“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
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 recent 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 Diners 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 seems 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.
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 that 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.
A 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 amuse 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 display 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.
I’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.
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