Wine Club Members and guests
including transitioning winery experiences to tableside service, adding a
reservation management system, using recyclable single-use materials, offering
contactless payment options, requiring all staff to wear face masks, continue
meticulous hand hygiene and regularly cleaning all high-traffic locations and
surfaces. Far exceeding the required
Where possible, the Company's administrative, sales and marketing positions transitioned to working from home and when working from the winery are staggering the use of office spaces.
As non-profit organizations were no longer able to raise funds through hosting
in-person events, the winery staff created a new
The Company also committed
The winery kitchen staff prepared meals for first responders during the shutdown and winery staff delivered gifts of wine to local hospital staff.
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