Revisiting Wine Marketing 101

Leo Burnett“If you don’t get noticed, you don’t have anything. You just have to be noticed, but the art is in getting noticed naturally, without screaming or without tricks.” … Leo Burnett

Chicken Little

Yes indeed, the sky may be falling. The Great Recession, which in the 6 months from September 2008 through March 2009 stripped in excess of $6.6 trillion from USA personal wealth, may be with us for awhile. The access to credit that drove US consumer spending behavior and the economy has largely evaporated. Although consumers have paid down debt at aiDepression Bread Lines coming soon to your neighborhood record pace, banks continue to reduce credit availability, expecting to retract an additional $1.5 trillion by lowering home equity loan access, consumer credit card limits and commercial lines of credit, restricting the ability of the US economy to recover recent spending patterns. Something lost in the swirl of marketing images from luxury Paneri Watchesconsumer brands such as Panerai Watches, Hasselblad, Hermes, Ferrari, Tom Ford, Christian Louboutin, Michael Kors, et alia, is that under the aura of glitz America has been on sale for quite sometime. Just like disco, to many consumers the idea of the luxury brand may be dead, at least for the foreseeable future. Value has coexisted with the concept of brand as long as brand has existed. It’s the yin and yang of the retail continuum. Walmart created explosive growth in the 1990’s with the concept of everyday low prices, and then created significant competition to chain grocers with the introduction of consumables in both Walmart and Sam’s Club stores. Costco has been in the game for awhile, and has become a major factor in wine sales. Target introduced the idea of designer products at value pricing, and now will match Walmart pricing toy for toy this Safeway Cut Case Wine Display w/Sale pricingChristmas. And then there’s Amazon. Amazon is no longer just your bookstore, but now a major online retailer across several categories of consumer goods and electronics. And, as soon as the compliance situation, delayed by the well documented situation at New Vine Logistics, can be sorted Amazon will be a major factor in wine sales. Trader Joe’s introduced the concept of healthful foods at value pricing back in the 1970’s. With the latest US Labor The Economic Elevator's going SouthDepartment statistics pegging the jobless rate at 9.8%, this is a dramatic understatement of the now real number that’s closer to 17% including people no longer actively looking for work and those now underemployed and working non-benefited minimum wage part-time jobs. It’s not surprising to see major retailers and grocers follow a strategy of value pricing. For anyone in this neck of the woods if you’ve been in Safeway recently the major merchandising theme is SAVE, and the yellow sale tags are inescapable. Lucky stores are following their philosophy of everyday low prices. And overriding this is a spirit of the new consumerism. It’s now cool to be frugal and save money.

The New Wine Consumer

San Francisco TrafficAs I worked my way to the Mission Street Garage traffic slowed to a crawl, in part due the rerouting of traffic away from Market Street. I was in the process of doing a NorCal broad market survey of grocery and independent package stores for a privately held family winery client, and it was time to break for lunch. Since my last two stops were in SoMa, I was headed to the food court in the Westfield Center, and to Charles Phan’s ‘Out the Door.’ Even though it was only 12:30 on an early October Friday, the joint was jumping. The food court was packed with shoppers, most holding multiple bags. The noise level sounded, well actually felt, like a low roar, creating a sense of excitement not present in the City’s shopping Out the Door at the Westfield Center, San franciscodistrict for several years. One of my early retail lessons at Disney’s Lake Buena Vista Village, was to look for the bags in shoppers hands as an indicator of a good or bad day, and this looked like a good day. All of this economic activity seemed to be driven by the aggressive mark-downs and clearances in the stores in the Center. Pricing motivated by the need to make room for holiday merchandise, and these pricing strategies seemed to be working. Consumers have been on the sidelines, even during the recent back to school shopping period in August. But sharp advertising and in store media seemed effective at getting shoppers to reopen their wallets. The efficacy of the various campaigns will be reflected in each stores daily flash reports. The tide may be turning, however slowly, as consumer sentiment seems to be Inflection Point Graphdriven by value, with the economic thermostat having obviously been reset. An economy that now seems more driven by consumer needs rather than by wants. And the need for value seems to be paramount as a new inflection point in consumer purchasing behavior has been reached. So, in an age of cash for clunkers, extended unemployment benefits and tight credit what can we do as wine marketers to meet the contemporary challenges of the market. Let’s take a quick revisit to the basics of consumer packaged goods marketing (I’ll try not to be too wonky) by first asking the following questions:

  • Who are the buyers?
  • How much will the buyers pay for my wine?
  • Where and how will the buyers purchase my wine?
  • How do I create buying situations?
  • Is the customer happy after purchasing my wine?

Marketing 101 Revisited

  • Product – the want satisfying offering of your winery (branding, packaging, product features)
  • Price – what you charge for your wines. Price is a measure of value. Price in the marketplace is a rough measure of how your consumers value your wines
  • Promotion – the communication of information between your winery (the seller) and the potential buyer in a defined channel (Place) that tends to influence attitudes and behavior
  • Place – making goods and services available in the right quantities and locations when your customers want them, resulting in the transfer of ownership from producer (your winery) to your customer/client, taking into account strategies and tactics applicable to any middlemen, brokers, marketing agents, wholesalers and retailers

Wine Business Monthly Top #0 US Wine CompaniesToday most wineries are micro marketers. Even wineries in the WBM Top 30 approach the market on a segmented basis. Micro marketing is the ‘performance of activities that seek to accomplish an organization’s (your winery) objectives (selling your wine on a timely basis) by anticipating customer or client needs (marketing research) and directing a flow of need satisfying goods (your wines) from producer (you) to customers/clients’ (via DTC, DTT, broad market).

