October 12, 2020
Since its founding in 1983 by vintner Jim Bernau, Willamette Valley Vineyards (Tii:WVVI) has grown into a world-class winery that was named “One of America’s Great Pinot Noir Producers” by Wine Enthusiast. With one of the most innovative shareholder perks programs, the Oregon-based winery is owned by more than 17,000 fervent wine enthusiasts who share a strong and lasting bond with the brand.
In this two-part Q&A, Alan Hughes, TiiCKER's managing editor, spoke with Bernau in a conversation that covered the winery's close relationship with its consumers, its perks program and how the West Coast wildfires and global pandemic have affected operations.
ALAN HUGHES: Let’s get started with Willamette Valley’s preferred shareholder perks program. It's a very innovative program. How did it come about?
JIM BERNAU: My idea was that there were lots of wine enthusiasts who shared the dream of building a world-class winery on their own but did not have the resources to do it. And so I went to the securities division here in the State of Oregon and I told them my idea about how I wanted to have lots of wine enthusiasts as owners.
They said, “Oh, Jim, what a great idea! They'll drink the wine and they'll tell their friends.” And then they said, “Yeah, but the problem is it's illegal. You can only have no more than 35 unqualified investors.” And I said, “Well, what's a qualified investor? How many of those can I have?” And they said, “You can have all the qualified investors you want but qualified investors make over $250,000 a year. They have more than $2 million in assets, not including the equity in their home, furnishings and automobiles.”
And so, as I was leaving, they said, “The only legal way you could have lots of wine enthusiasts as owners was to be a public company.” So, I studied for three years and learned about a little-known federal law called Regulation A, which was permitting people to raise a maximum of $1.5 million which would be self-underwritten. And so, I did the very first successful Regulation A self-underwritten stock offered in the country. I went to the SEC in 1988 and they qualified me. We got the money raised through 1989 and then I went to the NASDAQ, I think it was in 1994. And it got listed on the NASDAQ.
HUGHES: How many shareholders do you have now and what was your motivator to create the program?
BERNAU: We now have 17,000 shareholders, owners of Willamette Valley Vineyards. And we're rocking and rolling. We're doing great. So the primary motivation for these wine enthusiasts to join me was because they shared this dream. They wanted to be a part of building a great Oregon wine industry. And it wasn't just Oregonians. It was Pinot Noir lovers, from even outside the United States. I had people from all over the country who became owners in Willamette Valley Vineyards.
HUGHES: Can you give me a rundown of some of the perks?
BERNAU: The first thing is that a preferred stockholder investing today would get a dividend return of 4.5% annually and they can choose to spend that dividend on wine. And when they do, they get 15% more value. So, for every $100 of dividend you got coming, you get $115 worth of purchasing power.
Then you apply that, and you get 25% off of any wine purchase as a stockholder, whether it's one bottle or several cases. Let's say you live in New York and you wanted to buy a half a case, six bottles of Pinot Noir. At that level, that qualifies for free shipping. So you're going to get a rare, hard-to-get Pinot Noir from Oregon, at 25% off and no shipping costs. Now those are volume type offers that we provide to the owner. So that's probably one of the biggest motivators.
There are some others. For example, when you come to the winery, we charge guests $20 for a tasting. But for owners, it's free, and you can bring three other people with you. If you wanted to have a tour and a tasting, that's $30 each and you can bring up to eight people for a tour and tasting. So that's $240 saved. There are exclusive wines that you get to know about first, exclusive events and even an exclusive space for owners and club members. For example, our estate room is open only on Saturdays to owners and club members. So you get these. And then some events are owner-only, whether it's virtual or whether at the winery.
Check back later in the week for the second part of the interview, which covers the rise in popularity for Oregon wines as well as how the pandemic and West Coast wildfires have impacted operations for Willamette Valley Vineyards.