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June 26, 2019

To our shareholders:
For the last eight years, our company has been in the process of converting from a wine grape
and bulk wine producer to a vertically integrated “finished goods” company selling brands.
We began in the early seventies as a grape grower because wineries needed more grapes to meet
demand as wine was becoming more widely accepted into American culture.
In the late nineties and early two-thousands we continued to evolve with the wine industry and
embarked on the next step of vertical integration and enhanced margins. Our winery customers
needed finished wine in bulk to fulfill increased demand. We began making wine from our
grapes and built a state-of-the-art winery to preserve the quality we produced in our vineyards.
Around 2011, as consumers continued to adopt wine and began to care about where and how it
was produced, we reasoned that the time was right to take advantage of all we had learned and
built. Even though we had been producing our Scheid Vineyards brand in small quantities since
1989, we now took the next step (really a big leap) toward a fully vertically integrated company
and began producing our own estate branded wines for the national and international
marketplace.
It was not for the faint of heart to take this leap. We committed to building an organization that
not only produces high quality estate wines, but markets and sells them in a challenging
environment. Building relationships directly with customers and distributors is paramount and it
takes a dedicated sales force, large enough to cover the territory, as well as a skillful marketing
team to support them.
We have been investing in the growth of our company ahead of sales. We believe we can engage
and sell to the “gatekeepers” of the marketplace. We have found they are intrigued by a family-
run company that makes its own grapes into fine wines. They are impressed that all of our
vineyards are sustainably certified and that our winery is 100% powered by an onsite wind
turbine. They are also impressed with the quality of our wines at all price points.
Sales and Marketing
We look on fiscal year 2020 as the year we developed more robust marketing and sales efforts.
We have reorganized our sales and marketing departments and this work is producing positive
results. Over the past twelve months we have increased our sales staff by 33%, for a total of
eighteen sales people in the field nationally. A new marketing director was brought on board and
we increased staff by 75%. In addition, we are making a push on marketing through social
media. We believe this larger staff is needed to support the increased sales effort.
Selling progress is being made. One of the keys to increased wine distribution is increasing the
number of points of distribution (“PODs”). Each new POD means that we have placed one of our
wine items with a customer (super market chain, restaurant, etc.). We now have nearly 33,000
PODs, up 30% in the past year.
We have worked hard on our “trade specific” business of creating and selling private labels to
customers. These are often exclusive labels that a retail organization treats as its own. We also
assist with marketing and social media programs for some of these. This business is up 12%
from FY2018. In addition, we have increased our efforts in supplying client-owned brands and
this business is up 18% from FY2018.
Export sales have grown to 49,000 cases which is a 53% increase over fiscal 2018. We now sell
our wines in 11 countries through 20 different importers.
Our own national brands (Scheid Vineyards, District 7, Ryder Estate, Ranch 32, Metz Road,
VDR, Stokes’ Ghost, Roku) are up 6% from fiscal 2018. Selling our national brands involves a
coordinated and persistent “ground game”. Our larger and reorganized sales force is already
having a positive effect here.
Overall, our case shipments were up 11.2% outside of the travel business (airlines, cruise ships)
which is more dependent on larger harvest volumes. This contrasts well with overall wine
shipments for the United States which increased by 1.2% in 2018.

Greenfield Land
In May 2018 the city of Greenfield, California annexed two parcels of Scheid land totaling about
130 acres. Earlier this year, we obtained an approved Tentative Subdivision Map for one of the
parcels. The parcel is approximately 47 acres and is zoned residential. We are now actively
marketing this housing subdivision to interested developers.

Debt Refinancing
We have refinanced our long-term debt on favorable terms. In July 2018 we closed a new loan of
$80 million with a major insurance company. This loan is interest only for the first five years.
We used $55 million of this new loan to pay off all existing long-term bank debt and used the
remaining $25 million to replenish working capital. The insurance company also committed to
an additional $20 million for funding future capital projects. This refinancing gives us working
capital to invest in sales, marketing and servicing clients.
Key Financial Information – Year Ended February 28, 2019
Here are a few statistics which should be of interest to shareholders.
Total sales: $58,501,000
After tax loss: $7,927,000
Total book value: $43,180,000
2018 appraised value of vineyards and winery: $190,540,000*

Loss per share: $8.97


Book value per share: $48.85
Total shares outstanding: 884,000
Term loan to value ratio: 44%

Cases Sold: 485,000


Tons of grapes harvested: 23,100

*Does not include 130 acres annexed by Greenfield in fiscal 2018, vineyard equipment or
bulk and cased wine inventories.

More detailed financial information can be found in the financial statements accompanying this
letter. Please visit www.otcmarkets.com/stock/SVIN/quote for more financial information.

The wine grape harvest of 2018 was larger than average throughout the state of California. This
contributed to depressed grape and bulk wine prices which represent about half of our sales. It
also reduced the value of our unsold bulk wine inventories. We decided to write down of those
inventories by $2 million in order to reflect more accurately its true market value. These events
contributed to our loss for fiscal 2019.
Conclusion
We do not believe having one disappointing year is grounds for retreating from our plan to
expand case sales of wine. On the contrary, we continue to invest in our capabilities, especially
our sales and marketing force toward that goal. As this is written, it is late June with the best
wine selling season ahead of us. With our newly organized marketing and sales efforts, we are
optimistic that we will show an increase in case shipments in the fiscal year ending February 29,
2020.
If you have questions, please contact our CFO at mike.thomsen@scheidfamilywines.com.

Sincerely,

Scott D. Scheid Alfred G. Scheid


President & CEO Chairman & Founder

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