It is important to understand that we are no longer in a wants period of aspirational or conspicuous consumption, but in period of meeting the specific identifiable needs oAbraham Maslowf your targeted audience. Without entering the maze of Abraham Mazlow’s ‘hierarchy of human needs,’ here are the basic definitions of wants and needs and demands:

  • Wants – desires for specific satisfiers of deeper needs; i.e., the particular choices (including types of products/specific brands) that consumers aspire to buy to satisfy perceived needs.
  • Needs – a state of felt or real depravation of some basic satisfaction (the difference between a consumers actual condition and their desired condition).
  • Demands – wants for specific products that are backed by an ability and willingness to pay for them.

Wine Consumers at Benziger WinerySo, as wine marketers it is important to understand that we don’t create needs. Needs preexist marketers and their brands. A marketers function is to influence wants. A good marketer takes the initiative in stimulating and facilitating commerce. A key part of this function is understanding the market and your consumer. So, how can one identify the best possible markets, and then influence consumer purchasing behavior? Engage your marketing research resources and ask:

  • Who are the people with identified wants?
  • Where are these people?
  • What’s their purchasing power?
  • What’s their buying behavior?

Having asked and answered the above questions, what degree of market exposure do you want, or more importantly can support with your production, allocations and resources, human and capital?

  • Intensive (ubiquitous distribution for large production, enterprise wine companies)
  • Selective (by channel for mid-sized winecos, or for products within an enterprise wineco where price dictates targeted distribution)
  • Exclusive (small- family winecos with limited channel distribution, or luxury brands model)

Having now identified your market and your desired level of targeted distribution, what sort of consumer behavior response do you want to engender – routinized response behavior or adoptive response behavior?

Routinized Response Behavior – the regular selection of a particular way of satisfying a need. This is typical of low involvement purchases, generics or purchases motivated by price or perception of price.

Adoptive Response Behavior – the demand for a specific product that meets, on a regular basis, the hierarchy of needs of a buyer, and the continued ability to purchase your wine(s). This is typical of high involvement purchases, usually of products (wines) within a consumer’s brand set.

Sale tags on all the winesAs a marketer, if you plan to sell your wines in a saturated market based only on price, in essence creating a commodity and not a brand, in what has to be by nature a rapid depletion exit strategy, then the idea of routinized response behavior is the way to go, and pricing and display allowances will be your primary marketing tactics. However, if you want to build a brand even in this challenging market, then engage in marketing tactics that create adoptive response behavior within your identified consumer set.

Wine Consumer Adoption Process

Awareness – comes to know your wine(s) through your brand awareness plan that may include category specific magazine reviews, scores, story placement, newspapers, blogs, forums, and social media.

Interest – the ease of finding information on your web site, forums, blogs and traditional wine press. Events like Twitter Taste Live, open that Bottle Night or Tweet-ups.

Evaluations – providing information and access to your wine. In addition to the traditional wine press new points of information such as Cellar Tracker, AbleGrape, and approximately 800 wine bloggers are a resource that you need to identify and utilize.

Trial – the chance to try before committing. Wine by the Glass, in-store sampling, winery tasting rooms, winemaker dinners.

Decision – to adopt or reject. A whole set of modifiers come into play, such as varietal, pricing, packaging, where and when available to purchase.

Confirmation – the reinforcement that the decision is good. This can be in the form of availability or rarity, appealing to cultural values (sustainable or biodynamic wines), based on acclaim, reviews or a wine blog, or on the affirmation from friends or family.

The Game

Twins beat Tigers in one game playoff 2009Without a thorough grounding in classic CPG marketing fundamentals and a clear understanding of wine brand marketing concerning human motivations in regards to purchasing behaviors, success in today’s highly competitive and product saturated marketplace is not likely for your winery. This somewhat academic take, a departure from my usual ‘how-to’ articles was written to encourage you, your winery’s marketing officer, to think about your current brand plan. Concerning your brand – what is it that you do and why do you do it? Is it working? What would you do differently? What are you doing to differentiate your wines? It’s not a time for indecision in your consumer facing wine business. Faced with declining sales in his collection line Michael Kors quickly introduced a consumer approachable ready to wear line and is thriving in a brutal retail market. Yes, times are tough, and consumer behavior has been reset, but commerce moves on. It is important to be in the game, so sharpen your pencils and fire up your synapses. Preparation and planning = performance.

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

The Wake-up Call

Niccolo Machiavelli“Whosoever desires constant success must change his conduct with the times.”

… Niccolo Machiavelli

The Cult

My wife’s friend, New York based designer Joe Macal, told her that this summer in the Hamptons the wine selection on the party circuit is no longer the envy of the wine cognoscenti. The cult wines have been locked in the basement wine cellars of the McMansions, and the famous hosts just don’t think ostentatious displays of conspicuous consumption are cool in this economyHamptons Summer Party. Or so opined a vintner friend over Racer 5‘s in Healdsburg last week . I’m guessing there has been a sort of a reverse Veblen good effect going on here. Well, no doubt the tide is out. Wall Street has sneezed, and it’s looking less like a cold and more like the financial flu. The question being asked in the hills and knolls of wine country is ‘are we in a luxury goods recess, or has long-term consumer, even the most affluent consumer, behavior been modified?’ The luxury category segment of the American wine business known as the cult wine market has been on anKinked Demand Curve Model unprecedented run since 1990. While the term is new the concept isn’t. There have always been wines, as long as wines have been produced and sold, that commanded more attention and higher prices. Although we look at absolute pricing as an identifier of value, pricing is relative to the times, and through the inverted kink in the demand/pricing graph made famous by the late Dr Paul Samuelson in ‘Economics,’ and codified by John Forbes Nash in ‘Equlibrium,’ we’ve come to understand that the stratospheric pricing of cult wines infers on the host and guest the psycho-social attributes, as described by Berkeley’s Erving Goffman, of being accepted as members of the club. However, just ask Silas Lapham, membership in the club may not be long term.

