Report from Scheid Vineyards ($SVIN) Annual Meeting

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Our friend at Low Tide Investments writes in about the Scheid Annual Meeting held (virtually) this week.

Scheid held their annual meeting via Zoom on November 17th. They confirmed and went further into many important aspects that were mentioned in their Q3 press release.

Bulk Wine demand has gone “through the roof” due to the fires and COVID-19. Scheid’s bulk wine sales hit a 6 year low in 2019. This article confirms that the supply of bulk wine across all grape varietals has declined significantly from earlier this year, and that prices for some categories have nearly doubled. Scheid’s bulk wine sales saw a 44% decline from their peak in 2017 to 2019. In the 3 months ending on August 31st, bulk wine sales are up 222% in 2020 versus the same period in 2019.

Regarding the harvest and smoke taint, Scheid reported that they have harvested 100% of their grapes. They mentioned that their micro-fermentations have not had any serious effect from smoke taint thus far, but are not yet finished. Harvest yields look to be down ~20% across the board in California, and Scheid says they are in a good position today as it relates to the growing season and harvest.

They also are being recognized more. Heidi Scheid was awarded person of the year from Wine Enthusiast Magazine and will be featured in the January issue. They have also been able to get in front of more distributors more via virtual meetings. Significant issues with travel related cased wine sales for cruise lines & airlines were more than made up for by grocery store sales. Pent up travel demand could be a tailwind for Scheid looking past the pandemic. They are also expanding their exclusive wine brands with partners such as Whole Foods, World Market, and Food Lion. Sunny With a Chance of Flowers has been successful and will be accepted into Kroger at the national level in March of 2021. There has been an explosion in the less competitive “better for you” category. They recently purchased a new bottling line that will expand their bottling efforts by 50%. Additionally, Al Scheid (Chairman) seemed eager to share the YTD case wine sales, but of course was not allowed to do so.

See our previous discussion of Scheid: A wine company at 53% of BV and 4.6x earnings, Do the Disappointing Scheid Vineyards Results Show a Bad Business in Decline?, Interpreting the Scheid Vineyard 2019 Results, and Scheid Vineyards ($SVIN) Releases Quarterly Earnings.