Does your winery have an effective OND plan?

Dave Barry“Once again, we come to the Holiday Season, a deeply religious time that each of us observes, in his own way, by going to the mall of his choice.”
Dave Barry

The End of Innocence

Now that, according to Chairman Bernanke, we’re at the end of the recessionary crisis, don’t you feel like you’ve been a passenger on Ozzy Osbourne’s ‘Crazy Train,’ and at the end of the ride Axl Rose is welcoming you to the jungle. Well, if one’s to believe all the press, it has been a jungle out there. Consumer behavior has been difficult to predict, as trends in recenJulia Childt spending patterns have only now begun to make sense. Consumer credit card debt has been significantly reduced, and there’s been a concomitant raise in the rate of savings from less than 1% of income to more than 5% resulting in a noticeable drop in consumer spending. An example of the nationwide impact on dining-out is demonstrated in today’s Zagat Survey PR release ‘SF Bay Area 2009 Zagat Guide San FranciscoDiners Adjust Habits in Response to Slow Economy.’ Wine sales and wine values as a result have been flat in the latest rolling 52 weeks report. Questions still remain as to the nature of any long term shifts in behavior, and if or when there will be a return to what was viewed as normal. Some of the analysis, even by those who’s insights we’ve come to value, of the situation have been somewhat myopic. Several of the changes in wine sales and marketing that we are now experiencing are fundamental structural shifts that were both exacerbated and accelerated by the recent hard times. There has been for some time a move from traditional white table cloth dinning to a more casual dinning environment, even with the increased sophistication of American cuisine . Guest check averages grew faster than the rate of inflation as business diners supported restaurants in urban MSAs. On-premises experiences have evolved and will continue to do so. Business expense accounts have been reigned-in as T&E budgets are rationalized to revenues. While its Jacques PepinAlice Watersseems surprising that entertaining at home has increased, Faith Popcorn was talking about nesting for aging boomers a decade ago The effect that Chuck Williams, Julia Child, Jacques Pépin, Alice Waters, et alia had on the American domestic cook has now made home dining chic. The shift in sales channels for premium and artisan wines from on-sale to off-sale, while well documented, has been a shift that’s been occurring for some time. A change that in part has been driven by frequently changing (desktop publishing) and more focused wine lists, and a vibrant off sale market driven by groceries, chains, club stores and innovative independents.

Let’s Get it Started

August 18th Start of Crush at Schramsberg It’s the last week in September marking the 1/3 point of the ’09 Crush. Now that some if not most of the Pinot and many of the white varietals are in-house, the seasonal harvest temperatures are starting to climb towards triple digits bringing smiles to the faces of vintners and growers throughout wine country. Most every year it’s a time of optimism, especially after what’s this year been referred to as an optimal growing season. Everybody at the winery seems busy in the pursuit of a zen-like perfection. Crews hovering over sorting tables thaRobert Conard at the C Donatieloo Winery sorting Pinot Noirt are now commonplace as all hands are on deck insuring that only optimal fruit makes it into the wine that you’ll be drinking in one to two years. Even if the hours are long and days-off are rare, it’s a vibrant time with midnight picking schedules, large farmer’s breakfasts, and plenty of beer at the end of the day. The economic panic of the last year, and the resulting decline in sales have been temporarily forgotten as all the physical and emotional energy is willingly put into the winemaking process . The intense process that is winemaking, as evidenced by the game faces displayed by winemakers, from Santa Barbara to Yakima and all the way to the North Fork of Long island, from the middle of August to the middle of December each year continues unabated until every lot is barreled down. The enthusiasm created by the annual wine grape harvest and the esprit de corps generated has often served as the launching vehicle for the important last quarter sales period. A period known within the beverage distribution industry as OND for the months of October, November and December.

