'Tis the Season for Hard Core Capitalism?
BY Donna Fenn
Jake Kloberdanz, the 25-year-old CEO of Hope Wine, doesn't think the holidays are a particularly great time to engage in cause branding. For Kloberdanz and his team of seven GenY partners, cause branding is a 24/7, 365-day proposition: the Newport Beach, California company gives away half its profits to charitable organizations associated with breast cancer, autism, AIDS, serving the families of fallen troops, and green causes. "We're the perfect balance between hard core capitalism and democratic socialism," says Kloberdanz. (BTW, Kloberdanz incorporated Hope Wine long before President-elect Obama gave the word new meaning, but what a happy coincidence, eh?)
It's not at all unusual for GenY entrepreneurs to embrace social missions when they start their companies, but Hope Wine takes the practice to an extreme. Can a start-up that gives so much away really hope to become a sustainable company in this economy? Kloberdanz thinks so. He and his seven pals were working for Gallo when Kloberdanz got the idea for Hope back in 2005. He was stocking grocery shelves with wine eight hours a day and noticed that consumer products with cause branding campaigns were given premium shelf space and enjoyed tremendous sell-though. Charities benefited and companies sold more products, he reasoned, so why limit cause branding to a time-sensitive campaign? Why not create a "cause brand"? It worked for Paul Newman, after all.
Hope Wine, which is blended and bottled at Sonoma Wine Co., made its debut on store shelves in June of 2007; each of the five varietals is labeled with a circle ribbon that tells consumers what cause they're supporting with their purchase. This year, the company did $1 million in sales, gave away $150,000 in cash and in-kind donations to 20 not-for-profit organizations, and donated 3,400 volunteer hours at 200 charity events. At this point, Hope is "giving away our profit margin", but Kloberdanz says the company will be in the black in 2009. He's hired an executive from a major spirit company, and is negotiating with a big distributor to take the brand national (it's now sold in ten states and on the company's website).
I'm wondering if a tough economy actually increases the appeal of cause branding to consumers. They may not be able to write a big check to charities, but they can still feel good about contributing a little something through their everyday purchases. What do you think? Are you more likely to buy goods and services associated with a good cause? Does your company engage in cause branding and, if so, has it had a positive impact on sales, your company culture, your brand image?