Winc General Counsel Steers Subscription Wine Company Through COVID-19 Sales High
General counsel Matt Thelen says the increased demand has not distracted him from putting employee safety first for essential workers while reexamining the future of where the office employees will work who are currently telecommuting.
June 05, 2020 at 04:01 PM
7 minute read
The COVID-19 pandemic has dampened most corporate outlooks for the year, especially within companies dependent on the in-person experience. But Winc, the subscription wine delivery club, is seeing the opposite effect with its single in-house lawyer handling all the matters arising from door-delivered wine becoming a quarantine hot commodity.
Winc general counsel and senior vice president of corporate development Matt Thelen confirmed his company saw an almost 800% spike in new member sign-ups between mid-March and early April compared with that time last year. The addition of over 42,000 new members led to an 80% increase in revenues since February.
Thanks to companies such as Winc that specialize in mostly off-premise and online wine sales, the market is traveling in its expected growth trajectory despite COVID-19, according to the latest report by Nielsen, as consumers order wine as a self-care remedy while in quarantine.
Winc hosted wine tastings at its Los Angeles headquarters in the greater Silicon Beach business district, but the pandemic has ceased those events. Actually, Thelen says the main issue his company has to face is what to do with the office post-pandemic as some of the estimated 120 employees now work remotely at home. A large portion of the workforce is operating as essential workers in the two control centers, one in California's Central Coast and the other in Pennsylvania, where they're following extensive safety precautions from wearing personal protective equipment to adopting social-distancing protocol.
In 2012, Winc founders Xander Oxman and Geoff McFarlane partnered with winemaker and sommelier Brian Smith to build a personalized wine club based on what their California-based winery produced. The monthly subscription box business model for consumer products was booming at the time. The company has since expanded, partnering with vineyards around the world and pairing members with the right wines for their palates. Now insiders name Winc one of the top wine subscription companies.
Thelen recently spoke to Corporate Counsel about what the increase in demand has meant for his legal responsibilities. The interview has been edited for clarity and length.
Corporate Counsel: Winc has seen exponential sales due to the novel coronavirus-induced quarantine. How has that impacted your job?
Matt Thelen: My first priority was to maintain ongoing operations before worrying about shifting focus towards increased sales. I had to go into disaster mode and really evaluate how to keep employees and customers safe first. Only once you've assured that, you can start worrying about how to keep the business operating and growing.
When COVID first emerged, we started mostly with information-gathering; just because nobody knew what was going to happen, what was really going on for the first couple of weeks. It was just daily monitoring of the news and events, government guidance and reports to understand how everything was unfolding. We are obviously still doing that today, but that was heavily focused on in the first several weeks of the pandemic because we didn't know what was going to happen.
We started by posting CDC guidelines on good hygiene, stocking up on PPE and limiting access to the office. When we realized the severity of the issue, we decided to move to work from home at our headquarters fairly early in this whole process. That policy remains in effect till today and will likely continue through the remainder of the year.
Because we operate as an essential business, we made the decision to leave the warehouses open but implemented a variety of safety protocol in order to protect those workers. We immediately hired a professional cleaning crew that would sanitize the warehouses three times a week. We implemented social distancing within the warehouse, which comes with sacrificing quite a bit of efficiency in order to maintain safety. Finally, we required safety equipment for all the employees: gloves, masks, eye shields, etc.
Fortunately, our corporate team handled the adversity extremely well and we were able to absorb a significant increase in demand without much disruption. Our biggest challenge has been scaling the fulfillment centers while operating under much more rigorous safety standards.
CC: Have there been any supply chain issues?
MT: The biggest disruption has been significant delays in approvals from regulatory bodies. In the alcohol industry, we're required to register our product with respective state regulatory bodies in the jurisdictions we plan to sell to. Many of these governmental agencies are not operating currently, which creates delays in the registration process and getting product to market.
From a supply chain issue, there have been some delays on importing wine, but we've been able to compensate for the international program through domestic production. Increased demand has put some stress on the supply chain, but our product team was able to react quickly and make sure we had enough wine to satisfy our customers.
CC: Where do you see contract management and renegotiation adding to your work?
MT: We evaluated the renegotiation with our landlord based on the inability to use the office space, but we decided that that wasn't necessary for our business, so we committed to pay rent in good faith and be good partners with our landlord. That would've been the biggest one. No real renegotiations on any of our contracts but taking advantage of some of the payroll and excise tax deferment that the government has provided.
CC: You started out as the solo lawyer in 2014. Has your legal department grown since then? How do you see it growing with the product demand increasing?
MT: Unfortunately, no. I'm still doing mostly everything, which makes building a work-life balance difficult. I think if we continue to grow at this rate, it would start to make sense to expand the legal department while making hires with practice-area expertise.
CC: How do you see your legal role evolving post-COVID?
MT: I think this is going to create a lot of unique opportunities for us to start evaluating some strategic acquisitions, which I would be responsible for. I'm currently focusing a lot of my attention on sourcing M&A deals and beginning to lay the foundation of deal structure. These acquisitions will allow us to create value from assets that didn't have the capital access or business design to survive the economic disruption. This isn't necessarily purely a product of COVID but something that COVID definitely will accelerate quite a bit.
CC: What challenges are you dealing with that are unique to the pandemic?
MT: The biggest challenge right now is managing a work-from-home workforce and what the future of the office looks like. Whether we go back to expecting everyone to be in the office or are we more flexible around work from home. On a long-term horizon, we're evaluating what do we have to have out of our office, how much square footage we really need, do we need as many conference rooms, or can we downsize our office needs and have a more distributed workforce than we did previously. Lots of people think that the office environment will look radically different after COVID, but I think it's too early to know what the long-term impact is going to be for certain. Continuing to drive performance through a massive business disruption and a potentially permanent change to the workplace will be the biggest challenge for my organization following the pandemic.
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