{"id":1080,"date":"2015-12-05T12:36:12","date_gmt":"2015-12-05T17:36:12","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/cameron-hughes-wine-fine-wine-for-everyone\/"},"modified":"2015-12-05T12:36:12","modified_gmt":"2015-12-05T17:36:12","slug":"cameron-hughes-wine-fine-wine-for-everyone","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/cameron-hughes-wine-fine-wine-for-everyone\/","title":{"rendered":"Cameron Hughes Wine: fine wine for everyone"},"content":{"rendered":"<p>For the past half decade, Napa Valley wineries selling premium plus wines have had an increasingly difficult time selling their top tier wines. As the consumer demographic switches from Baby Boomers, who are willing to buy these premium wines, to Millennials, seeking to try international wines and find quality discount deals, the change is creating trouble for Napa wineries as their wine continues to build up with no demand growth in sight.<sup>1<\/sup> That is where Cameron Hughes Wine (CHW) enters.<\/p>\n<p>Company Background:<br \/>\nCameron Hughes Wine was founded by Cameron Hughes and Jessica Kogan in 2001 to bring exceptional wine to market at reasonable prices. By seeking out premium quality wineries with excess inventories, Cameron Hughes purchases the wines cheap and re-sells them at a discount under their own label. However, Cameron Hughes signs a non disclosure agreement with all of its partner wineries to ensure that their brand equity is not compromised.<\/p>\n<p>Business Model:<br \/>\nCameron Hughes Wine acts as an intermediary between its two customers: premium quality wineries and consumers in the economically valued wine sector.<br \/>\nThe high end wineries are caught in a bind because the demand for their exceptional wines is not large enough to consume supply. Consequently, they are unable to discount their prices since it risks cheapening their label. As a result, Cameron Hughes Wine creates value for the wineries and producers by offering the opportunity to sell their excess inventory at a discount price without releasing the name of the winery or producer.<br \/>\nOn the other side, wine enthusiasts are continuing to seek out top quality wines but are not willing to pay large sticker prices that first-class wines command. Subsequently, Cameron Hughes creates value for these value focused wine aficionados by offering the wine they seek at the price they are willing to pay.<br \/>\nBy not having to worry about large capital investments in their own winery or large overhead, Cameron Hughes Wines combines these factors to capture the value difference between the sourced wines and the prices consumers are willing to pay them.<\/p>\n<p>Operating Model<sup>2<\/sup>:<br \/>\nCameron Hughes<\/p>\n<ul>\n<li>establishes relationships with high end wineries and producers around the world<\/li>\n<li>purchases from the wineries and producers and signs a non disclosure agreement to protect the brand\u2019s equity<\/li>\n<li>will make the sourced grapes, wines, or bottles theirs by either\n<ol>\n<li>processing the grapes and bottling the wine (recent add)<\/li>\n<li>blending and aging the wines<\/li>\n<li>re labeling the bottles under their own label<\/li>\n<\/ol>\n<\/li>\n<li>establishes a collection of brands and labels with high quality consumer perception at a discount price\n<ol>\n<li>their Lot series is the largest project, where they assign a new Lot number to each wine they release<\/li>\n<\/ol>\n<\/li>\n<li>combines their low overhead and insider knowledge to deliver an amazing value of $100 plus retail priced wines at a large discounted price<\/li>\n<\/ul>\n<p>Alignment:<br \/>\nThe operating and business models, as described above, are well aligned. Because the operating model enables Cameron Hughes Wines to offer premium quality wines at a large discount, CHW is able to follow a profitable business model without risking exposure to low margins or the potential losses that have been characteristic of other wine companies in the past. However, Cameron Hughes did fall into the trap of expanding their operating model into segments that are greatly disjointed from what made them successful. Recently, CHW moved into purchasing cheap quality grapes and attempting to make their own. Unfortunately, they quickly realized that remaining profitable in wine making is incredibly difficult, resulting in their bank demanding they sell their assets off at a loss.<sup>3<\/sup> After a tough couple month, Cameron Hughes has been able to recover and returned to its original operating model, resurfacing and profiting again from its business model.<\/p>\n<p>&nbsp;<\/p>\n<p><sup>1 <\/sup>http:\/\/www.cnbc.com\/2014\/01\/15\/wine-sales-growth-to-accelerate-in-fine-wine-report.html?__source=yahoonews&amp;par=yahoonews<\/p>\n<p><sup>2<\/sup> https:\/\/chwine.com\/about<\/p>\n<p><sup>3<\/sup> http:\/\/blog.wblakegray.com\/2015\/05\/wine-is-bad-business-cameron-hughes.html<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Premium wine at a not-so-premium price makes for a happy customer<\/p>\n","protected":false},"author":419,"featured_media":1081,"comment_status":"open","ping_status":"closed","template":"","categories":[242],"class_list":["post-1080","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-wine"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - 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