July 01, 2017
WineShop At Home: A Rebirth and Renaissance
by Lin Grensing-Pophal
WineShop At Home
Founded: 1998 (direct selling, 2002)
Headquarters: Napa, California
Top Executives: Stan Fredrick II, Chairman of the Board; Jane Creed, President and CEO
2016 Revenue: approximately $20 million
Products: wines, wine club, custom-label wines, gifts, stemware and accessories
There are a lot of things that have come together to drive the growing popularity and increasing presence of WineShop At Home in the direct sales channel: growing sales and interest in wine among a wide range of demographics, a growing number of women interested in careers in the direct sales channel, and the proliferation of new wines and new wine blends to please virtually every palate.
A New Regime
1-800 Wine Shop.com Inc., now DBA WineShop At Home, had been established as an internet wine company, but due to inexperience and lack of direct sales knowledge, the company was on the verge of closure when the Fredrick family—J. Stanley Fredrick I, Chairman of the Board at Mannatech Inc. and a DSA Hall of Fame member, and his son, Stan Fredrick II—then minority owners, took a majority ownership in the business and gradually began the process of bringing it back to life. Fredrick II now serves as Chairman of the Board for WineShop At Home. By 2010, WineShop was well positioned to bring Jane Creed into the organization to execute a turnaround strategy for the new majority owners of the company.
Creed came to WineShop At Home with an already well-established presence in the direct sales channel, having served for nine years as a senior vice president for a notable seller of high-quality kitchen tools. Her wine and food-related experience was also extensive—she’s hosted international press events for wine-growing regions, has developed strategic plans for wineries, chefs and lifestyle, luxury and consumer goods companies, and has introduced a French wine company’s products to the American market. She’s also a prolific writer and serves on the Board of Directors for the Direct Selling Education Foundation as well as on the Advisory Board of Women of the Vine & Spirits. To say she is passionate about both direct sales and wine would be an understatement.
Through Creed’s leadership as President and CEO, WineShop At Home has executed a turnaround that now positions it as a leading in-home wine-tasting company in the U.S.—and that has led the company to double-digit growth and profitability.
When she took the helm, she says, the initial focus was paying off debt—almost $2 million of debt. “Today, we are a debt-free, highly profitable business with a growth rate of approximately 15-20 percent over the past five years, year over year,” Creed says. The company is privately held and does not release full financial information, but it does have about 4,000 Independent Wine Consultants and is “approximately a $20 million company,” she says.
What has driven that success? Building a culture of trust. “The trust between your employees, your sales field organization and the company is the most important thing in direct sales,” Creed says. A key element of the turnaround, “was rebuilding trust with our sales field organization so that they would understand where we’re coming from, what we do and what it is that we stand for.” That was accomplished over time through open communication and transparency. “We were ready to walk through the fire and make it happen, and that’s what we did.”
Creed adds, “We’re just so thrilled that we’ve been able to reinfuse this business with passion that’s unlike anything else out there.” A focus on discipline, along with taking steps to simplify the business, were keys to stability and growth, Creed says. It was also about “infusing the business with new joy and passion and creating a sense of community.”
The organization is now a blend of employees who were part of the original organization and those who have been hired since the turnaround, bringing the total to 30 full-time employees. All value the new transparent culture, open communication, the focus on quality, and the enthusiasm that Creed and her team have developed.
Capitalizing on Love for Wine
The consumption of wine is a decidedly social experience, making the direct sales model a perfect fit. Bringing together a group of wine lovers into a social setting sets the stage for sampling, sharing and shopping.
Women represent the majority of the market, says Lauren Howes, Manager of Marketing for WineShop At Home. They like wine, they like high-quality wine and they like having a variety of options to choose from, both in terms of varietals and price point—and WineShop At Home gives them all of this, along with exclusivity.
When WineShop At Home Independent Wine Consultants join the company, they are set up with a W.O.W. (Wine on the Web) Package, which provides them with a replicated website and the WineShop At Home app that they can use to place orders, enroll new Consultants and access training tools and other supportive materials to help them run their businesses. Various incentive programs are in place to reward Consultants for their efforts through vacations and other awards.
What Makes WineShop At Home Unique
In addition to a concerted focus on building a strong culture, based on trust and transparency, Creed says that a focus on the product and “upping the ante on the quality of the product” have also helped to drive demand and sales.
“We knew that we wanted quality to drive price,” says Creed. Driving that high quality is Alexandre Reble, Director of Winemaking. Reble is a native of Bordeaux, France, and has more than 18 years of winemaking experience both in France and the United States. Reble focuses on selecting wines and creating innovative blends that are introduced regularly. “We have 38 exclusive wine brands that we’ve created,” says Creed. “We release four new wines every month, so our people always have new wines to try at our Tastings.” Reble studied at the Agricultural School of Libourne and Blanquefort, receiving degrees in enology and viticulture, as well as wine trade and spirits. He came to the Napa Valley in 1997 and worked at estates that included Beringer, Newton Vineyards, Flora Springs Winery, Twomey/Silver Oak Cellars and others.
WineShop At Home follows a “good, better, best” pricing strategy, says Creed. Wines range from $14 to $75 a bottle. “There’s really something for every consumer price point,” she says.
