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07.18.2007  
 

User-Friendly Tech Symposium

Annual WITS gathering takes new tack

 
by Jane Firstenfeld & Jim Gordon
 
 
Wine Industry Technology Symposium 2007
WITS co-chairs J. Smoke Wallin, left, and Lesley Berglund welcomed Richard Maranville of FedEx Kinko's as keynote speaker.
 
Napa, Calif. -- A new approach and a number of dynamic speakers seemed to breathe new vitality into the Wine Industry Technology Symposium held here yesterday. WITS co-chair Lesley Berglund said that attendance for this third annual event was up to more than 300, that more than half of the attendees were from wineries, and that more wholesalers and retailers attended than in previous years.

The symposium's theme was "Technology Best Practices for the Wine Industry." Berglund said in her opening remarks that the new approach this year depended largely on emphasizing users of technology as speakers, rather than suppliers, as had often been the case in the past. Nearly 50 speakers were on the agenda.

For example in a breakout panel session on "Advances in Wine Production Tools," a winemaker, Alison Crowe of Plata Wine Partners, moderated the discussion while five winery employees, three of whom were also winemakers, discussed the pros and cons of at least five different cellar software systems. Representatives of the software companies sat in the back and remained diplomatically low-key until the Q & A period.

Wine Industry Technology Symposium 2007
Alison Crowe moderated a panel on cellar management software with speakers Steve Kirby, left, of Sonoma Wine Co. and Steve Urberg of Gloria Ferrer.
 
Advice from FedEx Kinko's

Berglund and event co-chair J. Smoke Wallin, chairman of ESkye Solutions, introduced Richard Maranville, CIO and senior vice president of FedEx Kinko's as the keynote speaker. While sketching recent tech innovations at his company, Maranville observed about the wine industry: "You guys are just at the beginning of using technology. If it's not something you're doing today, it's definitely something you're going to be doing tomorrow, because your competitors are doing it."

"You don't want to get too far behind, because it's going to take too long to catch up," he advised, while explaining that it had taken 10 years to complete the networking of hundreds of Kinko's stores within the FedEx system.

Two other keynote panelists stressed the importance to the wine industry of what's happening on the Internet. Max Kalehoff, vice president of marketing for Nielsen BuzzMetrics, showed market research on consumer expression (what people are saying and doing online) in graph form. He observed, for example, that the one word most closely associated with "wine" in web activity is "Cabernet." Terms about spirits and food are equally associated with wine.

He said consumer generated media like chat boards, blogs, etc., need to be better understood and better utilized by wine marketers. One positive note for wineries was that consumers online have a high level of trust in winery websites, Kalehoff said, and since wineries have total control over these, it's a great communications and marketing channel that is relatively under-performing today.

Retailer and online video star Gary Vaynerchuk of Winelibrary.com gave a fire and brimstone sermon interlaced with humor on the need to embrace the web to find and understand wine consumers and to sell more wine. He sells wine online, posts regular videos of himself tasting and rating wines, and says that's what's made his business boom.

"Embrace your website as your business," he exhorted. Not everyone is a born actor and speaker like him, he said, but "Do what you're comfortable with," he said. "And be obnoxiously over-the-top honest about it."
Wine Industry Technology Symposium 2007
Jeremy Benson, left, moderated a panel, on consumer direct marketing that included Bill Murphy of Clos La Chance as a speaker.


WITS participants chose among four distinct "tracks" which each included three breakout sessions. Track B, exploring Consumer Direct Sales & Marketing, was the hot ticket, and so oversubscribed that later registrants were turned away. The other three were Trade Sales & Marketing, General Management, and Vineyard and Winery Operations. Highlights of sessions that Wines & Vines attended follow:

Strategic Use of Sales Information

Track A, Trade Sales & Marketing, was well attended, and provided useful strategies for coping with the ever more competitive three-tier distribution system. The first session, Strategic Use of Sales Information and Best of Class Category Management Approaches, was introduced and moderated by co-chair Wallin. He described the rapid evolution of category management since the late 1980s, when, he said, "Gallo was the only game in town," the only winery to develop and use customer data to position its brands on retail shelves. In this old business model, Wallin said, "Distributors had to be cajoled and arm-twisted" to share their valuable data, even with winery clients. All that has changed, he said. "Today, account-level data is prevalent, and distributors have been trained to provide it to wineries."

Wineries must be aware, he said, that "Retailers don't care about your brand. They care about their sales." So it's incumbent on the wineries themselves to learn about category management--managing shelf displays, promotions and what they can do to make their brands most appealing to on- and off-premise retailers. This, he stressed, is based on using a fact-based sales approach, founded in deep knowledge of the market and your brand's current--and target--position within it.

Winery salespeople must be prepared to "Talk intelligently to trading partners. Distributors have more products than they can keep track of," Wallin said. "If you expect your distributor to manage your brand, you'll be disappointed." To do this, wineries should know who their top 10 key (retail) wine customers are in any given market, know the top 50 restaurants in that market, and who buys which of your products. "Facts can make you more effective," he stressed.
Wine Industry Technology Symposium 2007
The cellar software session also featured, from left, Lisa Russell of F. Korbel, Rose Dadian of The Wine Group, and Molly Hill of Sequoia Grove.


