[PPT] - Next Gen CEO Roundtable Eileen Crane, CEO November 1, 2018 PowerPoint Presentation

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Next Gen CEO Roundtable

Eileen Crane, CEO

November 1, 2018

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At-a-Glance

v Personal History v Winery History v Evolution of DTC at Domaine Carneros v Elements of DTC Success v Open Book Management

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v Personal History

“Not an MBA” or “Evolution of a Bubblehead”

‒ Inspiration ‒ Circuitous Route ‒ Learning Experiences Along the Way

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v Winery History

‒ Taittinger/Kobrand – French American Vintners ‒ Sale and Purchase 2008

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v Winery History (continued)

‒ Kobrand Means 4-tiers

§ Theory they are a marketing company § Reality a distributor management company § Constant downward price pressure § Pay a 10% marketing allowance § Hesitant to take on new SKU’s (may be a blessing) § Negligible profit, not sustainable

‒ Forced Us to Find Other Sales Channels

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v Evolution of DTC at Domaine Carneros

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‒ Beginnings

§ Paid Tasting vs. Free § 1994 Wine Club § Needed to Have Kobrand’s Approval

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‒ Today

§ Over 200,000 Visitors Annually § 12,000 Club Members, Call Centers, Web § 50% of Our Cases Sold DTC § 80% of Revenue, 95% of Profitability

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v Elements of DTC Success

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Consistent Branding

‒ Play to Our Strengths § Old world look: building, labeling, reference to Taittinger § Consistent POS, consistent story

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§ Known for hospitality, upgraded but casual experience, seated § Small (for a Sparkling house), Estate, separate labels from broad market pricing/bombing

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‒ Play to Our Audience § Sparkling wine and mid- weight Pinot Noir palate § More women than men § Relaxing atmosphere and pairing plate ‒ Sonoma State Project

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Sonoma State University Research on Our Brand

Information Provided by Acxiom

‒ Age – Wine Consumers in General (Sonoma & Napa only)

§ 37% of customers are over 60 and contribute to 42% of all revenues § 28% of customers 50 – 60 and contribute 40% of all revenues § 35% of customers are under 50 yet only deliver 18% of all revenues

‒ Age – Domaine Carneros Wine Customers

§ 33% of customers are over 60 and contribute to 39% of all revenues § 26% of customers 50 – 60 and contribute 29% of all revenues § 41% of customers are under 50 and provide 32% of all revenues

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‒ Gender – 52% of our customers are female

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Distribution of Women Across Age Ranges Compared to Other Wineries in Study

20-29 30-39 40-49 50-59 60-69 70-79 80-89 90-99 % Female DC 62% 58% 57% 53% 46% 37% 34% 30% % Female All 51% 45% 42% 41% 35% 27% 28% 28%

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‒ Curious Additional Findings

§ Domaine Carneros has a notably high percentage of customers who hold technical degrees § 30% of our revenues are earned from customers who live within 50 mile radius. 60% of our revenues are earned from customers 300 miles or further radius. Outside of California, our top three concentrations of customers are Texas, Florida and Illinois

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Expanded Experiences/Services

‒ Non-Club Members

§ Array of spaces: § Indoor, semi-outdoor conservatory, and

utdoors for tastings

served at table § Four different wine samplers

r single glasses, five plus

pairing plates, tours available § Reservations suggested; mandatory weekends.

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‒ Club Members

§ Private Room § Complimentary tasting, tours § First access to limited wines, “special offers”, gift cards § 18 events a year (at winery and at other locations), cruises § Wide range of clubs, we customize, etc.

‒ Whales

§ Included in Club events, Club pricing, etc.

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‒ Challenges and Successes – Building a Team

§ 20 years ago we realized the potential for DTC § We changed DTC manager 5 times in those 20 years MANAGERS THEN

§ Lack of people with DTC experience. We were all new to DTC

§ Managers I hired overwhelmed by growth, “We need to stop here.” MANAGERS NOW § Look for open-minded people, early adopters, curious, moderate risk takers and, of course, good at managing a team. Understands the brand and style § Need to find a work reference that will tell you good and bad § Bonus program for both quality, quantity and innovation

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‒ DTC Team Members

§ Passport § Bonus matrix

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‒ Coffee Klatch to Open Book Management

§ Zingerman’s – How we managed to adopt the system

Mission
Values
Vision (Pillars)
Strategic Plan and Strategic Board
Company White Board and Huddles
Departmental White Board and Huddles

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Visions for 2026

Estate Vineyard and Winemaking

Renowned for the highest standards of quality, Domaine Carneros is recognized in the United States as the top producer; and internationally as a leader in the production of Sparkling wine and Pinot Noir, and noted for its 100% Estate winery-direct wines.

Sustainability

As a leader in sustainable winegrowing and winemaking practices, Domaine Carneros has adopted and committed to high standards of sustainable practices that are sensitive to the environment; responsive to the needs and interests of both the company and society; and economically feasible to implement and maintain.

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Visions for 2026 (continued)

Technology

An early adopter of technology in all areas, Domaine Carneros invests in technology geared towards achieving the highest levels of service and quality for our customers and increased efficiency for our staff in all aspects of their jobs.

Open Book Management

As a result of adopting Open Book Management, everyone in the organization feels a personal responsibility and ownership to the bottom line, and all employees are actively engaged in measuring, tracking and meeting key indicators to improve profitability.

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Visions for 2026 (continued)

Best Place to Work

Our employees feel appreciated, supported and well rewarded; and enjoy a culture where challenges are discussed openly, relationships among employees and departments are strong and supportive and performance measurements systems result in rewards that include generous wage and benefit structures as well as opportunities for growth.

