Next Gen CEO Roundtable Eileen Crane, CEO November 1, 2018
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 Next Gen CEO Roundtable November 1, 2018 2
v Personal History “Not an MBA” or “Evolution of a Bubblehead” ‒ Inspiration ‒ Circuitous Route ‒ Learning Experiences Along the Way Next Gen CEO Roundtable November 1, 2018 3
v Winery History ‒ Taittinger/Kobrand – French American Vintners ‒ Sale and Purchase 2008 Next Gen CEO Roundtable November 1, 2018 4
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 5 Next Gen CEO Roundtable November 1, 2018
v Evolution of DTC at Domaine Carneros Next Gen CEO Roundtable November 1, 2018 6
‒ Beginnings § Paid Tasting vs. Free § 1994 Wine Club § Needed to Have Kobrand’s Approval Next Gen CEO Roundtable November 1, 2018 7
‒ 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 Next Gen CEO Roundtable 8 November 1, 2018
v Elements of DTC Success Next Gen CEO Roundtable November 1, 2018 9
Consistent Branding ‒ Play to Our Strengths § Old world look: building, labeling, reference to Taittinger § Consistent POS, consistent story Next Gen CEO Roundtable November 1, 2018 10
§ Known for hospitality, upgraded but casual experience, seated § Small (for a Sparkling house), Estate, separate labels from broad market pricing/bombing Next Gen CEO Roundtable November 1, 2018 11
‒ Play to Our Audience § Sparkling wine and mid- weight Pinot Noir palate § More women than men § Relaxing atmosphere and pairing plate ‒ Sonoma State Project Next Gen CEO Roundtable November 1, 2018 12
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 Next Gen CEO Roundtable November 1, 2018 13
‒ Gender – 52% of our customers are female Next Gen CEO Roundtable November 1, 2018 14
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% Next Gen CEO Roundtable November 1, 2018 15
‒ 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 Next Gen CEO Roundtable November 1, 2018 16
Expanded Experiences/Services ‒ Non-Club Members § Array of spaces: § Indoor, semi-outdoor conservatory, and outdoors for tastings served at table § Four different wine samplers or single glasses, five plus pairing plates, tours available § Reservations suggested; mandatory weekends. Next Gen CEO Roundtable November 1, 2018 17
‒ 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. Next Gen CEO Roundtable November 1, 2018 18
‒ 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 Next Gen CEO Roundtable November 1, 2018 19
‒ DTC Team Members § Passport § Bonus matrix Next Gen CEO Roundtable November 1, 2018 20
‒ 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 Next Gen CEO Roundtable November 1, 2018 21
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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. Next Gen CEO Roundtable November 1, 2018 24
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. Next Gen CEO Roundtable November 1, 2018 25
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. Next Gen CEO Roundtable November 1, 2018 26
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Departmental Huddle Board Next Gen CEO Roundtable November 1, 2018 28
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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 Next Gen CEO Roundtable November 1, 2018 30
v Opportunity for Oregon ‒ More Food Pairing Adventures. May Require Changing Laws. Next Gen CEO Roundtable November 1, 2018 31
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 Next Gen CEO Roundtable November 1, 2018 32
Thank you for attending the Next Gen CEO Roundtable with Eileen Crane, CEO, Domaine Carneros Next Gen CEO Roundtable November 1, 2018 33
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