Scheid Vineyards Inc.

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Scheid Vineyards Inc. (NasdaqNM:SVIN)

Scheid Vineyards Inc. (SVI) is an independent (i.e., not winery controlled) producer of premium varietal wine grapes. The Company operates approximately 6,000 acres of wine grape vineyards on the Central Coast of California. Of this total, approximately 4,400 acres are operated for the Company's own account and 1,600 acres are operated under management contracts for others. All of the properties operated by the Company are located in Monterey and San Benito Counties , both of which are recognized generally as excellent regions for growing high quality wine grape varieties.

SVI produces 18 varieties of premium wine grapes, primarily Chardonnay, Merlot, Cabernet Sauvignon, Pinot Noir, Sauvignon Blanc and Syrah. The majority of the Company's wine grapes are sold under short and long-term grape purchase agreements to a variety of winery clients. In 2001, the Company sold approximately 84% of its wine grapes under such supply agreements to 25 different wineries. The Company also converts a portion of its grapes, approximately 9% in 2001, to premium bulk wine, which is sold pursuant to wine purchase agreements or on the bulk wine market. The Company also sells a portion of its grapes, approximately 7% in 2001, pursuant to an acreage contract whereby the winery client purchases the entire grape production from specified acreage for a set price per acre.

The Company's largest winery client is Diageo Chateau & Estate Wines Company, a division of Diageo plc, a global premium drinks business and the eighth largest U.S. winery in terms of 2001 case shipments. Grape purchase contracts with Diageo cover 54% of SVI's acreage and accounted for approximately 76% and 73% of the Company's 2001 and 2000 total revenues, respectively. Diageo produces and markets the wines of Beaulieu Vineyard (BV), BV Coastal, Sterling Vineyards, The Monterey Vineyard and Blossom Hill. The Company also has long-term grape or bulk wine purchase agreements with other well-known producers of ultra premium wines, including Niebaum-Coppola Estate Winery, Canandaigua Wine Company (Canandaigua), a division of Constellation Brands, Inc., Chalone Wine Group, Beringer Blass Wine Estates, David Bruce Winery, Morgan Winery and The Hess Collection Winery.

SVI also provides vineyard management services to two winery clients, Diageo and Pacific Wine Partners, LLC (a joint venture between Constellation Brands, Inc. and BRL Hardy, Inc.). Under this arrangement, the Company provides its farming services for a set fee per acre. The Company's business is conducted through a wholly owned subsidiary, Scheid Vineyards California Inc. (SVI-Cal).

There are an estimated 800 commercial wineries that produce and market California table wine, approximately half of which produce fewer than 5,000 cases per year. Certain major wineries, such as Kendall-Jackson and Robert Mondavi, are large wine grape producers and produce a significant proportion of the grapes they need to make wine.

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The data included within the Financial section is solely for information and does not construe a recommendation and/or endorsement by IGHRM or its members to invest funds with any of the companies listed. You are strongly advised to obtain professional advice with qualified individuals or corporations for any investments of funds.

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