In the early 2000s, Ryan Carr, an ASU alum who studied graphic design and had no money and no wine experience decided he wanted to learn how to make wine and start a company. He started by working with wine makers in the Santa Barbara area and began to learn the trade well enough to begin making his own wines in his garage. He made enough to sell 10 cases to friends who immediately took to the wines and wanted more. Fueled by the success of his first go attempt, Ryan began to scale up his production, trading his time working for anther winery for the space and equipment to produce his own commercial wine. Eventually, he continued to scale to the point of owning his own wine tasting room in downtown Santa Barbara and starting his own vineyard management company.
Here’s the success: Ryan owns hundreds of barrels worth of wine all housed in his own tasting room and has received some of the highest honors and best commercial success for his pinots in the Santa Barbara area.
Here’s what makes this even more incredible: he started from nothing and still doesn’t own any vineyards.
What?! I thought you had to have a fortune to start a winery?
This summer I had the opportunity to visit Carr Winery’s tasting room in downtown Santa Barbara and learned about Ryan from his wife (who runs the tasting room). Ryan’s story fascinated me because it runs so antithetical to the oft cited story of the multi millionaire who wanted an outlet to spend all his/her money and so started a winery.
Ryan’s winery has been profitable from the start and he’s grown more or less just on the back of his compounding business success in wine making. I love this story because it’s a great example of how hard work, determination to learn, and resourcefulness enabled an entrepreneur to buck the traditional model of winemaking (buying and owning a vineyard before making wine) and found success along the way.
Maybe this could be a new case for this class?
Ben, I think this is a great post. It is nice to hear something that runs counter to the whole idea that winemaking involves taking a large fortune and making it a small one. I'd be curious to learn more about the economics of this business - is he able to make a full time living off of this (it sounds like it based on your description), or does he also have a day job?
ReplyDeleteI would be skeptical of his ability to scale given the difficulty of managing distributor relationships, as discussed in class. My guess is that he makes most of his money on direct to consumer sales, especially as fueled by folks that walk right into his tasting room.
I wonder too what differentiates him from other wines in that area. Maybe people just really like the idea of a small player without any of the traditional winemaking heritage bootstrapping his way to a profitable business. But, as our affable whiskey drinking guest today told us, I wonder if this advantage is sustainable. As the number of small wineries increases, will he not be crowded out of the market by all the other options out there?
Ben, thanks for sharing Ryan's story. It is really cool to hear about another approach to wine-making. I am a big fan of asset-light business models that come up with new best practices for an inefficient industry. Although I take Jen's point about the ability to scale because of distributor relationships, I wonder how much this matters for Ryan's type of business. It seems to me that part of what he is delivering is a unique customer experience, which is a powerful pairing with the wine he produces. I used to go to a similar type of location in Pittsburgh called the Pittsburgh Winery, which, in addition to producing decent wines from California grapes, also offered frequent concerts in their wine cellar as a way to attract customers. Perhaps winemakers could learn from Ryan's example of a customer-focused experience when creating wine. If you're bootstrapping a business as he did, then every customer really matters.
ReplyDeleteJen, you make great points in questioning Carr Winery's ability to scale and identifying how valuable direct-to-consumer is in Carr's business model. Having visited several wineries similar to Carr this summer, there are several aspects of the Santa Barbara market that enable wine enterprises like Carr's to thrive. For those who haven't had the chance to visit, Santa Barbara has transformed what was formerly a warehouse district near the beach into a vibrant neighborhood called "the Funk Zone," boasting art galleries, restaurants, bars and wine storefronts. Young people, tourists and residents flock to this area every weekend to gather and enjoy the company of friends. Carr can sell wines by the glass, bottles to consumers that stop in, and memberships for frequent visitors (that make financial sense to join if you plan to go multiple times, as most Santa Barbara residents do). In short, these tasting rooms and the infrastructure in Santa Barbara give Carr and other wineries a major source of direct-to-consumer revenue without any investment in marketing or customer acquisition.
ReplyDeletePerhaps a takeaway here is that if you want to own a small winery and build a loyal base of repeat customers, find a location with optimal demographic and consumption patterns that Santa Barbara has!