Publications
Publications
- May 2024
- HBS Case Collection
Naked Wines: The Profit vs. Growth Decision
By: Benjamin C. Esty and Edward A. Meyer
Abstract
Nick Devlin faced a difficult strategic decision in October 2022. As the CEO of a UK-based subscription business connecting wine drinkers in the US, UK, and Australia with winemakers from around the world (which one journalist called the “Netflix of Wine”), he had to decide whether to change the firm’s strategy. For the past three years, the company had explicitly prioritized long-term growth over short-term profits. Through the Covid pandemic, the company had doubled in size (sales were £340 million in FY21) and the stock price had more than tripled (from 250 pence to 880 pence) as people consumed more wine at home. But the prospects had changed considerably as the pandemic subsided. During the first half of 2022, demand slowed, wine inventories rose, liquidity tightened, and the firm’s stock price plummeted by more than 90%. Was rapid growth still the right objective or should the company pivot towards profitability? Or was Devlin thinking about this decision incorrectly? Rather than choosing profit or growth, could he achieve both? If so, what would that strategy look like and how would he implement it?
Keywords
Profit Vs. Growth; Platform Business; Economies Of Scale; Subscription Business; Wine; Scaling; Racing; Value Creation; Network Effects; Business Startups; Small Business; Financial Management; Financial Strategy; Growth Management; Business Strategy; Competitive Advantage; Expansion; Profit; E-commerce; Growth and Development Strategy; Agriculture and Agribusiness Industry; Food and Beverage Industry; United States; Australia; United Kingdom
Citation
Esty, Benjamin C., and Edward A. Meyer. "Naked Wines: The Profit vs. Growth Decision." Harvard Business School Case 724-462, May 2024.