"Retailers care about categories and satisfying their customers profitably," according to panelist Danny Brager, VP client services for The Nielsen Company. In a hugely fragmented category like wine, he said, it's vital that winery marketers understand how their brands relate to the category as a whole. "Don't hold your product to a lower standard than your competition," he warned. In a Nielsen study of outlets for a single major supermarket in one metropolitan area, the average store had 588 individual wines on its shelves, more than any other category. Although wine was far from the largest category in sales, Brager noted, "Wines can increase store traffic, build transaction size, build transaction profits, reduce costs and enhance store image."

But, he said, "Don't get fooled by averages. What does your consumer look like?" Try to obtain support from your distributors, because, Brager said, "Category management is not just for the big guys anymore."

"Your goal is to be among the favorite brands," Wallin interjected. "Wine consumers want variety, and wine shelves should not be stagnant."

Using the tools of a good brand management software package is critical, according to George Louis, who handles regional sales for Caymus Vineyards. Armed with real information, he said, "You can have an intelligent conversation with your distributor. Your distributor will respect you beyond belief."

"You must know that information," reiterated David Fischer, director of sales and marketing for Ramey Wine Cellars. Ramey produces 30,000 cases annually; "How much time are they spending on my brands?" he asked. Your products can be lost in the shuffle, he suggested, especially with on-premise clients, "If you don't know where you are, and you don't know what your targets are." Wineries must know this information themselves, because distributors are probably unaware of who your top 10 sellers are, or who is on your wish list.

Sasha Kadey, a proud millennial 23-year-old and sales analyst for Oregon's King Estate, stressed, "The more information you have, the more you are empowered. It's a matter of mind share. Make them invest in your brand. They must think you have the business savvy to manage your brand."

A distributor from Massachusetts seconded Kadey during the lively Q & A session that followed. "We want to deal with a well-informed, savvy person. Those are the wineries we have the best relationships with," he said. "Poorly informed? We don't want to deal with them. We want to maximize our own time by working with the right people."

Cutting Edge Retailer Models

Moderated by Greg Christoff, president of WTN Services-The WineTasting Network (wtnservices.com), this session addressed the spectacular rise of online wine retailing, offering what Christoff described as "a fourth channel for wine sales, wholly framed by technology."

This new e-channel has already passed three crucial tests, he said. "First, it's everywhere. Second, not everyone is purchasing online, but nobody's not online. Finally, these emerging companies have taken the channel beyond technology to create high-value relationships with consumers."
Wine Industry Technology Symposium 2007
Cornelius Geary, left, of RadCru, and Michael Brill of Crushpad Winery. Geary spoke about cutting-edge retailing.


First on board was Cornelius Geary, CEO and co-founder of RadCru, a San Francisco-based e-tailer that offers a single (or, as on today's listing, a two-pack) bottle of high-end wine at a time to its 8,000-plus U.S. subscribers. Geary and his colleagues handpick each offering from about 250 wineries, "If we don't like it, we don't run it," he said of RadCru's choices. (See "One Wine Per Day Websites Build Sales") RadCru (radcru.com) never takes possession of the wines; rather, the orders are forwarded directly to the winery, which ships the order and retains the contact information for future promotions. Because of the conflicting and ever-shifting landscape of state-to-state shipping, RadCru prefers to work with wineries that are able to ship to at least 25 states.

"We're about premium wines," Geary said. "We're not looking for second-hand wines." Although the wines are top shelf, RadCru started on a shoestring: Geary and his partners have spent a parsimonious $4,000 establishing and promoting the site.

With an MBA from Stanford, and a knowledge of wine gained as president of the university's 400-member Wine Circle, Alyssa Rapp set out to establish an online wine community for her peers. Bottlenotes (bottlenotes.com), she said, provides a "Personalized sommelier service," using simple technology as a way to save member's personal tasting notes and recommend wines geared to their preferences. This "high touch" matching technology gives subscribers a "sticky experience" by tracking each purchase. Like RadCru, Bottlenotes' sales are 100% outsourced to the wineries; neither business has a liquor license or ever has possession of the product.

Rapp considers Bottlenotes a source of "social networking in the community," a "trust engine" that brings members together with events like the Little Black Dress Wine Club, where women wine drinkers meet for sociable tastings.

Bryan Dougherty, CEO of My Wines Direct, demonstrated Crazy Egg, a tech tool that allows him to "Fish where the fish are" by physically viewing which areas of his website are in use at a given moment. Even though buyers can click on any image or word on his site, he's learned, "People still click where you underline."

My Wines Direct (mywinesdirect.com) screens wines from all over the world and a wide range of price-points. Buyers do not pay any shipping fees, and six bottles is the minimum order. All the wines are vetted by consumer tasting panels, and arrive with a money back guarantee. Dougherty noted that his studies have found that convenience is by far the most prevalent reason people purchase wine online.