Pump it Up

Judith Owen & Harry ShearerA late start to the upcoming holiday selling season has been forecasted by a number of beverage industry analysts. That may be the case, and we’ll all know soon enough. But hopefully, as the chief marketing officer your winery programing and promotions calendar is in place and ready to go on Thursday, October 1st. A reasoned look at the situation would seem to dictate that now is the time to get off your wallet and put on your seasonal game face. Differing sales channels will require unique tools structured to the idiosynchrocies of each. It will take innovative pricing structures to maximize your sales effort in Q4 of 2009. Christian Miller of Full Glass Research has shared that a recent survey of on-premises wine sales by the Wine Opinions Panel, revealed points of price sensitivity for list above $60/bottle, and $16/glass. So, depending on your resources it’s time to create programing for targeted restaurants accounts with this fact in mind. In addition to doing line-up tastings each working day at targeted restaurants, stick around for the early diners and offer an amusChuck Williams at the Maysonnave House in Sonoma, CAe bouches of a 1 oz pour of your listed or featured wine. As Chuck Willams said at the Maysonnave House this past week in Sonoma, ‘make the customer your friend.’ Also, spread your efforts across differing channels, hotels, catering, urban hot spots, large independents, ethnic cusine, entree specific and targeted lighthouse accounts. For off-sale, your POP materials, flow shelf talkers and back card should be pre-packed within the case. Provide high resolution, grabbable images on your winery web site for sell sheets, review talkers, labels bottle shots and tasting notes, etc. This will help to maximize ad placements and possible Sonoma Market Wine Displaydisplay activity. Discounting will be aggressive this OND, but you don’t have to compete with the big boys, be innovative in your tiered pricing, display allowances and use of coupons, including co-branding, non wine merchandise discounting, MIRs and occasional IRCs. Remember a basic rule in merchandising, hangers on 4-6 bottles, not on all 12 in a case. Oh, and Saturdays are great for in store tastings and/or bottle signings. If you’re relying on your tasting room and your wine club as your only DTC options, please consider the many other options available, such as third party wine clubs. This is a specific area in which sub-channel diversity will be the norm, but that’s not the case as yet. Assume the role this OND as a bleeding edge DTC leader.

Winter Song

Happy HolidaysI’ve been researching a series of articles written about the apparent market softness in the wine industry, and it seems that most of the noise is centered around the volumetric end of the business. As a small or mid-sized winery looking at flat as up, you can be much more innovative in your distribution strategy, and much more agile in the execution of your holiday marketing tactics. OND is your Crush time, so this selling season you should heed Warren Zevon’s words ‘I’ll Sleep When I’m Dead.’ The big boys aren’t sleeping at this time of year. Wineries in your competitive frame likely aren’t sleeping either. Go out there and shake a lot of hands, the hands of old and new friends. You can rest in January, at least for a few days.

Note: Copyright © 2009 Think Wine Marketing® All rights reserved.

9 thoughts on “Does your winery have an effective OND plan?

  1. Cork…a lot of great reference links for people to check on, a lot of food for thought, and they had better do it soon…with only 7 days left (to the start of OND). Openly admitting that as some what of a newbie I still have a lot to learn, I was somewhat impressed that at a professional tasting (in NYC) on Tuesday my pour was being done by John Conover and Cathy Segeshio…so I guess that at least some wineries have gotten the message that they had better be pressing the flesh (as well as grapes)…but I was also surprised by the reaction I got when I spoke to different people of this year as being challenging…was that perceived as poor etiquette? Too bad…if you can’t face realty I already know that you will have a tough time in 2010 in the wine business…I also had the sense (perceived) that the atmosphere was BAU…lets ignore what is happening and pretend everything will be fine if we can just wait it out for another 3+ months.

    Another important point that may come out of the wineries efforts in the OND period and how they use “non-traditional” sales channels is the perception by consumers as to how individual wineries treat them as “customers”.

    Its far to early to be making a statement that this could be a consumer “make or break” period but consumers have a funny way of deciding things on their on…while everyone is waiting for “a return to normal”, those who find the correct methodology to utilize those “non-traditional” channels may find themselves accelerating beyond their normal market share, during and after this OND period.

    Lets raise a glass to all those marketing people who reading this, and the toast I make is that they dig down into each link, think this out, and if they haven’t already done so get off their wallets and CREATE A SOLID PLAN!