The Call

Screaming EagleRinggggg, ringggggg, ringggggg. Sitting bolt up-right in my desk chair, looking past the glare of the iMac screen in the darkened room, I couldn’t believe that at 5 AM my iPhone was vibrating off the edge of my desk. Quickly shaking my head back-and-forth to loose the remnants of the mind numbing long night’s work of pushing ouHarlan Estatet pricing structures for a client’s new label project, I answered my phone without first checking the caller-ID. At the sound of the click the sonorous voice at the other end of the connection jump started the conversation. “Hi, sorry to call you so early, but did you read today’s Wall Street Journal article on the luxury wine market? Well, it struck home. My sales, for the first time in 15 years aren’t so great, and well, I’d like to toss around a few ideas.”

“Not a problem, I’ve been up working on a project, but no, haven’t read any papers this morning. Ah, excuse me. Who is this?”

“I’m that small cult winery, ha, that you pitched last year about this time and I told you I didn’t need any help. But I just got off the Araujophone with a management contact at my Boston asset management firm and, well, I need it now.” “I’ve replanted about half of my vineyard, changing the potential final blend, and the grapes are in 4th leaf. I could bottle the young juice in my primary brand, but the overall quality would be diminished. And if there was ever a time to push the quality envelop, it’s now.” “I’m thinking about introducing another label, in a more popular tier, something that could be sold in other environments, other channels. I’ve always been at the luxury end of the market, but I do buy other wines all the time, and think it would be great to get this new wine in more hands.” “So, how do I do this?”

The Plan

Yes, it is possible for a luxury brand to execute a lower priced, more egalitarian brand strategy effectively. A clear focus is needed and a tier specific brand plan is necessary. There are key questions that need to be asked and answered.

  1. Theme – name, appearance, label, packaging
  2. Personality – place, product, pricing, promotion
  3. Tactical Plan – what, when, where, how, how much
  4. Reputation Engineering – the PR initiative
  5. Sales Effort – DTC, DTT, existing distributors?

Forts de LatourA great team is in place, and to dislocate them for a new project just wouldn’t make any sense. They are part of the positive story for your existing brands and lend credence to the new project. You’re current cult and luxury portfolio is based on Napa Valley mountain grown Bordeaux proprietary reds. Protect the image of the existing luxury/cult brands by reducing production by further defining selection and maintaining real rarity. Use the traditional Bordelais classified growth second label model. Think Forts de Latour from Chateau Latour, Pavillion Rouge from Chateau Margaux, or Le Petite Cheval from Chateau Cheval Blanc. Share the story of replanting with new clones and the early quality displayed by the young vines, whilimages-3e refining the cult winemaking process. Increase exposure and the positive press and/or wine blog buzz opportunities by providing value and access to wines which were formerly unavailable in the broad market from your winery. In a market in which Michelin star chef Daniel Boulud has decided to focus more on value with DBGB Kitchen & Bar, the idea of a cult brand providing a more value centric model is not only timely, but most likely necessary given the reality of today’s world financial markets.

The Wrap

drafting plansCreating any new brand in a rapidly consolidating and saturated broad market is not without risk. Manage your risk by utilizing research to target the best potential accounts. Work with key lighthouse accounts, both on and off-premises in limited geographic markets, who will provide support through newsletter, blog and/or web endorsements, while avoiding brand image diminishing discounting. Be sharp in your pricing to not only maximize profit but to achieve planned depletion velocity and consumer pick-up and repurchase. Your value proposition is leveraged on your existing reputation, built through hard work and a fidelity to your singular vision over the last 15-20 years. Don’t engage in any activity that will diminish the new brand or your existing brands. And, really only do this if you are totally committed to success, and not just as a short term liquidity fix.

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

Swimming the Grocery Channel

Larry Bird“Push yourself again and again. Don’t give an inch until the final buzzer sounds.”
… Larry Bird

The Client

I’d been listening for more than a hour, taking notes, watching for signs or cues that my client wanted more than a confirmation that the strategic business model conceived more than 7 years ago was still viable in this new, emerging economy. Sometimes it’s just best to let someone talk and talk. And after all the points are expressed, restated and then exhausted the steam just runs out. As my client turned in his chair, at images-3the large cluttered antique desk, holding the latest account sold report, he looked at me and said one last time, ‘just a little more hard work.’ ‘Yep, that’s what we need, a little more hard work.’ I leaned forward in the faded leather club chair, pinching my eyes closed with my thumb and forefinger and started to feel the onset of a migraine. A migraine that would only go away when my client saw the light. I fought back the urge to answer withDana Carvey as Bush 1 my best Dana Carvey imitation of Bush 1 saying “Not gonna do it.” But, self preservation and 7 years of history got the better of me, and I responded that it was time to rethink the winery’s business model. We needed to flatten out the growth curve of the principal brand, while continuing to focus on the best quality. Some of the juice would have to declassified to be sold in bulk, bottled as a value tier or launched as a new brand. If the new tier or label strategy were to be implemented then pricing tactics would allow the winery to open up new channels for wine by the glass (WBTG), independent retail, or grocery distribution. The word grocery resonated like a scratch on a blackboard. My clients face scrunched-up as if he had just smelled a carton of month old milk. He looked up at me over the top edge of his bifocals and said ‘GROCERY?’

