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DRAFT MINUTES Virginia Winery Distribution Company (VWDC) 102 Governor Street Richmond, VA 23219 June 8, 2021

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DRAFT MINUTES Virginia Winery Distribution Company (VWDC) 102 Governor Street Richmond, VA 23219 June 8, 2021 DRAFT MINUTES Virginia Winery Distribution Company (VWDC) 102 Governor Street Richmond, VA 23219 June 8, 2021 This meeting was held electronically via WebEx on Tuesday, June 8, 2021 during the Governor’s declared state of emergency due to the COVID-19 pandemic making it unsafe for the public body to assemble in a single location. A recording of the meeting is available: VWDC Board Meeting-20210608 1742-1 View Password - qUPaAji2 Call to Order With a quorum achieved, Jay Colston called the VWDC Board meeting to order at 1:39 p.m. Roll Call Members Present Jay Colston Courtney Mailey Doug Zerbst Stan Joynes Others Present Justin Bell, OAG Carol Brown, VDACS Morgan Guthridge, Virginia Wine Wholesalers Association Robin Hill, VWDC and VDACS Tripp Perrin, Virginia Wine Wholesalers Association Kate Pyle, Big Spoon Co. Kendra Shifflett, VDACS Board Vote - Chairman Mr. Colson nominated Courtney Mailey as the new Chairman of the VWDC Board. With all present members voting affirmative, Ms. Mailey was confirmed as the new Chairman of the VWDC Board. Mr. Colson informed the board members that the new VDACS Commissioner, Bradley Copenhaver, was not able to attend the meeting. Approval of Draft Minutes Copies of the agenda and draft minutes were distributed in advance to all board members. Mr. Colston asked if there were questions about the minutes. There being none, Mr. Colston called for a vote to adopt the minutes as presented. Doug Zerbst moved to approve the minutes as presented. Courtney Mailey seconded. After the roll call for votes and Mr. Colston, Mr. Zerbst, and Ms. Mailey voting yes, and Mr. Joynes abstaining, the minutes were approved as presented. Financial Highlights Ms. Hill provided financial highlights as of May 31, 2021. Ms. Hill reported VWDC has sales of $4.6 million which represents an increase over this time last year. Ms. Hill shared the increase in sales is due to wineries taking advantage of their distribution options due to the pandemic. Additionally, there have been large sales to customers like Costco and increased sales of ciders. 38,738 cases sold and 8,046 transactions. VWDC sales comprised of 78% wine, 17% cider, and 5% mead. Sales by varietal include $987,200 in Blend, $763,589 in Apple, $356,601 in other, $303,536 in Chardonnay, and $293,825 in Cabernet Franc. The top sellers are The Winery at Bull Run (who made some wine for another winery and sold it through VWDC), Veritas Vineyard, CrossKeys Vineyard, Prince Michel, Bluestone Vineyard, Blenheim Vineyards, Blue Toad Hard Cider (lots of keg sales), Coyote Hole Ciderworks Showalters-Old Hill Cider (they do a great amount of sales to Costco), and Peaks of Otter Winery. Top buyer include The Winery at Sunshine Ridge Farm (The Winery at Bull Run sales), Wegmans Charlottesville, Virginia Wine Merchants (Wine of the Month Club), Well Hung Vineyard (Prince Mitchel sales). Ms. Hill directed the meeting participants to review the VWDC Sales by Winery. She advised the Sales by Winery Report is in alphabetical order not in order by sales dollars. Next, Ms. Hill reviewed the Sales by Case Report which is presented by calendar year instead of fiscal year. Mr. Hill noted that Blue Toad Hard Cider is close to the 3,000 case limit and they have been notified. The Winery at Bull Run has been made aware they are close to the 3,000 case limit. This is due to their wine making for Sunshine Ridge Farm. Showalters-Old Hill Cider is close to the halfway mark of the case limit due to their relationship with Costco. Licensing Update Ms. Hill continued with the licensing update. Ms. Hill reported VWDC currently has 236 active licenses and 12 pending licenses for a total of 248 winery partners. VWDC issued two new winery licenses since the last meeting and 12 pending wineries have completed Part – 1 of the application process. Ms. Hill advised that Ms. Brown moves the applications quickly and she is working with Mr. Gaskill to keep the pending list accurate by withdrawing non-responsive VWDC applicants who have been inactive after six months unless the wineries indicate continued interest. VWDC is renewing active licenses. Big Spoon Co. has sent a survey to the winery partners to provide notice about the license renewals. The wineries are notifying VWDC through the survey to document the renewal of the licenses. Operations Report Ms. Hill provided the Operations budget and expense report as of May 31, 2021. Ms. Hill highlighted current expenses of $220,434 and noted the license renewal payment of $38,850 will be sent in the upcoming week. Virginia Interactive