Luxury and Retail Club members with Kristen Duffeler (5th from left)

Pictures

Last Friday (10/28/11) the Luxury and Retail Club (at The Mason School of Business) went on a company visit to The Williamsburg Winery and Wedmore Place located at 5800 Wessex Hundred, Williamsburg, VA. As a club, we thoroughly enjoyed the opportunity to sample wines from the largest winery in the state of Virginia; and see the luxurious accommodations at a European style hotel. We also found out more about the hospitality, and the wine & spirits business segments. Our itinerary for the day included: a tour of Wedmore Place with Kristen Duffeler (GM of Wedmore Place and In-house Counsel for The Williamsburg Winery); a tour of The Williamsburg Winery with Courtney Darden (Assistant VP of Marketing, The Williamsburg Winery); and a Q&A session with the Patrick Duffeler I (family patriarch and founder of The Williamsburg Winery and Wedmore Place) and Patrick Duffeler II (current President & COO of The Williamsburg Winery).

Wedmore Place

Stepping into Wedmore Place felt like being transported to ancient Europe. Each of the 28 rooms at this boutique, luxury hotel is themed in the style of a unique European province.

In this hotel, much of every detail has been defined by the Duffeler family. The themes cover details from the wall colors, floor designs, and furnishings to the wall hangings and decor. Each room has a functioning fireplace, a minimum of 10’ ceilings, and a king size bed. Room types include Traditional, Classic, Superior, and Suite. Themes range from Scandinavia, Wales, Bavaria, Westphalia, Champagne, Kilarney, Provence, Brandenburg, and many more unique European destinations. Rates range from $165 to $750 depending on the room type and season.

The Williamsburg Winery

The Williamsburg Winery, established in 1985, is the largest winery in Virginia, producing 65,000 cases of wine per year. Prices range from $8 per bottle for their Governor’s White selection to $65 per bottle for their Adagio collection. Other wines such as their specialty “reserve” can sell for more depending on the cultivation year and grape. Out of their total annual production, a substantial portion (30,000 to 40,000 cases) goes to the production of the lower priced wines such as the Governor’s White, which is the largest selling Virginia wine in the state. In business of winemaking, inventory is a major cost component as wines can take years to reach their optimum profile. At the winery, they maintain their cellars at 55 degrees Fahrenheit. Courtney Darden explained that some wineries use caves deep under the surface to store their inventory because of a reduced need for electrified climate control.

Industry

Like all businesses in the wine and spirits segment, The Williamsburg Winery must abide by the US’ three tier systemfor alcohol distribution. The regulation, set up after the repeal of alcohol prohibition, mandates that alcohol producers sell only to distributors, who then sell to retailers, and that only retailers may sell to consumers. Virginia laws allow the winery to sell its products directly (at the winery) or indirectly (via wine stores, restaurants, etc) in Williamsburg, VA. Outside of Williamsburg, they have to go through a distributor to sell their wines. In the US, the winery has distributorships in a variety of states including MD, NY, NC, and VA. They also have international distributors in a number of countries including Britain and Spain.

In order to allow smaller wineries compete with larger ones who have better relationships with distributors, smaller wineries in Virginia are allowed to form co-ops to distribute their wines.

Technology and Marketing

The Duffeler family opened Wedmore Place in 2007 – just before the US financial crisis and at the height of the construction boom. Much of the furnishings come from abandoned chateaus and estate sales in Europe. As such, building the hotel was a very expensive project. More importantly, the hotel opened at a time many would consider inopportune.

However, the hotel has been very successful in recent times, garnering a ranking of sixth among 93 hotels listed on TripAdvisor.com. The hotel’s restaurant, Cafe Provencal is ranked first by OpenTableamong all fine dining restaurants in Williamsburg. Originally intended to serve breakfast to hotel guests, Cafe Provencal can seat up to 60 people and offers dinner reservations to the general public.

In our Q&A session with the Duffelers, we asked about the role of modern technology in their operations. Patrick I was quick to tell us that though wine making has much of its roots in tradition, today’s wines would not be as good as they are if wineries did not embrace new technology. Patrick II told us that though the winery will never stop its practice of using real cork in its bottles, it has one of the most advanced bottling systems in the country. You will also find innovative adoption of technology in the winery’s marketing efforts. Having just completed a rebranding effort, Courtney Darden’s team has started using QR (Quick Response) codes in its labels. In its market research, the winery found that female purchasers have a preference for knowing exactly what type of wine is in each bottle, what types of food a wine can be paired or cooked with, and how sweet a particular wine is. Considering that the US recently passed France in wine consumption, QR codes can especially be appealing to a younger demographic of wine drinkers. When you use your smartphone to scan one of the codes, you are driven to online promotional content telling you more about the wine, its origins, and what kinds of food go well with it.

Challenges

In managing a luxury hotel, Kristen Duffeler told us that the most important part of her job was allowing customers to vent their complaints. Like any fine hotel, problems do arise, but what is most important in running Wedmore place is ensuring that customers get a “listening ear”. Oftentimes, you can’t fix a problem to a guest’s satisfaction, but just making yourself available to hear a guest’s concerns can make all the difference between a return visit and a bad review. One thing we found very memorable on this visit was the Duffeler management philosophy. The hotel’s management pays attention to all reviews, and especially responds to feedback where customers have not experienced the high-touch service, on which they pride themselves. Kristen also told us that management never asks employees to perform tasks that they themselves have never completed. Both Kristen and her husband, Patrick II have worked in a variety of positions at the winery and the hotel.

At the winery, the strategic goal of growing the business requires a balance between customer focus and high-touch customer service. Patrick II told our group that the ability to effectively communicate with the winery’s high-end customers reduces with an increased demand from a mix of customer profiles. As previously mentioned, the winery produces wines with price points that cater to different consumer segments. As such, the winery has to be very precise in targeting its market, and follow its best potential for business growth. At the hotel, this dilemma becomes a lot easier to handle because its price points appeal to a more distinct set of customers.

Our trip to The Williamsburg Winery and Wedmore Place certainly opened our minds to how some product and service businesses operate in the luxury space. Most of all, we had the opportunity to view and sample the high-end products that the Duffeler family has so earnestly worked to develop.

Luxury and Retail Club members with Patrick Duffeler I (2nd from left) and Patrick Duffeler II (3rd from left)