Page 9 - Grapevine JanFeb 2022

In The Winery

methods to determine the asset’s value.

Brand Awareness

One asset that could be harder to put a value on is
the company’s brand. It is an intangible that could
be worth more than all of the physical property and
inventory of the company. There are three meth-
ods to determine a brand’s value, and they are
sometimes used together.

• The first is to calculate the replacement cost
of the brand. Basically, this involves formulat-
ing how much time and money it would take
to re-create the brand from scratch, which are
divided into three subsections:

Brand Identity: Covers all items used to create
and develop the brand’s identity, including the
name, designing the logo, novel bottle designs,
trademark and legal fees, websites and choos-
ing a color palette.
Brand Awareness: The cost of advertising, pro-
motion and publicity campaigns for the brand to
achieve its current level of market awareness.
Market Position: This is the cost of retaining the
business’s current clientele and includes adver-
tising, discounting with distributors, and build-
ing relationships with retailers.

• The second is comparable pricing. This method
requires researching the sale of similar brands
and using that as the foundation for a valuation.
This can be a challenge if there are little or no
sales of similar assets.

• The third and final method is an income-based
approach, also known as an “in-use” approach.
This involves calculating the future earnings that
can be directly tied to the brand to determine
its value. The formula looks at everything from
income to cash flow to cost savings generated
from the brand.

Sell High

If a winery owner’s family is not interested in
maintaining the business, selling is the other

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