Model scalability to drive growth.
The Company combines experience in the wine industry with the speed and swiftness of a start-up, and has demonstrated that it can work with both retailers and distributors in developing and marketing new wine brands. The Company’s size is relatively small versus its peers (see Competition on pages 40-43 of the Executive Informational Overview® [EIO] on Truett-Hurst), which affords it the ability to be more agile and less prone to layers of decision making. With its in-house world-class brand development/creative team (biographies on pages 17-19 of the EIO), Truett-Hurst is able to launch its new brands faster and more economically, which enables the Company and its partners to respond rapidly to market opportunities.
Collaborative channel partnerships.
The support of multiple entities inside the distribution system is critical for defending sustainable market position—i.e., a solid collaboration with well-known and reputable retailers seeking to market innovative, higher-margin brands. Truett-Hurst’s standing continues to improve driven by the Company’s success with its channel partners, which has led to new opportunities in brand development, such as selling some of its brands by means of traditional distribution at a lower price. The Company currently holds a small share of a sizeable market. Ultimately, Truett-Hurst seeks to expand its sales within its existing retailer partnerships, including with its large retail partners like Trader Joe’s, Safeway, and Total Wine & More, as well as ramp up the number of new partnerships with additional retailers.
Collaborative and rapid brand development.
The Company’s development process with its partners is highly collaborative, with the products developed based on partners’ market data and a thorough understanding of the needs of a partner’s customers. Rather than developing a brand and bringing it to market based on the input from consultants, Truett-Hurst is unique in that it exploits quantitative data from its retail partners with regard to brands, price points, packaging, and varietals purchased by customers. Truett-Hurst’s partnerships typically involve providing a retailer with numerous concepts, including multiple brands, varietals, and price points that get launched collectively—a method which has demonstrated success as it allows the retailer to test various concepts—with the expectancy that roughly half of the brands will prove successful and go on to be further developed while the other half will be scaled back or discontinued. A typical timeframe is about six months from the initial conversations with a retailer until a product reaches the retailer’s shelves.
Quality-focused within the premium sector.
Historically, the retail exclusive label business was focused on the generic, sub-premium category (a retail price of less than $7.00 per bottle), where the wine quality was consistent with such a price point. Seeing the growth within this category, Truett-Hurst has positioned itself mainly within the super-premium and ultra-premium segments. To support this “premium” strategy, the Company has identified and contracted with premium grape sources from Paso Robles, Sonoma, and Mendocino counties in California. Benefitting from the founders’ industry-specific experience, the Company is able to leverage longstanding relationships with California growers—an increasingly important advantage as grape supplies around the world tighten. Truett-Hurst is also able to source grapes on a priority basis from its founders as well as members of its management team, who collectively control 500 acres of vineyards in Sonoma and Mendocino counties. Furthermore, the Company employs top-quality winemaking staff and has invested in state-of-the-art equipment.
Unique packaging and label designs.
With the explosion of wine brands and a need to stand out, innovative labeling and packaging has become a key factor to successfully launching new wine brands around the world. Truett-Hurst’s founders along with independent contractor, Mr. Kevin Shaw (biography on page 18 of the EIO), who serves as the Company’s creative director, have first-rate experience in this area. Accordingly, they are gaining a reputation as market leaders with fresh, new packaging designs—e.g., evocative paper-wrapping, unique bottle shapes, and the world’s first paper-based bottles (PaperBoy®, described on pages 27-28 of the EIO).