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Editor's Letter

 

Thriving in a Slow Economy, Part 2

November 2009
 
by Jim Gordon
 
 

At this time last year the great recession had just arrived. To address the developing disaster I wrote a piece in this space in the November 2008 issue titled “Thriving in a Slowing Economy,” passing on advice from experienced vintners and marketers.

A year later, plenty of wine businesses are still far from recovering, yet some of them have found ways to improve their sales. A panel discussion at the recent Wine Industry Financial Symposium in Napa, Calif., brought out enough good ideas to warrant a sequel to last year’s letter. Here are more practical ideas from experienced marketers on how to beat the recession.

Go direct to consumer
Robin Baggett is the managing partner of 3-year-old Alpha Omega Winery in Rutherford, Calif. The winery obviously thinks big, from its expansive name (Greek letters that signify “the beginning, the end”) to its expensive Napa Valley wines—$160 for the flagship Bordeaux-style blend called Era. This is exactly the type of winery that should be keeling over right now, yet Baggett said that sales through August were up 44% from last year. Why? Because Alpha Omega sells virtually everything direct to consumer. Here are a few of his rules for direct sales:

• Provide a memorable experience, but make it sales oriented.

• Pay commissions to tasting room staff, and to limo drivers who bring in visitors.

• Have multiple terminals for payments and club signups.

• Keep your tasting room open later than your neighbor’s. Alpha Omega gets one-third of its sales between 4 p.m. and 6 p.m.

• Do credit-card maintenance in advance for wine club shipments, ideally on Saturday mornings.

Redefine your business
585 Wine Partners of Sonoma, Calif., began operations only four years ago with the purchase of the Red Truck brand, and it has become one of the top 30 wine producers in the United States. Carol Reber, vice president of marketing, said that doing things differently is their norm. “You remember the definition of insanity?” she asked. “Doing the same thing over and over again and expecting different results.” Here is a portion of 585’s “done” list:

• Disrupt the marketplace: 585 introduced the Red Truck Mini-Barrel, a 3-liter $30 retail bag-in-box package.

• Seize unmet opportunities: The company launched Green Truck wine made from organically grown grapes in Whole Foods stores.

• Clean house, simplify: Reber said 585 is putting all its existing business with suppliers out to bid. The company saved 20 cents per shipping carton by simplifying the graphics.

Do one thing well
“Pick one thing, do that one thing really well, talk about that thing and it will pull all the other products up, too.” That’s the advice of Brett Scallan, vice president of marketing, domestic brands, for Ste. Michelle Wine Estates. At the Washington winery, that one thing is Riesling.

Scallan added that Ste. Michelle’s key varietals have grown at 10 times the average rate for their categories. Keeping current with media is important, he said, including websites Twitter and Facebook (see related articles on pages 94 and 100), which he said have paid off quickly for his brands. “The new marketing is that customers should find you. It’s like PR (instead of advertising) except that it bypasses the reviewers and traditional media.”

Sell beer in Australia
Foster’s Wine Estates Americas, based in Napa Valley, is a big enough operation to have a director of business intelligence: Heather Crawford. She reminded the WIFS audience about the “pretty bleak” performance of on-premise sales, but noted that Nielsen numbers showed some sales channels were up, including retail liquor stores, CVS pharmacies and Walmart stores.

What’s selling for Foster’s? “Beer in Australia,” she joked, but then added that the new Beringer California Collection line extension is selling fast in its $4-$6 field, and that a Foster’s Malbec from Argentina is promising. “It tells you a little bit about the importance of knowing what you do well,” she concluded, since Beringer is a classic California winery and Malbec has been a staple in Argentina for generations.

Positive steps
Readers can put into place almost immediately a few of the recommendations above, while others may take months or years to accomplish. None of these measures by themselves will turn around your business, but it’s important to acknowledge the new reality, revise your tactics where necessary and remember that progress comes step by step.

 
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Wine Industry Metrics
 
Off-Premise Sales » Month   12 Months  
October 2014 $570 million
6%
$7,775 million
6%
October 2013 $539 million $7,342 million
     
Direct-to-Consumer Shipments » Month   12 Months  
October 2014 $284 million
18%
$1,751 million
13%
October 2013 $240 million $1,556 million
     
Winery Job Index » Month   12 Months  
October 2014 139
6%
226
18%
October 2013 131 192
     
 
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