Forecasting and Financial Consulting FAQ

 

If you are reading this, there is a good chance that you have a specific reason to research forecasting services for the wine industry.  Whether or not that’s the case, I hope you’ll take the time to read this FAQ about how VFA’s forecasting services can make you more profitable. 

 

 

How Can Better Forecasting Increase My Profitability and Improve My Business?

 

The most common goal my clients have is to use grape price forecasting to improve their contracts.  Whether they are buying or selling grapes, using the industry’s most accurate grape price forecasts allows them to gauge the term (length) of grape contracts and to structure price-adjustment mechanisms (e.g. how prices fluctuate during the term of the contract), in a manner that makes them more money.  Not only can they capture more of the pie, but, if they understand their counter-party’s goals, they can often increase the size of the pie.

 

The second most popular service is to forecast revenues and expenses to improve financial planning.  More realistic financial plans help to understand and anticipate risks, properly scale projects, accurately compare between competing priorities and better estimate profitability.  It can also improve assessments of success within the organization, for your own use, as part of a business plan, or as part of a pitch to investors or banks.

 

Some clients also use my forecasts to identify and time investment opportunities.  Robust and accurate forecasts answer questions like:  Should I buy or plant?  Where?  What?  And, perhaps most importantly – When?  For companies with a variety of holdings, it can give not just a clear snapshot of their portfolio, but a forward-looking video of every probable scenario for that portfolio’s performance.

 

 

What Does VFA Forecast?

 

VFA not only forecasts grape prices, but also labor rates and other expenses, yield volatility and trends and land prices.  These can be forecasted for a project, organization or the market as whole.  I also forecast yields and acreage by variety and region.  I am open to forecasting for other purposes, too, though sometimes this can be handled better by other professionals.  Call and ask.

 

Beyond simple forecasting, I also run computerized simulations to measure how all these variables work together.  For instance, if Cabernet Sauvignon prices fall, Cabernet Franc is likely to do the same.  By using computerized simulations, we can estimate the probability of many different possible outcomes to inform decision-making and better understand your company’s strengths and vulnerabilities.

 

How Do You Forecast All of This?

Honestly, there is no secret sauce.  It is simply applying best forecasting practices to a breadth and depth of wine industry knowledge.  Let me be clear: I have no crystal ball.  But I am the only person in this industry who is an active member of the International Society of Forecasters; I am the only person to make public, transparent forecasts of grape prices; and, simply put, I am the best forecaster in the wine industry – at least as far as grape prices are concerned.

 

Beyond just producing accurate forecasts of future prices and other values, I present my clients with highly-informative forecasts.  For one, I can accurately estimate the validity and uncertainty of a forecast.  We can use these estimates for scenario analysis: to look at different possible outcomes, their effects and their likelihood.  We can also use them for sensitivity analysis, where we identify inflection points in your business (such as likelihood to take a loss or not be able to service a loan), and then estimate the likelihood of this occurring and identify what we can do to alter that likelihood.  Finally, I can create granular, probability distributions that show your future financial results as an essentially continuous spectrum of possibilities.