There are two forces gripping America: change and hope. Aside from politics, these are shaping business as well. One Southern California company is building a brand around hope and changing an industry in the process.
"It's an uphill battle getting a person to pull out their checkbook and make a donation in America, and it's getting harder and harder with the economy the way that it is," says 25-year-old Jake Kloberdanz, founder of Hope Wine, a wine brand that donates 50% of its profit to charitable causes. "What we're trying to create is a lifestyle brand where it's built into the product."
In 2006, Kloberdanz, a former wine industry sales manager, visited a friend who was undergoing treatment for Hodgkin's lymphoma. The next day he formed Hope Wine. Seven other young entrepreneurs joined the business, believing commitment to a charitable cause should be in the DNA of business, not just a sticker on packaging for a single month to raise awareness. A year later, the first bottles were being poured.
Hope Wine offers five varietals: Sauvignon Blanc (proceeds go toward saving the planet), Cabernet Sauvignon (fighting autism), Zinfandel (supporting American troops), Chardonnay (fighting breast cancer) and Merlot (targeting AIDS).
Just about all of the Hope Wines, produced by veteran winemaker David Elliott at the Sonoma Wine Co., have won awards. Unlike in generations past when a year-end donation check was considered a good deed, Kloberdanz says his team works hard for the business and the causes they support.
"Our culture is not just donating through our company, but as individuals being really involved in our community and rolling up our sleeves," says Kloberdanz. "We've been active in over 100 fundraisers this last year for different non-profits. For instance, five out of the eight on our team did the AIDS LifeCycle last year and rode 550 miles from San Francisco to Los Angeles, and I think our Hope Wine team raised $20,000."
As most consumers don't have the time or stamina to ride 500-plus miles for the cause of their choice, Hope Wine's "cause business" model represents progressive change. In the past year, Hope Wine donated more than $100,000 to charities, with a much larger amount anticipated for 2009. Kloberdanz projects revenue to top $2.5 million from the production of 25,000 to 35,000 cases of wine next year, up from 10,000 cases and just under $1 million in revenue in 2008.
Many veteran business leaders might wonder how a company can donate 50% of its profits and still survive. After all, business is tough for larger wine and liquor companies -- Robert Mondavi (MOND) , Concha y Toro (VCO) ( VCO) and Constellation Brands (STZ) - Get Report ( STZ). The secret, according to Kloberdanz, is a minuscule marketing budget. Hope Wine has partnered with many non-profit organizations that are more than happy to market Hope Wine. The do-good business model also gets attention from the media. Since various causes have their own month dedicated to them (breast cancer in October, autism in April, AIDS in December), it makes a company like Hope Wine a seamless fit for press coverage.
(MOND) (VCO) (STZ) - Get Report The product is easy to talk about. During the holidays or special occasions when wine is being exchanged, Kloberdanz says most consumers don't understand wine well enough to carry on a conversation about the vines, temperature, grapes and so on. When people see the pink ribbon (representing breast cancer awareness) on their bottle of Chardonnay, for example, a different discussion ensues. This model has worked well so far, and Kloberdanz doesn't expect the current economic situation to suffocate any of the company's goals. After all, for success to taste right, it's best to let hope breathe.