The Grocery Channel

I understand your reticence. You’re concerned with endangering, what Tim McDonald CSW refers to as, your winery’s ‘Reputation Engineering.’ And, based on old models, this concern was once justified, but no longer. Today’s grocery is more than a viable constellation solar winerydistribution alternative for wineries of small and moderate size. The world of grocery distribution seems to the uninitiated to be dominated by the big boys, the 30 largest wineries in the USA market. And it seems to be most appropriate as a channel model only for those wineries producing 100,000 cases or more. Well the grocery market, like the wine market is highly differentiated and segmented. Groceries are classified and merchandized by neighborhood and product selections determined by local demographics. A sharp, regionalized well conceived channel strategy is a must. There is a spot across most price points somewhere within the grocery segment for your wine brand(s). There are convenience store concepts, independents, mid-chainKrogers, large regional multi-unit stores, and then there’s Safeway and Krogers. Within these larger grocery brands several regional sub-brands keyed to the needs of their local markets exist. Consolidation, a current trend in the adult beverage business for producers and distributors, has also found its way into the US Food & Drug business segment. It is not a one-size fits all solution anymore. As I look across the country, I see data that demonstrably reveals pricing segment shifts and channel shifts that favors due consideration of grocery distribution for your brand(s). I believe that it’s time to reset your expectations. It’s time to innovate. It’s time to realize that there are new points of price sensitivity that factor into consumer wine purchase decisions. It certainly is time to recognize the need for real-time category information as a key part of your decision making matrix.

Please note that large areas of the country, including the Inter-Mountain West, several control states such as Pennsylvania, and Whole Foods Wine Sectionlarge US Eastern population centers including Maryland, New Jersey, New York, Connecticut and Massachusetts don’t as yet allow wine sales in grocery stores. For the smaller, niche, highly-differentiated winery single unit independents and mid-chains are the most appropriate targets for selected distribution. In the nine county San Francisco Bay Area, the small and mid-chain grocery market is vibrant. Within 100 miles of most wineries in Napa and Sonoma several points of potential distribution exist. Although not meant to be comprehensive, the following list represents strong premium grocery retail wine locations: Oliver’s, Fiesta/Pacific, Molsberry Market, Sonoma/Glen Ellen Markets, Vallerga’s, Ranch Market, Sunshine Foods, Oakville Market, Dean & Deluca, Molly Stone’Nugget Markets Wine Sections, Paradise Foods, Nugget Markets, Real Foods, Andronico’s, Berkeley Bowl, Monterey Market, Farmstead Cheese, Draeger’s, Lunardi’s, Cosentino’s, Diablo Foods and many more. Whole Foods, and Trader Joe’s are also larger specialty food retailers with strong wine programs, and a significant Bay Area presence. Although, I’ve focused on my back yard, I would also target strong local or regional grocers such as the Carolina’s Harris Teeter, Chicago’s Treasure Island, Seattle’s Metropolitan Market, Portland’s New Season’s Markets, Los Angeles metro area Gelson’s and Bristol Farms, Florida’s Publix Markets, Texas’ Central Markets, Arizona’s AJs, Cleveland’s Heinen’s and St. Louis’ Dierberg’s.

A Very Short Course in Category Management

Category Management GraphCategory Management is “a retailer/distributor/supplier process of managing categories as strategic business units, producing enhanced business results by focusing on delivering consumer value.” …FMI ECR Committee

Selling to groceries can seem daunting to the first timer. The concept of management by objective is key to your grocery presentation. What specifically are your goals? How do you hope to achieve your placements? Do you understand how to leverage your brand equity with that of the retailer’s equity? You don’t have to be Gallo or K-J to have definedTrader Joe's goals and a plan. Your brand’s equity is based on your prior distribution achievement, sales history, reliability, pricing and promotions. Understand that this is a business relationship that requires candor, confidentiality, participation and the ability to give unbiased recommendations in reference to the category, varietal and other winery’s products. Wineries of all sizes have the ability to grow and diversify their depletions by taking the category management approach with retailers seriously. Understand that retailers are seeking multiple points of input to get a holistic view of their marketplace. Use your unique position as a smaller winery and your knowledge of the super and ultra-premium price segments to become a trusted adviser helping the grocery buyer to be better at focusing on the end user. In your presentation be objective, be consumer oriented, keep the message simple and focused, be action specific, and sell a ‘win-win’ program.

A very simple analysis is to quantify your opportunity  by comparing the Consumer Development Index and your Business Fine Wine SalesDevelopment Index, What may sound like geek speak to you, is actually a simple concept. CDI is a specific market accounting of the % of sales for an item based on type and price. To access this information you need to refer to data from IRI, Nielsen, Trade Pulse, or other previously discussed wine consumer insights firms. BDI is your actual % of sales within a defined geography. Select markets where CDI>BDI. Calculate the gap as CDI-BDI = a positive opportunity. Then utilizing the formula (Volume/BDI)*Gap = opportunity volume, develop a plan. This is allows you to ask and discover the answers to the 3 basic questions of distribution:

  1. Where are we?
  2. Where should we be?
  3. How do we achieve desired targeted distribution objective

Swim to Win

imagesSelling wine to groceries tends to be a more technical and specialized arena than other available wine sales channels, but not necessarily more complex. Sales is sales. My Dad used to always say ‘sales is a contact sport.’ And in any contact sport you want the best tools in order to just not survive but to succeed. You’ll need to incorporate your market, brand and wine knowledge, salesmanship, business skills and your entrepreneurial mind set. Yes, it’s tough out there, always has been, always will be. But, you’re in the game to win. And if you close your mind to any available channel before a thorough strategic market analysis, win you won’t. As you swim in the grocery channel, utilize technology to access the best market and category information tools to target, prepare, present , close and win.

