Overview of Grappa Grapes INC (GGI):
Grappa Grapes Inc is a private company (owned by the Grappa family) who grows grapes to produce sparkling wines. The company is located by the fertile farmland that is suitable for growing grapes. About every three years, the owners purchase new farm-land adjacent to the old one where new vines are planted, and it takes about three years to produce quality grapes for wine-making.
The winery is located at the edge of a range of hills that are composed of chalk; the company has dug caves into the side of the hills where the chalk caves provide the perfect temperature and humanity for maturing wines. The vintage wines are produced, aged, and stored in chalk caves. People from all over the world to visit the chalk caves; in fact, 25% of company’s revenue comes from winery tour.
It has been three years, and the company has managed to produce vintage wines which are higher in quality and sell for the higher price; besides, they contribute to the prestige of the winery. Due to this success, the company started to sell wine “future” to large whole-sales. Under the terms of the contract, whole-sales pay the company upfront and agree to take delivery of certain numbers of bottles in two years 20% off the predetermine future price. In anticipation of increasing cost, the company made purchase commitment and placed a purchase order for a significant number of oak barrels from France that are used to age the wines.
Problems that Grappa Grapes INC