Part B

With the intention of maximising the future sales value of Two Creek Wines, Cam and Adibah have been considering

various options for expansion. One of the options would be for Two Creek Wines to expand into the production of

boutique gin. Cam has been researching setting up a gin distillery at one of their Yarra Valley vineyards. He has determined that, to be able to expand into gin production, Two Creek Wines would need to invest approximately $$800,000$ in distilling equipment and product research and development. Cam is confident that Two Creek Wines could start earning revenue from gin sales within $18$ months. He has spoken with RedX and WinesANZ, who are keen to expand the product offering to include boutique gin.

Required

Prior to making a final decision on whether Two Creek Wines should continue with the expansion into gin

production, Cam and Adibah have asked you to consider its potential implications for the business. Prepare a

response to Cam and Adibah by addressing the following:

$1.$ Analyse five $(5)$ key implications that the proposed diversification into gin production would create for Two

Creek Wines$$ business.