In late May 2009, New Vine Logistics ("New Vine"), a Napa-based wine shipping and fulfillment company, abruptly closed its doors, leaving hundreds of clients scrambling for information on their orders and inventory. Six days after New Vine's closure, Inertia Beverage Group (IBG), a provider of solutions for the creation and expansion of online wine marketplaces, agreed in principle to acquire New Vine and provide interim cash funding to revitalize operations. The resulting organization provided the industry's only fully integrated direct-to-market solution incorporating e-commerce, compliance, and logistics capabilities. Nine months later, in March 2010, Joseph Waechter, who had spent 15 years at DHL and was credited with the growth and expansion of the company into the world's largest express shipment company, was appointed CEO of IBG. Under Waechter's direction, the company set out a new strategy to expand access to new markets. Despite operating in a highly regulated industry, WineDirect facilitated winery direct-to-consumer fulfillment in 45 states, enabling the company to reach 90 percent of the U.S. wine-drinking public. In 2015 alone, WineDirect enabled more than $1 billion in direct wine sales and shipped more than 8 million bottles of wine through its three fulfillment centers. Still, Waechter thought about the greatest current business opportunities as a supply chain management firm. Further, he wondered what types of existing or new wine businesses could and should be leveraging WineDirect's supply chain management capabilities. This case describes the challenges faced by the growth of the direct-to-consumer segment of the wine industry. It covers growth, trends, and regulatory matters within the wine industry, as well as WineDirect's competitive offering, customers, and brief economics.
In 1998, Courtney Kingston persuaded her family to expand their ranch in Chile from dairy and cattle into wine. By March 2016, Kingston Family Vineyards had a strong international brand for its small-production wines and successfully sold the remaining top-tier grapes to other Chilean winemakers. But they faced key choices regarding focus and growth. As Courtney packed her bags for Chile to attend the annual meeting of the family business, she considered three diverging paths. One option was to increase production of their highly rated, handcrafted wines, which had established the vineyard's reputation for quality, pursuing sufficient scale to turn a profit on the winery. Alternatively, the Kingstons could refocus on the vineyard, as they had originally planned, playing to their strengths in farming expertise and leveraging their primary asset - the land. A third possibility was to Invest in Chile's burgeoning tourism market, and open a boutique hotel in Casablanca's wine country. Courtney wondered how best to preserve the family's land for the next generation while contributing to the greater Casablanca Valley community. This case explores these three strategic possibilities and their potential economic impact. Kingston Family Vineyards - Trade and Education video provides an overview of their history and approach to winemaking in Casablanca Valley, Chile. https://vimeo.com/201833299 (TRT: 04:38)
The purpose of this case is to illustrate why Napa Valley wine producers find it both irresistible and challenging to enter the growing Chinese wine market. Over the course of the 2000s, China went from being the 51st largest wine importer in the world to the 5th. While the Chinese consumer has an interest in foreign wine and significant discretionary income, logistical, regulatory, and cultural barriers prevent Napa Valley wineries from easily entering the market and achieving economic success. Frederick Family Vineyards, a fictional, family-run Napa Valley wine company, is interested in expanding distribution into China. The company must determine whether this geographic expansion is economically viable and then determine which go-to-market strategy will best position the firm for success. The company is deciding between four potential strategies: (1) Utilize traditional import and distribution channels (2) Leverage online sales (3) Partner with a logistics provider (4) Create a Chinese investment. Frederick Family Vineyards grapples with this decision in the face of imperfect information and an ever-changing market landscape due to President Xi Jinping's anti-corruption measures. Few luxury goods were more effected by these measures than wines and spirits. Prior to 2013, an estimated 80 percent of luxury wine imported into China was distributed as gifts, and used to help cement deals and relationships. Now global wine producers are left to wonder how Chinese demand for foreign wine will change as a result of these broader governmental changes.
New Vine Logistics was founded in 2001 by Katie Schumacher, a member of the failed Wineshoppers.com start-up operational team. Ms. Schumacher believed that Wineshopper's approach to inventory management, logistics, and general operational challenges rampant in the U.S. wine industry had value and managed to get funding to resuscitate Wineshopper's assets. The case provides background of the U.S. wine industry, including consumption figures, consumer demographics, and general industry trends, and explains the regulatory environment governing the U.S. wine industry. It then discusses New Vine Logistic's competencies and value propositions to its various customers, suppliers, wholesalers, distributors and retailer of wine.