Founder Profile: The Brains Behind The Wine

 

Summary

Technology has revolutionized everything from the way we travel to the way we shop. For years, the wine industry remained uninterrupted, undisturbed, from this technology. With the rise of tech and social media also came the rise of direct-to-consumer shopping models. Millenials in particular value transparency and convenience when it comes to shopping, making DTC models particularly appealing. Winc is disrupting the wine space with DTC and wholesale channels bringing wine into the 21st century—just as millenials and gen xers are reaching the legal drinking age.

Winc has already been tremendously successful in the space and was recently rated a Top Deal. Specifically, DTC and wholesale channels are both booming; not to mention Winc has developed its own line of products. To date, Winc has produced 664 wines from 78 grape varieties, and 97 regions across 12 different countries. Summer Water Rosé, a highlight of the portfolio, has a combined $10M in sales and has grown at over 1200% CAGR.

Winc products can be found at Whole Foods, among other retail giants and the team has some impressive backing from venture firms to continue to scale.  In fact, with additional crowdfunding, the team plans to roll out new products and enter the hard liquor space.

Given this impressive traction, we were eager to sit down with co-founders Geoffrey McFarlane and Brian Smith to learn more.


Kingscrowd
Geoff and brian, the winc team has come a long way. can you tell us about how the business has evolved over the past few years?
Geoff

Brian: Winc was founded upon the belief that wine should be more accessible: simpler to get and easier to enjoy. Launched as Club W in 2011, we started out as a subscription e-commerce model that catered to a broad audience and brought curation and personalization to the wine category. In 2015, we transitioned to fully proprietary wines and brought in our Director of Winemaking, Ryan Zotovich. As a company passionate about wine and winemaking, the decision to become our own winemakers was a natural pull to get closer and closer to the source. After launching a few of our own wines, we quickly realized the value of getting our hands dirty in the vineyard. In the four years since we began creating our own wines, revenue has grown by 333%. 

We rebranded to Winc in 2016 to reflect this switch as well as our successful expansion into wholesale distribution.Today, select Winc brands can be found in premium restaurants and retailers nationwide. 

Kingscrowd
What do you think are the core differentiators of winc in comparison to competitors such as splash wines?
Geoff

We believe our multi-channel, brand-centric approach makes us distinct. The real opportunity area, where we have been successful, is in building and scaling brands. Other subscription wine companies are not building a portfolio of culturally relevant wines that resonate with consumers, but are instead solely focused on acquiring customers for their online subscription model. Some companies (wine and other) are just subscriptions boxes but we believe the companies that have real staying power have diversified their strategy through building brands. By using first hand customer data and building consumer affinity for new products, online subscription remains a very important channel for our company but we do not believe it should be the only place customers can find Winc wines. Our great products, which are sold in multiple channels and which have brand value in themselves, will drive profitability in the long term. Think of Harry’s razors for example really scaling their business in Target, Walmart and other retailers.

Kingscrowd
Can you talk about winc’s own wines and the benefits you think come with developing your wines in-house?
Geoff

Brian: As a fully-integrated winery with an innovative, two-channel model we have a unique ability to launch, test, and iterate projects with our customers at an unrivaled pace. Not many traditional wineries are able to be as experimental as we are, and create such a diverse portfolio of consumer-led wine brands, inclusive of light-bodied red made to be chilled, a zero sulfur wine, a cider, and a canned rosé. Winc’s brand portfolio consists of over 90 trademarks, like Summer Water and Folly of the Beast.

Kingscrowd
Do you have a sense of how consumer behavior is shifting with a younger demographic of wine drinkers?
Geoff

Brian: Winc’s digital-first platform targets Millennial and Gen-X consumers wine drinkers (over 80% of our member base), a demographic that traditional wineries have had trouble reaching, seeing as they aren’t able to retrieve consumer feedback and establish a two-way connection like we have. The largest consumer group in the market sector, at 73M strong, Millennials tend to value quality, convenience, and experiences when determining loyalty toward a product or service. They also are willing to try new things. Beverage Daily states, “Traditional wine consumers are now becoming adventurous connoisseurs, experimenting and expanding their palates.” One of our projects, an obscure orange wine called ‘Au Dela,’ sold out within 2 months of launch, underscoring the strong strong level of trust the company has established with this target consumer.