  2. A good column John, but I think you’re perhaps too calm and polite when you say “Christian Miller of Full Glass Research has shared that a recent survey of on-premises wine sales by the Wine Opinions Panel, revealed points of price sensitivity for list above $60/bottle, and $16/glass. ” In over half the restaurants polled bottle sales over $60 had dropped and in 42% sales by-glass over $15 had dropped. Nearly 1/3 no longer offered wine-by-glass in that range. In our trade survey, sales weren’t increasing until you moved under $8 by-glass and under $30 by bottle. The middle price segment was more or less flat.

    Throw traffic declines on top of this, and things are undoubtedly grim on-premise. Off-premise is a different story, as you point out.

    Christian Miller

    • Christian: thanks for taking the time to read my articles and for providing clarification. I don’t know if polite is the word, but just trying to follow the word’s of Rudyard Kipling:

      “If you can dream – and not make dreams your master;
      If you can think – and not make thoughts your aim;
      If you can meet with Triumph and Disaster
      And treat those two impostors just the same;”

      Tough times for most wineries, and I’m attempting to provide a chronicle of the events that we are all now experiencing in the wine business. I’m also trying to give a polite kick in the can to those still asleep at the wheel. In recent conversations with several key market distributor execs, the message has been that depletions of wines above $25 retail & $40 wine list are at best difficult, in fact have stalled or stopped. And this is anecdotally supported by the number of wine discount offers that I receive daily in my email inbox for SKUs previously unavailable outside a closed mailing list. So, the question that I have yet to have answered – is this a short term response to the economy or a long term structural shift to value? My considered but unsupported opinion is that this is a longer term shift. Maybe not permanent but at least long cycle in nature. Once again thanks for the great information that’s supported by your research at Full Glass and though the Wine Opinions polls. … Cork

  3. Hi John.

    Yes, I too love all of your references – especially being a huge Warren Zevon fan. Here’s some additional points to add to yours.

    Will retailers take new inventory when they haven’t successfully depleted their current selections? Will those new releases be available for consumers who are looking to buy? What does all of this mean for the wineries?

    There are ‘secret sales’ all over the wine retail business on current inventory so many consumers won’t even look at an item that’s not ‘marked down’.

    This happened in fashion retail and the consumer has not returned to the state of mind of buying something at full price. The ability for internet price comparison has made most savvy consumers look around for a wine that they want to buy and place their order not in their own backyard but where they can get the cheapest price and free shipping.

    Many wineries have spent a lot of time and effort this year in trying to beef up their direct to consumer sales and I know that this is a hot topic for them but I have yet to see any email campaigns from them talking about the holidays. It’s like the elephant in the room.

    Here’s what I’m telling my clients to focus on in addition to their restaurant and retail tastings and POS campaigns:

    1) get started in partnering with chefs to offer recipes for Thanksgiving and suggested wines to pair from their winery for the biggest nesting time of the year;

    2) have ‘pick-up’ party events in major US cities for wine club members to get together close to home and give an in-person thank you;

    3) offer gift promotional packaging online and remind consumers that even in tough times there are those that need to be thanked with a gift. In my opinion using the excuse that it’s a tough year when people have given you business is idiotic and the best way to lose business in 2010;

    4) have POS materials that encourage people to have holiday parties as a way to say thanks with suggested guides for how much wine to buy for a party;

    5) plan winemaker appearances at wine tasting dinners because that’s what gets the consumer excited. If you’re a restaurant trying to attract diners to taste expensive bottles having the presence of a sales rep is not the same;

    6) remind consumers that early gifts stand out more than those crowded into the last week of the year – and encourage them to send either before Thanksgiving or right after.

    I can’t even touch the discussion on restaurant wine prices as most have not responded very well to price sensitivity and knowledgeable wine lovers are really put off by it – even if they can afford it.

    Lastly, I’ve overheard several conversations in the past few days about Halloween. Maybe it’s time for restaurants and retailers to add this fun holiday to their marketing calendar as a way to pick up some extra holiday biz and connect with the consumer at a less pressured time.

    Thanks John – I love reading your blog!

    P.S. I invite you to read my recent post about the State of Social Media in the Wine Biz

  4. Pingback: Reflections of a Wine Business Blogger « Think Wine Marketing

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