Willamette Valley: These Wines Aren't Getting Better With Age by Ian Bezek
Summary
- I've owned Willamette Valley Vineyards' stock for three and a half years, earning a -1% total return over the span.
- This company offers an excellent example of how revenue growth by itself doesn't necessarily turn into shareholder value.
- Where I went wrong with Willamette as opposed to my more successful alcohol industry stock selections.
- Looking for a helping hand in the market? Members of Ian's Insider Corner get exclusive ideas and guidance to navigate any climate. Get started today »
In April 2016, I bought a tiny starter position in Willamette Valley Vineyards (WVVI) at a price of $7.09 per share. Now, nearly four years later, it trades at virtually an identical price, with the last quote as of this writing being $6.99. As the common stock pays no dividend, that means there's been no total return either.
In 2016, I was busy acquiring shares in most of the U.S.-listed beer, wine, and liquor companies. Some of these have gone on to be huge winners, like Diageo (DEO) and Brown-Forman (BF.B). Others, like Willamette, have not. You often learn more from your mistakes than your triumphs, so it's worth considering what's gone wrong with Willamette. While the position hasn't caused a significant loss, it's certainly come at a high opportunity cost compared to other beer, wine, and liquor stocks I could have purchased at the same time:
Data by YCharts
Willamette: The First Crowdfunded Company
I imagine very few investors realize it, but Willamette Valley Vineyards was in fact the U.S.-first SEC-approved crowdfunded venture. While founder Jim Bernau launched the company in 1983, it was in 1989 that the company started to take off, when more than a thousand investors pitched in an average of $1,500 a piece to become small stakeholders of the Oregon winery. And it has indeed acted like a crowdfunded venture - as a Forbes article described it:
Founder and CEO Jim Bernau might easily be called a visionary as he has wisely tapped into a serious consumer desire to be truly engaged in the wine experience. These investors are not well-heeled, deep-pocketed millionaires, but “mom and pop” wine enthusiasts interested in a modest but meaningful investment in the wine business. Indeed these stock owners invest more than just their cash, they show up at events with shovels ready to plant vineyards, they work in the bottling line putting on labels, and they pour in the tasting rooms.
Thirty years after the original crowdfunding operation, it appears that little has changed. To put it simply, this is a small outfit whose CEO, at least from my vantage point, seems to run it more as a local community organization than a public company. In fact, at one point, the corporate website described the firm as the country's leading "community-funded winery". The company counts 16,000 individual investors, a rather formidable shareholder base for a company whose market cap is less than $40 million. And in past articles on the company here at Seeking Alpha, it seems that at least a few people own WVVI stock because they enjoy Willamette's shareholder perks.
Source: Corporate website
That's a fine reason to own the stock - perks certainly provide a return on investment of a sort. And it's hard to put a price on the non-monetary value you get from tangible ownership of a nearby community institution. In fact, this would be all well and good except that I don't live anywhere near Oregon, so none of these benefits are particularly useful to me.
...Originally Posted On Seeking Alpha
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