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

It’s Time for Plan B

images-4“The most successful people are those who are good at Plan B.” … James Yorke

I’ll be more than happy to grant you a plenary indulgence if your first response to reading the daily news headlines is to head to your winery’s case goods storage facility to start drinking this years unsold suprplus. USA Today Money section headline reads ‘Anxietimages-3y surges as stocks relapse.’. The Wall Street Journal reads ‘Markets Fall on Growth Fears,’… ‘Drop Amid Worries Over Global Contraction.’ James C. Cooper in his Business Week column advises us that that ‘Consumers Won’t Drive A Recovery.’ Given the dynamics of today’s financial markets the world of commerce as we have known it appears, at a minimum, chaotic. The situation is completely out of our control, or so it seems. As our core wine consumers concentrate on increasing their rate of savings and focus on paying down debt, we face the daily reality of our wine business balance sheets. Upon the completion of the monthly review of our financial dashboards the question most often asked is, ‘which way out of the abyss?’ Well, I’m guessing that Plan A isn’t working as well as it once was, so let’s start talking about Plan B.

head in sandNo Plan B is not sticking your head in the sand, or drinking all of your unsold product by the holidays. Plan B is increasing your promotional spend in very specific ways to create improved brand awareness and to increase the velocity and lift of brand take-away. Promos can take many forms that can be shaped to your winery’s specific business and channel models. It is important to note the obvious. In the domestic USA there are 50 states, with each state determining alcoholic beverage custom, law and practice within its borders. Before embarking on any of the following suggestions make sure that you interface with your compliance specialist and with your Sonoma Market Wine Displaybeverage industry attorney concerning any proposed promotional activity. Promotions in the beverage business can be experiential, interactive, viral or mobile, while focusing on your tasting room, retail distribution or restaurant activity. The idea is to create a reason or a set of compelling reasons that with create a positive interaction between your brand and your targeted customer. Good promotions not only engender sales, but are also structured to provide trackable metrics. All good promotions are established with specific goals and objectives in mind. And all effective promotions are keyed to a calendar with a beginning and end date.

Thanksgiving w/WineAn awareness of the calendar is also important in maximizing promotional opportunities around key selling dates — Thanksgiving, Christmas, New Years, St Valentine’s Day, Easter/Passover, Memorial Day, Mother’s Day, Father’s Day, Fourth of July and Labor Day. Promotions can focus on seasonal releases such as Beaujolais Nouveau on November 15th, the May release of Rose, the late spring release of your aromatic whites, or the fall release of your Syrah. Promotions can be keyed around major sporting events through sponsorships or seasonal promotions such as the MLB All Star Game or the annual NCAA/NFL season kick-off.

While general marketing trends follow our traditional Julian Calendar please note that the promotions calendar for all 50 states should not the sameimages. While consumers are drinking lots of wine in the Hamptons right now, the same can’t be said for most of Florida or Arizona where consumption peaks during the winter months. You may want to create a national promotions calendar, but you would be wise to regionalize your calendar based on seasonal differences and on your unique product mix.

Case Study

The Crisis:

Winery A, a <10,000 case single brand burgundian varietal facility, had experienced reduced week day traffic in the tasting room, IMG_0452and week-end spend was flat compared to last year. A significant amount of bleed was being experienced from the mailing list. The marketing plan had always been to focus broad market three-tier distribution specifically on-premise, and to not focus on retail, avoiding discounting and direct competition with, what was until this year, a vibrant DTC program. Well, restaurant sales were contracting and retail, while receptive, only placed just in time orders. Winery A’s distributors were also minimizing orders and stretching out the payment cycle on purchases, crimping cash flow in a tight, tight credit market. Ouch! What to do?

Plan B:

In order to create focus and to drive traffic in the tasting room the understanding that most traffic was now local was key to creating the following promotional activities. A technology person was hired and tasked with new web-site development and new media strategies. Online coupons were developed offering twofer tastings. The tasting bar glassware was upgraded to Stolzle lead freeBurgGrand crystal. Instead of the standard sequential individual glass tasting, flights of 3 wines were created, i.e., 3 Chardonnays, 3 Pinot Noirs, or 3 SVD wines. Retail wine pricing was revisited and prices were rationalized to current BBQeconomic realities. With the clarification that California wineries could now offer for on-site consumption full bottle or wine-by-the-glass sales, the outdoor areas were refurbished and replanted, picnic tables were added and activities such as live music, BBQ’s and association events were added to the Calendar. An outreach to mailing list clients was initiated first by email, and then by phone. A members only room was created and made available for for active mailing list customers. Several mailing list first only small production single vineyard wines were produced and marketed to the members. Principals and winemakers were now present and active at all primary members events.