will be paid $20,000 for their work on IControl and their development of the SevenFifty automated files and Big Spoon Co. will be paid. The funds for the bank fees are included in our committed expenses of $10,000. The bank fees for SunTrust will be more than the $10,000 committed due to the lockbox. The remaining committed funds are for Ms. Hill’s salary. Transaction fees totaled $46,722 and $11,840 in license fees were recovered this year. VWDC received a marketing grant of $3,300 for SevenFifty. There is an ending cash balance of $68,821. Hill asked if there were questions about the budget and expenses. There were no questions. Page 2 Budget Ms. Hill reviewed the proposed budget for FY 21-22. There is no expectation for the general fund appropriation to change from last’s amount of $242,399. There will be more non- general funds remaining of approximately $15,000 due to increase transaction fees and reduced funding of software development. As VWDC continues to grow, software development needs expand and those costs are increasing overall. As sweeping changes are made to the VWDC application, more funds need to be set aside as our general fund appropriation is not expected to increase. The license fee renewals budgeted amount of $48,200 is based on the number of active winery licenses and the 15 pending licenses expected to come on board. The expenses for the year includes license fee renewals of $54,000 to cover existing licenses as well as new winery licenses. $11,000 is budgeted for system maintenance fees and webhosting. There are funds software development costs of $26,000 including funds for 903 Creative with hopes of making the website more intuitive and reduce the number of clicks in processing orders. Some funds will also go towards mobile deposits since we have been unsuccessful with SunTrust mobile deposit app. The marketing budget has been increase to $40,000 to cover two trade tastings. The amount of $6,600 is included for SevenFifty. While SevenFifty has not produced a lot of orders, more sales are expected as a result from the partnership with the Virginia Wine Marketing Office. Bank fees are doubled to $20,000 to cover the cost of the SunTrust lockbox. The spending for the liability Insurance plan remains at $750. The amount of $1,000 allotted for travel to winery related activities also remains the same. There is $40,000 for administrative costs to VDACS. Additional planned spending includes $5,000 for legal notices, $128,000 for salary and benefits for Ms. Hill, $4,269 for a finance intern who assists with processing checks. There is $1,000 for office supplies and miscellaneous expenses, and $18,000 for NGF Reserve. These items bring the total proposed spending plan for FY 21-22 to $355,619. Ms. Hill asked if there were questions about the budget as presented. There were no questions. Mr. Zerbst motioned that the budget be adopted as presented. Ms. Mailey seconded the motion. After a verbal vote by each member, The Board passed the new budget for the fiscal year 2022. Old Business Ms. Hill shared the formal announcement about the VWDC website was communicated to winery partners via the monthly newsletter. The front-facing aspects of the website are working fine and looks great. The website is ADA compliant. New Business Kate Pyle from Big Spoon Co. provided highlights of services Big Spoon Co. has already provided and information about Big Spoon Co.’s plans for VWDC for the upcoming year. Big Spoon Co. plans to continue their work on the social media channels of Instagram and Facebook. Big Spoon Co. redesigned the VWDC website and made sure it was ADA compliant. Big Spoon Co. does monthly newsletters sent to wineries and retailers. As well as a monthly blog post on the VWDC website. With Instagram and Facebook, Big Spoon Co. posts about three times per week. Big Spoon Co. gave the VWDC website a more updated feel with the redesign. Ms. Pyle shared that Carla Mendez runs the weekly tasks and ensures everything is compliant. Ms. Mendez also uploads new content and makes any changes to the website as necessary. Ms. Pyle shared some social media metrics. In the past year Big Spoon Co. was able to grow the Instagram account Page 3 by 400 followers. Followers liked the March campaign – Women in Wine. Big Spoon Co. looks forward to working on more content wineries and meaderies for the followers. Currently, Big Spoon Co. is working on Flagship Friday to promote products in the VWDC portfolio. Facebook impressions have nearly tripled compared to this time last year. Big Spoon Co. is working with Ms. Hill on the newsletter, honing in on them to make sure there are useful tools for the wineries. Big Spoon Co. ran a survey targeted towards seeing how people felt about resigning with VWDC and almost all of the respondents were favorable to the website changes.
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