Published on November 22, 2019
1. www.royalfrenchwines.com 1 VINEYARD ESTATE PROPERTY INVESTMENT a business plan developed by ROYAL FRENCH WINES 21/F, on hing building, 1 on hing terrace central, hong kong Téléphone : +852 2294 7712 / Fax : +852 2524 1428 March 2010
2. www.royalfrenchwines.com 2 ACQUISITION OF A FRENCH VINYARD ESTATE Luxury investment of business strategy, the acquisition of a French vineyard estate becomes of growing interest for Chinese investors. Both for private investors aiming at investing in a secure asset that has not lost value since more than 50 years, and for wines & spirits distributors building their image of authenticity. Because we are more and more asked to find potential acquisition targets in France and to help them investing properly through a reliable business model, RFW has developed a wide range of integrated services from the selection of potential investment targets to the definition of the implementation strategy of the brand in dedicated markets through the effective organization of the transaction and the recruitment of an adequate management team. From the initial project to its finalization, RFW takes care of every aspect of the project from inception through to the project being fully established which can be up to three years in the development cycle. 1 - Definition of the project 2 - Target research 3 - Target price analysis 4 - Selection of investment opportunities 5 - Recommendation of investment & Trip organisation to France 6 - Business plan 7 - Organization of the transaction 8 - Creation of the new legal entity 9 - Recruitment of an adequate management team 10 - Creation and commercialization of the new brand
3. www.royalfrenchwines.com 3 1. Definition of the project According to both the investment capacity of the client and the quality of the vineyard to be acquired in terms of geographic area and output capacity, RFW prepares a first study reviewing the main economics of the targeted wine area, its projected costs and earnings impacting the profitability of the investment. This study offers the ability to define the appropriate environment for the economical project, and especially for an analysis of the potential project parameters eg. surface of the vineyard, dimension of the production tool, quality of the land etc.. 2. Target research From the initial investor request, RFW undertakes extensive analysis of potential targets. To enable the RFW, team to comprehensively offer this service we utilise an established network of industry partners, especially in the Cognac, Bordeaux and South France regions, but as well throughout all the French wine growing regions Through rigorous process, RFW selects and visits a first selection of preliminary targets. It gathers all potential industrial and financial information regarding these targets and offers a potential short list for consideration. 3. Target price analysis Evaluation of the target After reviewing the financials, the vineyard quality, the capacity of the production tool and the technical elements such as the winery, the chateau and the available stock, RFW offers its recommendations taking into account price and quality of the target. Annexe : Updated vineyard cost per ha : Languedoc Roussillon : http://www.saferlr.com/prix-des-vignes-donnees-regionales Gironde : http://www.saferaa.fr/website/le_prix_des_terres_des_pres_et_des_vignes_&400&15.html Others : http://www.safer.fr/prix-des-terres.asp
4. www.royalfrenchwines.com 4 As well it will allow to open negotiations with the owner. A full acquisition audit (due diligence) In addition to the financial evaluation of the vineyard, RW offers a full audit of its activity, whether it is a simple agricultural unit or a commercial company on its own. This commercial, legal and financial audit defines the economical organization based on the vineyard activity and ensures its global and potential performance. 4. Selection of investment opportunities Further to the full evaluation of the potential target, negotiating and agreeing a final selling price and the necessary required complementary investments, RFW offers a selection of the best opportunities with the associated business review highlighting their specificities. This review offers much more than simply backing up the investment choice, this business review integrates the creation of the future commercial entity and gives an overview of its potential output and profitability. (PRE BUSINESS PLAN) This business review is presented to the investors with final recommendations from RFW. 5. Choice of the target & Trip organisation to France After the presentation of those business plans, RFW organises the visit of the investor to France and establishes a comprehensive meeting agenda including vineyards, meeting with all the experts taking part in the acquisition and further management processes (vineyard owners, independent cellar masters, bankers, lawyers, accountants..).
5. www.royalfrenchwines.com 5 6. Business plan From the business review statements, and once the investor has himself paid visit to the choosen target in France, RFW provides a full business plan on the investment, including the following elements : Initial investment value : estate acquisition price + complementary investment + acquisition costs + working capital Marketing development (branding, communication and distribution) Sales forecast Profit and Loss account forecasts Cash flow statement Return on investment scenarii 7. Organization of the transaction Once the target has been decided, RFW coordinates all legal aspects of the transaction : final negotiation with the initial owner and legal contracts. NB : French law gives any investors the full title history for the property of acquisition, may it be a land or a building, with no limit of time or means, which is different to the Chinese system where the property of the land is limited to a few decades. 8. Creation of the new legal entity RFW works with international lawyer and accounter firms in order to create the legal structure that will operate the vineyard, build the new brand and export it to its dedicated markets. Generally, the land will be operated by a SCI (société civile d’investissement) or a GFA (groupement foncier agricole) selling its production to a commercial company like a SA (société par action)
6. www.royalfrenchwines.com 6 9. Recruitment of the management team In order to manage the vineyard effectively RFW utilises it's wide industry network to recruit the most effective management to to manage the new acquisition. RFW can also offer assistance in all aspects of brand creation and commercialization plus 'go to market' strategy. RFW offer a structured investor reporting structure in regards to these aspects of the implementation process. 10. Creation and commercialization of the new brand Finally, during the first years of activity and brand building, RFW offers hands on assistance to investors in the management of the full marketing and logistic processes for the building and the commercialization of the brand in the dedicated market, including all promotional aspects. NB : To add confidence to our comprehensive service provision RFW offers a co investment programme where we take a shareholding in the commercial entity and offer initial funding. These shares are then sold back to the owner in a pre determined time structure and price, once the new owners feel confident to manage the business alone.