To launch the new image, prior to the start of season, a regional party was thrown for hospitality staffs at other wineries, IMG_0543restaurants and hotels. A one day employee discount offer was put into place, and the In-Out Burger Wagon was brought in to serve the large crowd. The new media manager had a station for Facebook Fan Page sign-ups, tied into a ‘guess-that-varietal’ contest, with the winner(s) broadcast on the Fan Page the next day. Great good will was created, leading to a significant uptick in referrals from the attending hospitality folks. Next the new media manager organized individual tastings with traditional media Facebook Fan Sign-Upfrom local and regional newspapers, radio, television and the major wine magazines for a winemaker tour and tasting of the new releases. This resulted in several stories and reviews. Next came the tweetup. All visiting and local active Twitter contacts were invited to the winery for a tasting and BBQ. Library, and yet to be released wines were poured alongside current or soon to be released wines. A good time was had by all, and considerable buzz was created, not just on the event day, but the relationships developed kept the conversations flowing. The new media manager also identified key influential bloggers in targeted markets, and distributed samples for a subsequent online winemaker led tweetup.

For the broad market a new channel strategy was put into place. A regionalized marketing/promotion calendar was developed. The sample budget was increased, and a program for new accounts and/or new markets was put into place. The release of Winery A’s Brown Bag Wine Tastingbest Pinot Noir was treated as a notable event. Tastings were organized and the prize Pinot was placed in a brown paper bag as was a well known and highly rated and much more expensive Burgundian Pinot Noir from the same vintage. The targeted on-premises account gatekeepers were tasted on both wines in a random order, and then asked to choose. A win win situation that resulted in new placements in conjunction with new on-premise post-off or 3 case tier restaurant pricing replacing the former no discount practice. This tasting was replicated with the in-market distributor partner’s key account sales teams. In the evening, accounts with an active wine bar crowd imageswere sampled by the market manager interfacing with wine friendly patrons, and a wine amuse bouche was offered to receptive dinners. Retail pricing was revisited and post off or volumetric discounts were offered. In markets where groceries sales were allowed, distribution was extended with appropriate pricing creating sales and display activity even at Winery A’s higher price points. Winemaker and principal travel was coordinated to do either in-store tastings or bottle signings on key Friday and Saturday sales periods. And in the evening they were scheduled to conduct  local tweetups,  interacting with key wine bloggers and Twitter contacts.

In dealing with their distributor partners, Winery A allocated human resources, and promotional dollars to drive sales. In order to accelerate the payment cycle, they used a traditional CPG invoicing strategy. While seeming to lengthen the payment cycle, by writing the terms to reflect a discount of 5%/10 days, 2%/30,  & net 60, accounts receivable returned to a normalized payment schedule.

Conclusion:

Woodcut BWinery A had a viable Plan B to attack not retreat from the market in times of consumer retraction. They created new promotions, programs and strategies reflecting new technologies, and allocated spend to position their winery for not only the current economic times, but for sustainable success. The implementation of Plan B which incorporated old school  promotional practices aligned with new technologies applied with old fashioned elbow grease have positioned Winery A for maximization of results. So, is your head still in the sand? Are you sitting on your barrels, mired in reams of financial reports, or are you working on Plan B?

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

Back to Basics

Picaboo Street“When someone tells me there is only one way to do things, it always lights a fire under my butt. My instant reaction is, I’m gonna prove you wrong.” … Picabo Street

Yes, it’s tough out there, maybe tougher than anytime since the immediate post 9/11/2001 period for wine sales. The wine brand market place is saturated, with little or no room for additional undifferentiated brands. The rate of distributor consolidations has increased squeezing out the small winery brand. On-premises national accountNielsens are becoming an even more significant part of current broad market wine sales. There is an increasingly rapid consolidation of the grocery sector, constricting the funnel from winery to shelf placement. And, now the Nielsen Company, in their May 13, 2009 US Wine Consumer Report informs us that even though wine in general is ‘recession-resilient’ the US wine consumer has an economic hangover resulting in restrained spending.

US Wine Market GrowthThe domestic wine market, while featuring new points of price sensitivity and significant channel shifts, is still growing, albeit at a slower but perhaps more rational rate. Is the market growing for your brand? If not, maybe you should revisit some of the basics of marketing best practices. It will also help to have an understanding that the actions that you take today and tomorrow, will help to position your winery to ride upward with the recovery.

project-genomeDevelop a deep understanding of the various to market models available to you as a wine marketer:  the Three Tier System, DTT, and/or DTC. Gain a thorough knowledge of the role of ‘Marketing Agents,’ third party marketers of your wine such as The Wine Spies, Woot Wine, winecliQ, and soon Amazon, Sears and Borders Books, plus a panoply of independent wine clubs.

Hire and retain talent. Find people who share your vision, and have the ability and desire to articulate this to the market. Identify individuals who view innovation as a key strategy. It seems to be an important concept in this phase of the business cycle to have experienced leaders who have previously weathered the inevitable exigencies of  business ups and downs.

Run a flat organization. Create an environment of opportunity. Stress collaboration over hierarchy, and value and reward individuals based on their contributions. And, remember the golden rule of management, to praise in public, and to discipline in private.

Steve JobsRecognize that in recession it’s time as Steve Jobs of Apple once said to, ‘Think Different’. Apple was born in the energy crisis of the late 70’s. The early 1980‘s were a time of great innovation. Glen Ellen and ‘fighting varietals’, Kendall-Jackson’s category leading Vintners Reserve Chardonnay, and Corbett Canyon 1 Ltr varietals from Santa BarbarBadit Tetra Pack Winesa County all debuted in a climate of 22% interest rates and base mortgage rates of 17%. The early 90‘s brought about $2 Buck Chuck, Tetra Packs, Screw Caps, and Cult Cabernets. There has been a continual evolution of the wine market from deserts, to light sweet whites, to the era of jug wine, through the shift to varietals. The current cover of Beverage Industry Magazine features a story about packaging innovation, proclaiming a new ‘French Revolution, Boisset Family Estates pushes the boundaries of wine perception.’

