| Willamette Valley Vineyards engages in the | | | | Burgundy region has enjoyed an outburst in |
| production and sale of its brand name wines | | | | popularity in the last few years, surprisingly |
| available in the Pinot Noir, Chardonnay, Pinot Gris, | | | | enough to Mr. Bernau and his team, among young, |
| Riesling, Griffin Creek brand and other popular | | | | hip culinary enthusiast s who consider pinot noir to |
| wine styles. The company markets and | | | | be the best red wine food companion. The climb |
| distributed its wines directly at its winery; directly | | | | to admiration in the U.S. for pinot noir had already |
| and indirectly through its shareholders and | | | | been steadily building up when the movie |
| website; and through self-distributions to local | | | | Sideways triggered an explosion in demand and |
| restaurants, retail, and wholesale outlets in | | | | consumption for the variety Willamette sold by |
| Oregon, all other U.S. states and 8 additional | | | | Willamette. Mr. Bernau offered rather explicitly |
| countries through wine wholesales. | | | | that Willamette's 08' pinot noir vintage promises |
| Willamette opened a new tasting room called the | | | | to be the best wine they've ever produced. |
| Wine Center located in McMinnville, OR, that | | | | First Quarter 2010 Financial Highlights Include: |
| serves as a new retail location in the fourth | | | | |
| quarter of 2009. This new location contributed to | | | | - A shift in the mix of sales from produced |
| an increase in retail sales in the first quarter, while | | | | brands to purchased brands in our Oregon |
| net revenues were down a mere 2%. Other | | | | wholesale market where we achieve a lower |
| financial highlights for the quarter are detailed | | | | gross profit has adversely impacted gross |
| below. | | | | margins in the first quarter 2010. The company |
| The wineries and distilleries producers operate in | | | | generated ($0.04) basic earnings per share during |
| an interesting industry. First of all, this business is | | | | the three months ended March 31, 2010, a |
| cost-heavy due to seasonality and variable cost | | | | decrease of $0.07 basic earnings per share versus |
| factors that include labor and allowances for | | | | the comparable prior year period. |
| obsolete inventories that occur from the | | | | - In 2009, management implemented a new |
| wholesale business most wine distributors have. | | | | inventory management and purchasing system to |
| For the first quarter 2010, Willamette was able to | | | | identify and prevent the accumulation of |
| move these obsolete inventories as detailed | | | | purchased wine inventory that could sour if not |
| below thanks to major investments in inventory | | | | sold. From October 2009 to the end of the 1st |
| controls and refocusing by sales staff. More | | | | Quarter 2010, aged wine inventory has been |
| obvious than those challenges are the fact that | | | | reduced from $698,332 to $543,034. |
| the industry belongs to the consumer goods | | | | - The company should benefit with the release of |
| sector, a sector infamously known for sensitivity | | | | the 2009 vintage beginning with the '09 Whole |
| to changing consumer tastes and macro-economic | | | | Cluster Pinot Noir in June. Provided the Company |
| trends. After 28 years in the business, Mr. Bernau | | | | can maintain its general price position, operating |
| says the recent recession was particularly hard on | | | | income from produced wines should improve. |
| the customers. In Oregon, where one in five | | | | - The company announced that a Memorandum |
| citizens are currently recipients of food stamps | | | | of Understanding (MOU) between Hong Kong and |
| and the unemployment beats national averages at | | | | Oregon and Washington states was signed on |
| 11.7%, Willamette's margins have suffered along | | | | May 24, 2010 in Hong Kong, and Willamette would |
| with the macro-economic downturn and recovery. | | | | be participating. Under the MOU, the three places |
| Mr. Bernau is optimistic; the higher costs of goods | | | | will strengthen co-operation in promoting |
| sold recorded during the period are not expected | | | | wine-related trading, tourism, investment, |
| to persist. | | | | education and the fight against counterfeits. With |
| Partly because the demand for Willamette's | | | | a knack for trade promotion, Hong Kong presents |
| flagship wine, the pinot noir, has escalated in | | | | an ideal platform for companies from the two |
| recent years, Mr. Bernau is proud to have | | | | states to market their boutique wines to Asian |
| retained the customers who drink the wine he | | | | clients. Since eliminating duties just over two |
| loves to produce. "The pinot noir drinkers are a | | | | years ago, the value of wine imported into Hong |
| unique group of people" he said, speaking over the | | | | Kong from the U.S. has increased five-fold. While |
| phone from his Oregon office, "they are a | | | | opening up exciting avenues for the wine industry |
| sophisticated and well-educated; really great | | | | in the respective places, the MOU also signifies a |
| customers to have. We feel really lucky to be | | | | new chapter in bilateral relations between Hong |
| serving this market niche". The cool climate red | | | | Kong and Oregon and Washington. |
| wine grape variety associated with the French | | | | |