The irrepres sible Vaynerchuk closed the session on an inspirational note, urging wineries--and websites--to embrace co-competition. "Wineries really understand community on a real-world level," he noted. Vaynerchuk started as a bricks-and-mortar retailer at his father's New Jersey business. Online sales, he said, require a willingness to "go viral" and to generate quality content. "To grow a business," as he has, requires "Utter commitment. Embracing and fighting for it," he said, emphasizing that content is king.

"There is money in brands," he said. "Take control of your brand. Put out the information you want out there. Reach the consumer direct, so you're not at the mercy of anyone….You have to care. If you're good, you're going to win. Doing the right thing always wins."

Barrel Management Identity Crisis

Track D's final stop focused on the two technologies currently available to create and operate a winery barrel-tracking system. The three panelists introduced by Lisa Levsen Corbett, president of Modular Information Systems, discussed how the systems work, what they can do, and why any sizable operation needs to have one.

Joseph Shirley, winemaker at Trinchero Family Estates, told of implementing the company's barrel management system 10 years ago. After much tweaking, it's still in use, now that inventory has grown to 11,000 barrels housing 25 wines made from 10 grape varieties. Tracking barrels is important for many reasons, he said, among them economics. Trinchero sells its wines at price-points ranging from $10-40 per bottle. "You can't buy very expensive barrels for inexpensive wines," he commented.

When setting up a tracking system, "Decide at the outset what is important for you to track, and plan ahead for future needs," Shirley said. "Ultimately, you want to track for consistency and quality control. You can track a barrel's history, and the effectiveness of any treatments it has had, such as Cryo-clean dry-ice reconditioning."

It's handy to know how many barrels of a specific oak, size, toast or age are on hand, and how many are empty and available for use, Shirley explained. Shirley, or other winemaking staff, do most of the data input, he said, explaining that many cellar workers don't understand the importance of barrels. "Toast is a meaningless concept to those who aren't making wine," he said. "When things are very difficult, they often don't get done." An automated barrel tracking system can help to reduce labor costs, Shirley said.

His system uses established bar-code tracking equipment; bar-coded labels (printed in-house) are attached to both a barrel and its rack, for easy scanning. Barrel attributes and facts are encoded, and location within the storage area. This meticulous attention to detail rewards Shirley later in the winemaking process, when he can look up any barrel by any of the aspects on a spreadsheet, which will tell him what's in the barrel, where it is, how many times it's been filled, and when it's ready for retirement.

Mike Dever, finance and production systems analyst at Washington's Chateau Ste. Michelle, was involved last year when that big operation was shopping for a barrel-tracking system. Ste. Michelle maintains a stock of about 130,000 barrels, replacing about 20,000 per year. Weighing the advantages of bar code and RFID (radio frequency identification) technologies, Ste. Michelle opted for bar code.

"You need to consider the entire working environment: do you have wireless access at every point where you'll need it?" he asked. The Windows CE scanners that Ste. Michelle chose have all the software on each individual scanner: since Ste. Michelle has a wireless-compatible environment, these work well. "The only benefit RFID brought was when wireless was not accessible," Dever said.

RFID set-ups are still more expensive than bar code, although Dever expects that to change, and the standards for it are still evolving. "We think it is the solution for the future," he conceded. "When will the standards evolve? When will its capabilities increase?"

Mike Blom owns Napa Barrel Care, a barrel storage facility. He's still in the decision-making process. "Bar-code technology has gone as far as it can go," he said. "But RFID challenges have not been worked out yet." And, he said, RFID scanners currently cost about $5,000 each. That's pricey for a big operation, especially in an environment where barrels are stacked high, floors are hard and scanners are fragile. Safety is also an issue, and RFID scanners tend to be more position-sensitive, requiring more trips up a ladder to read labels.

Whatever technology one chooses, all three panelists insisted that installing a barrel-tracking system should be done all at once, rather than piecemeal, or just with new barrels. And, since scanners of any type are expensive, "Don't keep them in the cellar."

Trends in Vineyard Management Systems

Brian Osborne of Cropwire Inc., one of four on a panel moderated by Cyril Penn, editor of Wine Business Monthly, said vineyard information systems are getting better all the time, and in the future will be low power users, wireless, networked, real time, will work in situ, and will be increasingly web-based.

Robert Wample, chair of the CSU Fresno Department of Viticulture and Enology, gave an update of his ongoing precision harvesting research that maps quality in a vineyard using near-infrared photography, global positioning and geographic information systems (see "Smart Machines" for a feature story on this project.)

Understanding and Maximizing Web 2.0

During the final session of the sold-out Track B, speakers, including bloggers Josh Hersmeyer of Capozzi winery (pinotblogger.com) and Tom Wark of Wark Communications (fermentation.typepad.com) discussed what's new in the wine blogosphere and showed example of blogs and sales and marketing tactics they thought were working well. The founders of two other wine web companies, John Hingley of Andiamo Systems and Philip James of Snooth.com also gave their takes on the current Web 2.0 era (a term which covers social networking, wikis, blogs and online user-generated content) and the opportunities in it for wine sales.
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