Wonder Women of Wine

Given that March is Women's History Month, it is only right to highlight what is going on in the wine industry regarding women. The first weekend of March, Austin hosted the "Wonder Women of Wine conference", which has been called the first national conference advocating gender equality in the wine industry. This event was started by Sommelier, Rania Zayyat with the mission "to create balance in leadership through the advancement of women into decision-making positions."

During the event there was  keynote by Karen MacNeil, the author of the best-selling wine book in America, The Wine Bible, who discussed her personal experience with gender bias during her career path. On Saturday, the event shifted gears to focus on how to change the future by creating a more inclusive space for women in the wine industry. Overall, people have been discussing the event as a success.

Given this success, Rania Zayatt is hoping to make WWOW a nonprofit entity in Texas. She has officially applied for 501c3 status and is awaiting approval. Overall, Rania is extremely excited about improving gender equality in the wine industry!

2 Buck Chuck

We're all familiar with it, the magical $1.99 vino available at your local TJ's - Charles Shaw. There are a number of interesting theories of why the wine is so cheap, and then there are some more logical business reasons why it is so. Let's look at both!

Myths

• Divorce
• Charles went through a divorce and was outraged at having to divide his assets and as a result sold the wine at a very low price in order to ruin any potential profits
• Airplane
• After 9/11 corkscrews were banned on airplanes and as a result, airlines offloaded a large amount of wine and TJ's bought it up - selling the wine at a very low price
• Claw
• Charles Shaw used a giant mechanical claw to harvest it grapes (a large cost savings mechanism), including any bad grapes and potential small animals in the vineyard!

Economics

• Cheap real-estate
• Charles Shaw grapes are grown in the San Joaquin Valley which is much cheaper than Napa or Sonoma
• Oak chips
• They use oak chips rather than oak barrels which is a huge cost savings as the barrels are very expensive
• Lightweight bottles and cheap cartons
• They reduce shipping costs by using as lightweight materials as possible to package the wine
• Low-cost cork
• They utilize a special cork which has cork pieces glued together and a cork veneer at the bottom

Sources:

https://vinepair.com/wine-blog/the-mystery-of-charles-shaw-better-known-as-2-buck-chuck/

https://www.businessinsider.com/why-trader-joes-wine-is-so-cheap-2017-5

Wine in Style- What to do next?

Given the current knowledge in the case, I think Eberhart should vote against the deal.

However, there are a few points in favor of the deal. First, personally it will allow him more free time to spend with his family in Palo Alto. In addition, given the timing, the deal would show support of the current CEO Khoo. Finally, the deal could positively impact the cash flows of the company.

Despite these favorable points, there is a lot of concern in taking the deal. The biggest con is that there is no idea who these investors are, their thoughts and desires for the company, and their intentions. Given the previous scare tactics made towards the company, this lack of knowledge is extremely concerning since the investors could be people trying to sabotage the company for competitors benefit. Additionally, the cash problems can be resolved through other means such as operating more efficiently and cutting down existing expenses. Finally, while this could be a good sign of faith in the current CEO if everything goes well, it could also be extremely hard for the new CEO to deal with the potential scam.

Given this information, I think the best option would be to turn down this current offer unless there is certification showing more details on who the investors truly are!

How to correctly saber a champagne bottle

After dabbling with it quickly in class, I spent some time doing additional research on how to saber a pressurized wine bottle (champagne, etc.) correctly -- and with limited injuries by the participants! Here's what I've learned:

• Get a wine bottle of choice and the object that you'd like to use to saber it. A kitchen knife works well (since you likely don't have a sword available)
• Point the bottle away from everyone
• There is a seam on the bottle that runs the length of the bottle (vertically)
• You want to strike the bottle right at the intersection of the lip and the seam (very close to the top of the bottle)
• The goal is to have the cork and a portion of the glass bottle fly off so please please don't point it at anyone
• Amaze your friends and family

Tips:

• American champagne bottles are harder to saber than French bottles
• The bottle should be VERY cold. 
• Your knife doesn't have to be sharp. You can do this with a kitchen knife
• There is a lot of force from the Champagne pushing against the cork at all times and you're pretty much capitalizing on that force to break the bottle at it's weakest point

Sources: 

https://www.wired.com/2015/12/how-to-saber-champagne/

https://www.chefsteps.com/activities/how-to-saber-a-champagne-bottle-with-writer-neal-stephenson

Wine in Style

Eberhardt is at an interesting junction with WineinStyle and one that is not all that common, especially here in Silicon Valley. As a growing company becomes cash constrained, it has to make a few choices about how it is going to increase working capital.

