Man, those Duckhorn slides. I could envision some banking or
private equity associate stretching the images of wine bottles to indicate
revenue explosion over the past five years; and when Carol was describing her
relationship with TSG as a partner, I could imagine sitting in on the
conversation between management and the investors at TSG. As an investor in
consumer and retail businesses, and also as a consumer, I was excited to learn
more about Duckhorn’s history of private equity ownership and the impact it has
had on the company.
Carol used the term “relentless focus on luxury” to describe
how Duckhorn is trying to grow, and I especially appreciated her thoughtfulness,
attention to detail, and creativity in do so. Two key lessons on preservation and cultivation of the Duckhorn brand, one small scale and one large, stuck out to me:
1. Carol described policing menus, making sure that sommeliers
used the term “Decoy by Duckhorn” rather than “Duckhorn Decoy.” This seems like
a minute detail, but in her description, I saw her ruthless pursuit of brand
preservation. I agree, a customer who seems Duckhorn Decoy might not realize
that it’s the less expensive line unless it is separated as she described. The lesson
for me here is to find the instances where even such subtle wording choices might
have a differential impact on how customers perceive your brand.
2. She also shared with us the thoughtfulness with which
Duckhorn decided to acquire Calera, a “blue-chip brand” that was already highly respected by others in the industry. Recognizing
that everyone’s eyes would be watching them, her team made sure that the next
big step after acquisition by TSG was still brand-enhancing and not destroying.
A different acquisition of a less respected name might have eroded the
industry’s faith in Duckhorn’s success as a brand after taking money by a
financial player looking for a profit. This example is a good reminder be
thoughtful about how any structural decision, small or large, might enhance or erode
brand in the eyes of customers or competitors.
Brand cultivation is not always obvious, and Carol's lessons helped bring to light some examples that we might not otherwise at first glance. As an investor, I want to be wary about how these business decisions,
however small or large, could impact my customers perceptions of my brand. And as
a consumer, I want to use what I learned from Carol to make better decisions, and
also to recognize when my decisions are the product of marketing decisions rather
than a result of my own preferences.
Very interesting thoughts! I completely agree with the first point. At the consumer product company I interned with this summer, all employees (including, most importantly, the customer experience team and showroom editors) were carefully coached on how to message a product any time a new product was launched, and the messaging was always perfectly crafted. For example, when a product was launched that was, for all intents and purposes, a sunscreen, under the name Invisible Shield, employees were coached to never refer to the product as a sunscreen, but instead as SPF. While this was more for regulatory reasons, the subtlety of product messaging rang true for all other products as well.
ReplyDeleteOn the second point, while I agree that all strategic decisions should be brand-enhancing, I don't think that acquiring a brand that isn't perceived as a blue-chip brand would necessarily be destructive to the brand equity. For example, I think there are mismanaged brands that may not be performing up to their full potential, but could be acquired and turned around. In this case, I think as long as a brand has strong underlying assets (namely the land), it could be a potentially attractive target.