Kingscrowd
Revenues have been growing at a healthy clip, in-part due to the rise of your wholesale wine program. can you talk about your decision to move into wholesale space as well?
Geoff

We launched wholesale in 2015 and it now contributes over $17mm to revenues. We believe that an omni-channel approach builds greater brand affinity for our products and makes us more accessible as a winery. Today, it takes multiple touch points with a consumer before they convert or trust your product. Being able to provide customers with an easy, at-home subscription model, in addition to being sold conveniently at their neighborhood store ensures an easier, more accessible, and more enjoyable experience for the customer.

Kingscrowd
Do you see the wholesale channel as an opportunity to reach another type of customer or just more of your core customer?
Geoff

Brian: It’s a little of both. With these two channels we find that we have fans of Winc, and then we also have fans of specific brands like Folly of the Beast and Summer Water rosé. We validate brands digitally to establish consumer appetite and ensure proof of concept, and from there we are able to grow and scale select wines offline within the wider market, in the hopes of creating better experiences for existing customers while reaching new ones. 

Kingscrowd
It appears as though customers are spending more with you over time. what are the product improvements driving this behavior?
Geoff

Brian: We continue to iterate and improve upon the customer experience, from website to delivery, which we believe encourages customers to continue to spend with Winc. We have made a point to not only use customer feedback when designing our wine program, but also to better communicate that process to our customers so they understand that we are creating a wine program specifically for them. We also launched a membership tier for customers interested in more premium wine. Customers are able to self-select into this tier, which comprises 7-8% of our membership base. Finally, we have begun to do more advanced customer segmentation, allowing us to target specific groups of customers with wines we think they’ll like based on their purchase and ratings history, which has resulted in customers placing additional orders.

Kingscrowd
What role does data play in separating you from more traditional wine makers since you are now in the wholesale channel?
Geoff

We leverage 3.3M customer ratings from 500K+ customers and 40+ data points on every wine to directly inform our decisions in the vineyard and the brands that we create. We have more flexibility than other wineries to test, iterate, and improve our product offerings at an unrivaled speed. One example of this is our Field Theory Albariño. Based on customer feedback, we knew that our customers were seeking experimental wine projects and wanted to explore and discover interesting and obscure grape varieties. We launched the brand first as “Pufferfish,” and we immediately received positive feedback on the wine, but we found that the brand and the storytelling wasn’t where we had hoped. We continued to invest in custom packaging that would better express the uniqueness of the wine and the story behind it. Once we did that, we saw consumer ratings on the wine increase by 17%. 

Kingscrowd
With this raise, what areas of the business will you invest in further?
Geoff

Marketing, first and foremost, to continue to scale our DtC customer acquisition efforts and grow membership. Wholesale is also becoming a big focus for us, so we plan to invest in growing that team and our accounts. We are currently in conversations to gain distribution in some of the largest retailers in the US as well as international expansion.

We will also continue to launch new brands, as well as explore brand expansion into new product categories, such as Sake. Most recently, we introduced Keep it Chill, a red wine made to be chilled, and Summer Water Bubbly. Upcoming wine release include a zero sulfur wine and a canned wine spritzer. 

Lastly, we’re looking to continue to grow and foster a great portfolio of wine brands through strategic acquisitions.

Kingscrowd
What types of exits do you think will exist for investors over the next 5 to 7 years?
Geoff

We feel that an IPO is possible in the coming years, but for now, are happy to be inviting our customers to invest.  We are focused on building a solid fundamentally sound business that will generate strong EBITDA and strong cash flow into the future. This will open up many opportunities for an exit.   We started with the customer; they’re the ones who allow us to do what we love, and we want them to have a role in our future. Should we plan to IPO, it doesn’t hurt already having a few thousand evangelists on our side.


We are eager to watch the Winc team scale its brand as customer acquisition efforts are ramped up and the portfolio of wines and other liquors expands. The fact that the founders predict an IPO in the coming years is both promising and exciting; not to mention that strategic acquisitions will continue to grow the brand.

We are excited for the future of Winc and will be following the company and its progress. Read more about Winc and its rating of a Top Deal here.


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About: Chris lustrino

A Boston College Eagle for life, on a mission to democratize startup investing for all people at KingsCrowd, with a passion for Fintech, investing, social impact, doing well and doing good, and an avid runner, cyclist and writer.

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