For WineinStyle, I see the choices as follows: First, consider identifying ways to decrease current expenses to free up cash flows. On page 13 of the case, it is discussed that Eberhardt believes that they can accomplish this by operating more efficiently. However, based on the current operational structure of WineInStyle, I don't believe that there is significant room for growth. The company does not carry a significant amount of inventory and has already invested in operational efficiencies through its order management system. Furthermore, growth takes cash! It's unreasonable to believe that the company won't have to hire more individuals or bring on additional inventory as it expands at the rate it would like. I'm not arguing for inefficiency but there seems to be little room to improve working capital in the short run.

Another consideration for WineInStyle is that it could raise debt instead of giving away equity. This seems to be ill-advised because of the growth the company is looking to pursue. There is a potential for debt overhang where positive NPV projects might not be taken on because they might limit the companies ability to pay back the debt holders. More information on the situation is needed to answer this fully but at this time, I would not recommend this course of action.

Therefore, I would recommend that if Eberhardt is looking infuse cash into the company, looking for outside investment makes sense. However, I would strongly caution about moving forward without doing strict due diligence on the interested party. Eberhardt has put in way too much work into the company (even given significant time away from his family) to sell the company to just anyone. 

Will You Accept this Rosé?

My guilty pleasure for years has been The Bachelor and Bachelorette franchise. A sexist franchise with countless flaws (that’s a different blog post) … yet I keep returning, season after season. Partly because the Monday night gathering with friends always includes wine, and partly because I find the people who choose to go on this show fascinating.

Just as fascinating as their behavior on the show are the paths the contestants take after the show. The most popular as of late: The Instagram Influencer. After last night’s Most. Dramatic. Finale. Ever. while debriefing with friends and polishing off the last of our wine, I took to Instagram to explore past contestants’ paths, specifically their relationship with wine.

As expected, I found many contestants promoting well known DTC companies such as Winc and BrightCellars. But I was surprised to see that there were a number of contestants that had more than dipped their toe into the wine world:

·       Ben Flajnik –Season 16, The Bachelor: Ben was a winemaker before coming on the show, at Sonoma wine company Envolve. Ben sold Envolve to the Benzinger family in 2016, although is still involved in the wine world with his new venture Return of the Rosé

·       Kaitlyn Bristowe – Season 11, The Bachelorette: Katilyn launched a wine-centered podcast “Off the Vine”, and is working on launching her own wine label.

·       Lauren Bushnell – Season 20, “Winner” of the Bachelor: No longer engaged to her Bachelor Ben Higgins, Lauren is working with her new boyfriend to launch a wine brand Dear Rosé

The show has always had a connection with wine (The Bachelor franchise even launched its own label), and its clear past contestants see an opportunity to leverage this connection for their own pursuits in the wine world. Given the rising role of The Influencer in brands’ success, I wonder how these new ventures will fare.

WineInStyle: Let it Go...Let it Go

Letting go can be hard. Yet, sometimes you just...do it.

Eberhart has done an excellent job growing the business as much as he has. Hitting $4M in 10 years in a foreign market is no mean feat. However, there seem to be few arguments left as to why he should continue. On the macro level, while the wine industry in Japan is growing, it's not growing that fast relative to other international markets. One could argue that Eberhart should stick around and carve out a larger slice of Japan since he has an early mover advantage. However, Eberhart's company lacks differentiation or impassioned leadership - bad signs in an increasingly crowded market. Since the company is already struggling against competition, it seems unlikely that it would survive against larger or more determined opponents.

Eberheart's care for his new CEO in his absence is touching and important. However, immediately selling the company to these new investors may not be the best course of action. I believe he should use this current offer as leverage and shop around for alternative investments. If the current offer is the best he can get, fine - otherwise, he should optimize for investors that clearly care about the long term upkeep of the firm.