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Executive Summary:
William Jaeger, a partner in the Freemark Abbey Winery based in northern Napa Valley, is facing a dilemma about the harvesting decision of Riesling grapes. Due to an approaching storm, Mr. Jaeger has to decide whether or not to harvest the crop before or after the storm. There is a risk factor involved in either of the decisions.
If he harvests the grapes before storm, he can avoid the risk of uncertainty and could get a decent return. However bottling inferior quality of wine could lead to damage in winery’s reputation. On the other hand if Mr. Jaeger decides to harvest after the storm, there is 50-50 chance of storm hitting the Napa Valley. If the storm doesn’t hit than the grapes ripe fully and can fetch much better returns. Even if the storm hits, there is a 40% chance they can produce high quality wine which can fetch higher prices but is partly offset by the reduction in quantity.
So which path should Mr. Jaeger take and which he shouldn’t? As Freemark Abbey is a producer of only premium vines and given the case facts its more feasible to wait for the storm rather than harvesting right away. The company can get more value of the wine by waiting rather than by bottling under quality wine which will ruin the reputation of the company. At the same time they could also choose to sell the wine in bulk or sell the grapes directly.

Post Author: admin