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2007 Executive Wine Summit Looks to the Future

June 2007
by Tina Caputo
Augustin Huneus, Sr.
Augustin Huneus, Sr. proprietor of Quintessa, was an interested attendee.
Photos: John Bonick
Barbara Insel
Barbara Insel, managing director of summit host MKF Reasearch, moderated a panel on building direct sales.
Brian Baker
Use a good database system and keep your data clean, Jackson Family Estates VP Brian Baker recommended.
The third annual Executive Wine Summit, organized by MKF Research, gave industry executives a look into the future of the U.S. wine industry during a two-day conference, held May 3 and 4 at the Villagio Inn & Spa, in Yountville, Calif. The program tackled hot topics such as consumer trends, direct sales, media outreach and innovative sales and marketing techniques.

Michael Mondavi, founder of Folio Fine Wine Partners and moderator of a panel discussion called "The Structure of the U.S. Wine Industry Over the Next Decade," pointed out during the opening session: "We're not just competing with one another, we're competing with all other beverages" for "share of stomach."
Michael Mondavi
A panel discussion about the industry's structure in the next decade was moderated by Michael Mondavi, founder of Folio Fine Wine Partners.
Kathleen Hoertkon
New Vine Logistics CEO Kathleen Hoertkon reported on findings of a recent direct-to-consumer study.
Leonardo LoCascio
Leonardo LoCascio, president of Winebow, Inc., said consumers want alternatives to Chardonnay and Sauvignon Blanc.
Carolyn Wente
Carolyn Wente, Wente Family Estates, believes vineyard planting in California is not keeping up with consumer demand.
Eric Binau
During the direct sales session, Cultivate Systems CEO Eric Binau urged owners to provide exceptional service to their best consumers.

Mondavi added that as more wine brands enter the market each year, wineries must take on additional marketing responsibilities. Rather than expecting distributors to market and sell his wine, Mondavi said he views distributors as "order takers, bill collectors and freight forwarders."

Mondavi challenged the industry to increase U.S. per capita wine consumption from one glass per month to one per week, and expressed optimism in achieving that goal. "The future is absolutely bright," he said.

Panelist Carolyn Wente, of Wente Family Estates, remarked that there is still plenty of opportunity for growth in the California wine industry, though grape sourcing may present a challenge in the coming years. "Planting is not happening fast enough to keep up with consumption," she said.

In promoting California wines, Wente said, it's important to market California first, and individual appellations second. Consumers are interested in sustainable farming, she added, and are looking for good value. "In the '90s, value was a bad word; now, it's come back to being a good word."

Leonardo LoCascio, president of Winebow, Inc., predicted that by 2009, the U.S. will become the world's largest wine market, due to steady increases in population, per capita consumption and household income.

He said that consumers are looking for alternatives to Chardonnay and Sauvignon Blanc, and are moving toward unoaked, food-friendly wines. "Pinot Grigio is not a fad, it's something that is here to stay."

The panelists agreed that the future will bring more wine coverage in general interest media, though Wente pointed out that younger consumers won't be getting their wine information from these sources. More likely, they'll turn to the Internet, so it's important for wineries to broaden their outreach to different types of media, she said.

Direct Sales Advice

A session of particular interest to attendees was "Building a Direct Sales Profit Center," which covered trends and best practices for developing direct sales programs.

Panel moderator Barbara Insel, managing director for MKF Research, presented the preliminary results of MKF's Direct Sales Survey. Key findings included:
  • Direct sales have increased by 30-100%.
  • Tasting rooms, not e-commerce, account for the majority of direct sales, yet wineries don't keep good data on tasting room buyers.
  • Wine clubs are important drivers of direct sales.
  • Many wineries have huge mailing lists, but don't know how to convert them into sales.
Kathleen Hoertkorn, president and CEO of New Vine Logistics, presented the findings of a recent company study, which included:
  • The direct-to-consumer wine market is growing three times faster than the rest of the industry.
  • Consumer direct sales (CDS) were up 30% in the first quarter of 2007, compared to the first quarter of 2006.
  • Between '05 and '06, CDS rose by 27.6%.
  • CDS have increased by 68.5% in the over-$30/bottle category; sales in the under-$10 category increased by 8.2%.
  • The top five states for direct shipping sales are: Califor nia, Illinois, Texas, Colorado and Washington. Florida and New York are gaining.
Eric Binau, CEO of Cultivate Systems, spoke about the importance of knowing your "top 500" customers, and providing them with exceptional service.

Brian Baker, VP of consumer relationship management at Jackson Family Wines, stressed the importance of using a good database system and keeping data clean. In sending out e-mail promotions, he recommended targeting those who are most likely to buy, rather than sending them to huge numbers of recipients. The goal, he said, "is to create brand advocates who will spread the word to people you've never even met, while you sleep."

Other program highlights included sessions on using the Internet to build community among wine consumers, the impact of wine SKU proliferation on consumers, innovative sales and marketing techniques and "green" wine architecture.
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