permission marketingPay attention to cultural and market dynamics. In this age of permission marketing, use all of the great social media tools to engage your friends, fans, customers and clients. Get online and in tune with social networking through Twitter and Facebook. Make sure that all of your print trade information is accessible through your web site, such as labels, product information sheets, sell sheets, press releases,file:///Users/johnncorcoran/Desktop/images.jpegacclaim, etc. Put your press kits on USB flash drives. USB drives are green, they can be recycled, the end user decides what’s important to print saving a tree or two, and the reduction in print cost can be significant.

wine tastingsGet on the road and shake hands. No one can tell your story with more authenticity than you can. Do a lunch with market movers each day. If you’re in the market for 2 days, make the first lunch with 10 accounts who don’t buy your wines, the second day can be the thank you lunch for your best in-marketDavid Cole accounts. Get on the phone and talk to your customers. I saw this on Twitter 2 days ago from David Cole of James David Cellars “Surprised a few customers today when I called to thank them for their online orders. Love talking with customers!”

Jay Conrad LevinsonBecome as Jay Conrad Levinson counsels a ‘Guerrilla Marketer.’ Drive your DTC business by innovative marketing. Taste and interact with college alum groups. Do luncheon tastings for faculty groups, i.e., the Stanford faculty tasting. Set-up tasting lunches in large brokerage offices. Do tech company events. The following email announcement is a great example of a must do wine tech event hosted by Smoke Wallin, founder of Wine 2.0:

Subject: Announcement from Wine 2.0 – the second, exclusive, Wine 2.0 Reserve @ Google Event

500-600 Google professionals will attend. Very Casual/Relaxed, Outdoor on theJ. Smoke Wallin patio of the Cafe on Campus
. When: June 19th, 2009, 
Times: 4:00 – 6:30. 
Cost: $325 per winery to pour. 

Winery must be signed up on Winetwo.net to register. Wineries must register who will pour for them in advance.

 Limited to first 25 wineries. RSVP to join us or with inquiries to clay@winetwo.com

Invest in research tools, and get to know your market. For wines in broad market distribution, whether in a three tier model or a DTT model, wine market intelligence is key to decisions regarding your channel strategy, pricing tactics, and distribution model. Marketing intelligence isn’t just for the mid and large sized wineries. It may be as important to the 5,000 to 25,000 case producer, where these decisions are key to surviving and thriving in today’s congestion. All classes of CPGs utilize market intelligence, and there are specific products and companies that provide information to the wine industry.

IRI provides transactional web based data reports for wineries in chain beverage, or in US Food and Drug retail markets, utilizing empowering technology to focus on market performance and brand building

TradePulse provides comprehensive sales, distribution and inventory management services, critical information for managing your sales model.

Nielsen Retail Scan Data provides a robust reporting engine on current transactional data from the retail chain marketplace. Provides information on what are you selling and where are you selling. This is important as a tool for checking your strongest and your weakest markets.

WINEDATA Pricing Report is a source of competitive supplier pricing. This is important in helping to determine your brand and/or varietal competitive frame, and for tracking pricing tactics and promotional activity within this frame.

Christian MillerFull Glass Research is an independent firm providing primary wine industry marketing research operated by Christian Miller. This firm helps you choose the right methodology for your budget, by separating the nice to know issues from the important to know issues. A key component to understanding market dynamics necessary to making those important decisions.

MKF Research, founded by Vic Motto, is now headed by Christian Hill, and is a division of Frank Rimerman, Co LLP. MKF Research has done primary market studies on varietal and category pricing, ranking markets by varietal, and tracking pricing segment shift patterns. This is an aid in determining your market distribution model.

Joe MontanaHopefully your goal in the wine business is to build market value. This is your passion. You do this because you must. Really, because it’s nose to the grindstone time. Basically you need to work harder and smarter than your competitors. It is not the time to cut back on core business resource allocations, either human or capital. Use these resources to identify and fill distribution voids. And, remember to pay attention to the basics.

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

Building Brand Equity Through Social Networking

Jonathan Winters“If your ship doesn’t come in, swim out to it!” …Jonathan Winters

Does the static, the noise, the 60 hertz hum of the social web seem meaningless and nonsensical to you? At least that’s what I’m hearing on the street from a significant number of winery principals and brand marketers. This not an unschooled group, but in these times oShopping for Winef economic malaise, this group of neo-luddites seems to be wedded to traditional, conservative brand marketing plans, even as the wine market continues to flatten, in fact contracting for the competitive frame of wines with bottles priced above $10. We can all observe with a degree of chagrin the increase in wine club resignations, the slowing of sales of cult Napa Valley Cabernets , the downward shift of pricing segments , and margins that being are squeezed, if not in fact evaporating. Perhaps it’s time to reevaluate one’s options. Stand idly by and let your neighbors seize the moment, or join the conversation and add to your brand awareness, value and equity.

While to some degree, it is understandable that the popularization of social networking is viewed in some quarters with a jaundiced eye; however, if used as Biz Stonea method to initiate a conversation with and to engage your customers and clients, then social networking is and will be an effective tool to add to your marketing kit. Seeing where you are is nice, but seeing where you’re going is key to your business success. Utilizing all the new media tools now available will help you to be transparent and real, and to facilitate the interaction with your customers in a human way, and to demonstrably build brand loyalty.