Brand Recognition and Sales Growth

Domaine Carneros is seen as the standard for guest experiences and DTC marketing in the wine industry; and our DTC program has grown to $45,000,000 annually as a result of our innovative customer experience and service.

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Departmental Huddle Board

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v Top 5 Lessons

‒ Think Outside the Box (Black Bottle) ‒ Understand Who Your Brand Is. What Truly Separates it From Others. Then Build Everything Around It. ‒ Hire Managers Very Carefully ‒ Invest Strategically on Growing the Business ‒ Engage as Many Employees as Possible in Running the Business

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v Opportunity for Oregon

‒ More Food Pairing Adventures. May Require Changing Laws.

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v A Few Things I Learned from Scion Roundtable

‒ Executives Who Take Well Thought Out Chances Succeed ‒ Credentials Do Not Always Make a Good Leader or a Great Manager ‒ How Wineries Created or Recreated Their Brand ‒ To Think More Widely About Solutions to Problems ‒ Built a Group of Executive Colleagues and Friends Which Have Been Invaluable

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Next Gen CEO Roundtable

At-a-Glance

v Personal History v Winery History v Evolution of DTC at Domaine Carneros v Elements of DTC Success v Open Book Management

v Personal History

“Not an MBA” or “Evolution of a Bubblehead”

‒ Inspiration ‒ Circuitous Route ‒ Learning Experiences Along the Way

v Winery History

‒ Taittinger/Kobrand – French American Vintners ‒ Sale and Purchase 2008

v Winery History (continued)

‒ Kobrand Means 4-tiers

§ Theory they are a marketing company § Reality a distributor management company § Constant downward price pressure § Pay a 10% marketing allowance § Hesitant to take on new SKU’s (may be a blessing) § Negligible profit, not sustainable

‒ Forced Us to Find Other Sales Channels

v Evolution of DTC at Domaine Carneros

‒ Beginnings

§ Paid Tasting vs. Free § 1994 Wine Club § Needed to Have Kobrand’s Approval

‒ Today

§ Over 200,000 Visitors Annually § 12,000 Club Members, Call Centers, Web § 50% of Our Cases Sold DTC § 80% of Revenue, 95% of Profitability

v Elements of DTC Success

Consistent Branding

‒ Play to Our Strengths § Old world look: building, labeling, reference to Taittinger § Consistent POS, consistent story

§ Known for hospitality, upgraded but casual experience, seated § Small (for a Sparkling house), Estate, separate labels from broad market pricing/bombing

‒ Play to Our Audience § Sparkling wine and mid- weight Pinot Noir palate § More women than men § Relaxing atmosphere and pairing plate ‒ Sonoma State Project

Sonoma State University Research on Our Brand

Information Provided by Acxiom

‒ Age – Wine Consumers in General (Sonoma & Napa only)

§ 37% of customers are over 60 and contribute to 42% of all revenues § 28% of customers 50 – 60 and contribute 40% of all revenues § 35% of customers are under 50 yet only deliver 18% of all revenues

‒ Age – Domaine Carneros Wine Customers

§ 33% of customers are over 60 and contribute to 39% of all revenues § 26% of customers 50 – 60 and contribute 29% of all revenues § 41% of customers are under 50 and provide 32% of all revenues

‒ Gender – 52% of our customers are female

Distribution of Women Across Age Ranges Compared to Other Wineries in Study

‒ Curious Additional Findings

Expanded Experiences/Services

‒ Non-Club Members

§ Array of spaces: § Indoor, semi-outdoor conservatory, and

served at table § Four different wine samplers

pairing plates, tours available § Reservations suggested; mandatory weekends.

‒ Club Members

§ Private Room § Complimentary tasting, tours § First access to limited wines, “special offers”, gift cards § 18 events a year (at winery and at other locations), cruises § Wide range of clubs, we customize, etc.

‒ Whales

§ Included in Club events, Club pricing, etc.

‒ Challenges and Successes – Building a Team

§ 20 years ago we realized the potential for DTC § We changed DTC manager 5 times in those 20 years MANAGERS THEN

‒ DTC Team Members

§ Passport § Bonus matrix

‒ Coffee Klatch to Open Book Management

§ Zingerman’s – How we managed to adopt the system

Visions for 2026

Estate Vineyard and Winemaking

Renowned for the highest standards of quality, Domaine Carneros is recognized in the United States as the top producer; and internationally as a leader in the production of Sparkling wine and Pinot Noir, and noted for its 100% Estate winery-direct wines.

Sustainability

Visions for 2026 (continued)

Technology

An early adopter of technology in all areas, Domaine Carneros invests in technology geared towards achieving the highest levels of service and quality for our customers and increased efficiency for our staff in all aspects of their jobs.

Open Book Management

As a result of adopting Open Book Management, everyone in the organization feels a personal responsibility and ownership to the bottom line, and all employees are actively engaged in measuring, tracking and meeting key indicators to improve profitability.

Visions for 2026 (continued)

Best Place to Work

Brand Recognition and Sales Growth

Domaine Carneros is seen as the standard for guest experiences and DTC marketing in the wine industry; and our DTC program has grown to $45,000,000 annually as a result of our innovative customer experience and service.

Departmental Huddle Board

v Top 5 Lessons

‒ Think Outside the Box (Black Bottle) ‒ Understand Who Your Brand Is. What Truly Separates it From Others. Then Build Everything Around It. ‒ Hire Managers Very Carefully ‒ Invest Strategically on Growing the Business ‒ Engage as Many Employees as Possible in Running the Business

v Opportunity for Oregon

‒ More Food Pairing Adventures. May Require Changing Laws.

v A Few Things I Learned from Scion Roundtable

Thank you for attending the

Next Gen CEO Roundtable

with Eileen Crane, CEO, Domaine Carneros