The uniqueness of the offerings is also driven through Reble’s selection of varietals from around the globe—from Napa and throughout California, as well as countries such as Chile, Argentina, Italy, France, Australia and Spain. While the company does not disclose its wine sources, as this is proprietary information, Creed says they source from some of the best vineyards in the world. She adds that this gives WineShop At Home some advantages as it is not reliant on one, or just a few, estate vineyards, should any of them have a bad season. “We’re also known for our Winemaker’s blends,” says Creed. “These are formulations that our Winemaker puts together that are quite unique within the wine industry.” WineShop At Home currently has 38 exclusive wine brands created in Napa and has been awarded more than 75 medals at international wine competitions over the past four and a half years, including Sunset International Wine Competition, San Francisco Chronicle Wine Competition and Winemaker Challenge International Wine Competition.
There’s also a certain aura of exclusivity that drives sales at WineShop At Home private Tastings and through its website. Wines cannot be found on store shelves, on any other website or in any tasting rooms or restaurants. They can only be attained through WineShop At Home Wine Consultants.
How It Works
Wine Consultants, primarily women (85 percent), and falling within the 35-44 age range, tend to be suburban—94 percent are married and 40 percent are parents, says Howes. “The largest concentration of Consultants is in Texas, but we also have a lot of consultants in Colorado, Iowa, Pennsylvania, Tennessee and Illinois.”
The company’s mantra is “We Are One Wine Nation,” and it’s the theme of this year’s convention where, says Creed, “We’re even having our own ‘One Wine Nation’ flag.” Anyone can come together over a glass of wine, and that’s the premise behind the Wine Tastings. Wine Consultants don’t have to be wine connoisseurs. They simply need to be interested in sharing a wine tasting experience with friends and family. Hosts can choose from five Wine Tasting Samplers: “the original,” “the renegade,” “the collector,” “the romantic” and “the individualist.” Samplers offer five bottles of wine for $29.95, plus tax and shipping—the Host also receives a “thank you” bottle, altogether making Samplers average more than $120 in retail value. Hosts also have the opportunity to add on to their Sampler with “Custom Packs.” Each wine comes with tasting and vintner’s notes, which offer some background on the wine, its vintage, varietal(s) and appellation, alcohol content, aging potential, serving notes, pairings—and a recipe for a selected pairing.
In addition, the notes identify the “Vinotype” most likely to enjoy the wine. The Vinotype experience was developed in partnership with Tim Hanni, a world-renowned Master of Wine. It’s devised from a short survey that explores taste preferences based on personal, psychological and physiological traits. After an individual takes the quiz on the WineShop At Home website, a list of wine recommendations is delivered that can be readily shared with friends via social media.
It’s all about flexibility, friendships and fun. But, while fun is at the heart of the WineShop At Home experience, the company gets very serious about a very important cause.
WineShop At Home’s Raise Your Glass corporate giving program benefits America’s Mighty Warriors, a 501(c)3 nonprofit organization that honors American troops, the fallen and their families with programs that improve quality of life, resiliency and recovery. The organization was founded by Debbie Lee after her son, Marc, became the first Navy SEAL to be killed in Iraq on Aug. 2, 2006. Marc’s Last Letter Home asked for friends and family to “pass on the love and kindness and precious gift of human life.”
The decision to support this organization was both personal and business-related. The program came to WineShop At Home’s attention after Stan Fredrick II, and his wife, Hollie, met its founder, Debbie Lee, at their church where she was speaking to the congregation. She said she was on a mission to tell the congregation about her foundation, America’s Mighty Warriors. Fredrick shared information about the program with Creed, and they both felt it was the right fit.
“Many of our Wine Consultants are military families, or come from military families themselves,” says Creed. The small size of the organization also appealed to them, as did the fact that 95 percent of the dollars raised went directly to those who needed the help.
WineShop At Home supports the cause by directly passing along contributions through monetary donations in increments of $1, $5 or $20 and through the purchase of its special-label Glory Cellars wine—a $2 contribution is made to America’s Mighty Warriors for every bottle purchased. Those who make a donation of $20 or more to the Raise Your Glass program receive a special “Raise Your Glass: America’s Mighty Warriors” commemorative pin. This special wine is released during times of the year that coincide with patriotic or military-specific holidays.
It’s a fitting focus for a company that is currently, exclusively based in the United States.
There are no signs that the demand for wine will ebb in the near future in the United States—or other countries. Rob McMillan, Executive Vice President and Founder of Silicon Valley Bank’s Wine Division, write’s in his “State of the Wine Industry 2017” report : “Premium wine dominates sales today and is responsible for nearly all the growth in the trade.” By 2021, Gen X will have surpassed the baby boomers “to become the largest fine wine consumer demographic in the United States,” according to the report.
“Our sense right now is that things are going so beautifully here there’s nothing but growth, growth, growth,” Creed says about WineShop’s potential. “We’re going to be expanding our operations here in the U.S. and then looking beyond.” But, she adds, “There are certainly opportunities in Europe, and in Asia, so those are things that we will be exploring in the years to come.”
That growth will also drive some expansion, she says. “We’re bursting at the seams at our location here in Napa. Next year we’ll be moving into new headquarters.” The current location has about 17,500 square feet, and the new building is planned to have at least double the space.
Creed says, “Nothing would make me happier than seeing a bottle of our wine on every table in America.”