Case Study: The Retailer

Wine Library TVBring on the Thunder! The game changed on 2/21/2006 as the very first episode of Wine Library TV premiered as a video wine blog from a then moderately successful liquor store in Springfield, New Jersey. The originator and star of the show was Gary Vaynerchuk. The setting was reminiscent of so many public access TV shows from the early days of cable, but Garyvee had an ‘it’ factor. He didn’t fit the mold of the self-important, elitist wine critic. Instead of a suit in a halo of hubris pontificating about a wine known only to the cognescenti, Garyvee was one oGaryVeef us. He made wine accessible. He wasn’t talking to us, he was conversing with us. Oh, he knows his wine, but he wants to share this knowledge, as demonstrated by his commitment to a production schedule for WLTV segments that most of us would find onerous.

From this modest beginning, Gary has engaged just about every social network and web 2.0, wine 2.0 community to build his brand. WLTV was the first video wine blog podcast on the then new iTunes. He has a presence on facebook, Twitter and Tumblr, and has crossed over to traditional media with one best seller 101 Wines, with a new book deal just inked.GaryVee on Late Night with conan O'Brien Gary has appeared on The Big Idea with Donny Deutsch, Late Night with Conan O’Brien, and The Ellen Degeneres Show. Gary has established credibility for both his store and personal brands, by honestly displaying his passion, and by being real. I was on Twitter one night involved in a lively conversation with New Zealand wine writer/sommelier Jules van Cruysen on just which retailer in the States was Gary Vaynerchuk Presentsthe biggest supporter of New Zealand wines when Gary Vanyerchuk entered into the discussion and sent a couple of links to support Jules’ argument. It was past midnight in New Jersey, and I’m just 1 of 301,831 of his Twitter followers. This is not only hustle, but passion personified; and, this is being at the very top of your game. I’m sure that the money is nice, but Gary is genuinely motivated by the conversation, and in the conversation has found success.

Case Study: The Vintner

Jeff StaiJeff Stai is an imposing figure online, and in person. Standing head and shoulders above the Crushpad tasting crowd, he was easy to spot, even back in the corner. From an organoleptic point-of-view he was pouring the best and most distinctive wines at the tasting, It was apparent from the start that based on the Twisted Oak buzz on Twitter, that this was a wine that I needed to taste, and Jeff was someone that I had to meet. The first meeting happened at the February 19th Jeff Stai at the bottlenotes TastingbottlenotesAround the World in 80 Sips’ tasting at Crushpad SF. Twisted Oak Winery was founded by Cal Poly Ponoma grad, and experienced computer industry electrical engineer, Jeff Stai and his wife Mary in 2001. I became aware of Jeff Stai, proprietor, and chief marketing guru at Twisted Oak Winery located in Calaveras County, California just above Angels Camp on Highway 4, shortly after signing onto Twitter in late December, 2008.

Twisted Oak Warning SignThe conversation among my wine industry friends centered on the wacky premise of “Take your Rubber Chicken to Work Week”. Intrigued and motivated to do a little research I added Jeff as one of my tweeps, which he quickly accepted and reciprocated. I clicked onto the Twisted Oak web site, and then onto his El Blaggo Torcido and got the rest of the story. I ran into Jeff again at the Wine 2.0 Expo 2009 tasting at Crushpad, in the Dogpatch neighborhood of San Francisco. It was as if Jeff had camped out for this April 2nd event. Same corner, and still easy to recognize, and still pouring some of the most distinctive selection of wines at the tasting. Appropriate to the tenure of Wine 2.0 , Cece Salmon-Lee posted a to-the-point short video interview of Jeff and his social networking Jeff Stai in the Tasting Rppmphilosophy . Of course Jeff, who is one of the hardest working marketeers in the wine business, was busy either at the winery or on the road pouring his mediterranean varietals for old and new fans His whereabouts, his promotions, his appearances all promoted and discussed by Twisted Oak fans and friends on the social web.

In order to engage his customers in conversation, Jeff started his blog in May 2006. He has established an account on Twitter, a fan page on facebook, and iReuben's Blends an active participant in wine forums. He conducts with his social networking friends his annual TYCTWW in early February, and then posts photos on the winery blog. Next is an annual contest consisting of customer, friends and fans submitting backside copy for the ‘Ruben’s Blend. Fans in the know, know Reuben quite well. In fact Reben is the guest of honor at The Rubber Chicken Roast at the winery in Vallecito. Jeff has been having a lot of conversations with a lot of people. The Winery, while in a gorgeous place, it’s definitely not on Hwy 29 in Napa.  Jeff, in response to my question on how an electrical engineer landed at a winery in  Calaveras County,  answered “mostly, I fell face first into it…”

Conclusion

I was recently in St Helena for a client meeting. On the way south, I stopped at an iconic Hwy 29 winery to say hello to some old friends. It was 3 PM on Welcome to Napa Valleya Friday afternoon, usually a busy time for Napa Valley wineries, even in the off-season, but only 10 cars were in the parking lot, and the tasting room was empty. This winery has little or no social web presence. Perhaps a case of resting on their laurels, but they just aren’t engaging in the conversation with their guests, customers, clients or fans. Which is too bad, because they’re producing really nice wines across all price points. The folks at the winery were bemoaning the economy, the bleed from their wine club, and the resulting diminished revenues. Perhaps by focusing on the goal of customer retention and build in part through social media interaction,  positive results will be the likely outcome. If only my friends got it.

Target PaintingGaryvee and Jeff get it. The current economy is at best stagnant, and the effects on  wine businesses are now well documented. Yes, you’re going to have to work harder than ever to succeed today. You’re going to have to shake  a lot of hands, and talk with a lot of people, either digitally or in-person. If you don’t get it now, I hope you get it soon. Isn’t this the perfect time to connect with  your targeted customers, and to start engaging others in conversations about your brands?

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