The Classic Business Models of the Past Two Decades

Over the past two to three decades, wineries have used a similar playlist to build their businesses.  This has generally led to three successful business models - the Cult, Trade / Wholesale focused, and Hospitality driven.  Each model comes with its own set of tools to be successful in them and those are continuing to evolve in the modern world.  

Detailed Show Notes: 

• Over the last 20-30 years, press and scores were the primary ways to differentiate a brand
• Winery stories were similar - if they owned land, it’d be about the land and terroir, if they did not, it would be about the winemaker or people driving the winery
• There were 3 primary business models that successfully built brands in the past 20 years: Cult, Trade/Wholesale, & Hospitality
• Cult Model
• Hard to get the wines
• Still a need for high scores
• A “cool factor” and slick packaging can help
• For investment demand, need a history of quality and age ability
• Recently, more brands are doing cross promotion with other luxury products
• Examples: 
• Marcassin (Sonoma) - had to mail in a check without knowing if you’d receive any wine
• Screaming Eagle (Napa) - has no visitation, a long waiting list, and has kept production low (~1,500 cases/year)
• Trade / Wholesale
• Brands built through restaurants and retail
• Need deep relationships with trade (e.g. - sommeliers)
• Rise of sommeliers and celebrity sommeliers - they are often looking for the story to tell and seeking new and different wines vs established brands
• A benefit of trade - consumers can try the wine before going to the winery to buy direct
• Recently, more non-Bordeaux wineries selling through La Place de Bordeaux
• Examples: 
• Opus One (Napa) - did a lot of events and promotions with both collectors and trade, when supply was higher than demand - did a by the glass program at restaurants with the sommeliers telling the story and a special card with a description of the wine, uses Bordeaux negociants (La Place de Bordeaux) to create scarcity globally by selling to all channels and markets, has limited DTC (only allows 6 bottles purchased per person) and expensive hospitality
• Dominus (Napa) - no hospitality, only sold through trade
• Hospitality
• This has boomed around the world
• Millennials want experiences - leading to trends of more exclusivity, by appointment only tastings, and more extravagant experiences to get more visitors
• When experience driven, it may be harder to get more wine club signups and may reduce club member retention
• Visitors are mostly local, but out of state visitors tend to have higher average purchases and wine club tenure
• Examples: 
• V Sattui (Napa) - has picnic grounds, a deli, right on Highway 29; has been so successful that they built Castello di Amorosa, an Italian styled castle winery on a hilltop in Napa
• Sterling (Napa) - has a gondola ride up with a self-guided tour and tasting
• Del Dotto (Napa) - cave tours, barrel tastings, large pours, and ability to buy futures
• Darioush (Napa) - a Persian palace in the heart of Napa Valley
• Scribe (Sonoma) - targeting a millennial audience looking for experiences
• Some wineries doing well on social media to drive their businesses
• Being multi-channel for brand messaging is important - e.g. - using email, text, social media, and mail with integrated messaging