Kingston Family Vineyards (B)
In late 2016, Courtney Kingston, founder of Kingston Family Vineyards (“Kingston”), a two-decade-old vineyard located on a century-old farm in the hills of the Casablanca Valley—one of Chile’s premium wine regions—was reflecting upon discussions that had recently taken place during a class at the Stanford Graduate School of Business. At the time, the deliberations centered around where to focus the family’s wine business for both profitable and sustainable growth for the next generation while continuing to contribute to the greater local community. With an emerging international wine brand known for its small production, super-quality wines, in conjunction with success in the sale of remaining top-tier grapes to other Chilean winemakers, the Kingston family found itself at a crossroads. Specifically, the family debated whether to increase production of its highly rated handcrafted wines; refocus on the vineyard, leveraging the land as the family had always done; or invest in Chile’s booming eco-tourism market and open a boutique hotel.
The answer, for the Kingston family, was inspired by the latter option. Instead of developing a boutique hotel, the family invested in a new tasting room with a fully equipped professional kitchen, private events center, and guest house to grow hospitality, the leading source of direct wine sales. With completion of the tasting room slated for the end of 2018, the family faced a new challenge: how to continue to grow sales in the highest-margin direct-to-consumer business. From partnering with a vertically integrated, multi-brand wine business to expand the brand in the U.S. to investing more heavily in ecotourism, the family had options, but none of these were without challenges. Indeed, it would take a fine balancing act of attracting and converting the right customers into U.S.-based direct-to-consumer buyers and ideally, wine club members (“subscribers”) in order to generate the most sustainable business lines possible. Overarching any goals and objectives for its wine business unit, the Kingston family remained committed to maintaining control of and preserving the farm for the next 100 years.
This case describes the challenges faced in growing the direct-to-consumer segment of an international family wine business. It includes a wine industry update, including production and trade figures, and a description of growth trends and changing perceptions of Chilean wine. The case also includes an update of the Kingston Family Vineyards business and financials, and ends with a discussion of options for growing the direct-to-consumer business.
Also see: SM266 (A): Kingston Family Vineyards (A)