Technology is not a Four Letter Word

‘If you can’t measure it, then you can’t manage it’ … classic B-School value proposition

The Challenge

Back in 1997 when I first started working and living in San Jose for Mirassou Vineyards as the National Sales Manager, I found myself in Silicon Valley in the middle of a revolution in science and technology based on a platform laid down by a post World War II generation of scientist and engineers. These were frenetic times in the South Bay, and the structure of today’s technological achievements was being built in a series of fits and starts. At the time consumer access to the internet was really only a few years old, and broadband was just a dream in a small lab in Telecom Valley. The Mirassou family had gone down some several dead-ends strategically in the development of their brand. A significant challenge was at hand. I faced a similar challenge years earlier at Walt Disney World when I was assigned the role as the supervisor for all of the food & beverage receiving clerks. Significant waste occurred on a daily basis as a result of over ordering limited shelf life foods. Ordering was based on a minimum/maximum par inventory level. A system that, even in the early days of an open and functioning Magic Kingdom, was already dated. Disney had a top line research department, and we had a monthly calendar of predicted guest counts. Decision on revenue budgets, levels of staffing and even operating hours were based on these forecast which were accurate within .5%. So, I did a 30 day research trial of food, item by item, usage versus actual guest counts. From there a specific relationship between traffic and usage was discovered, and a ratio or factor was assigned to the ordering system and quickly implemented by all food & beverage outlets. Food waste as a percentage of Park food service revenues was reduced from around 2% to .2%. The answer was in the math, and then in getting the system to accept the change. But the challenge at Mirassou was more daunting.

David Mirassou, who had gone to work for Fred Franzia, after College, became a star in Bronco’s chain grocery division. After a few years he returned to the family business, but was relegated to a role selling to and merchandising groceries in Northern California. I shared an office with David, and after implementing some necessary field staff changes, David became the Western Division Manager. At the same time I hired Michael Stedman as our sales analyst. Both David and Michael were very sharp in viewing and conceiving new ways of looking at the sales process. David built a detailed, sophisticated  Access data base, and then gained permission to login to his distributors’ AS400 data files. Importing the data in the form of a .cvs file, he created pivot tables to populate the data, and then used this information to manage his distributors by providing goals and monthly feedback on not only a macro level, but on a micro level, salesperson by salesperson. Michael Stedman built a national key account list for multiple channels, and then implemented a version of this system to target and track performance within this targeted set. A lot of work. The industry took note, and the Gallo Wine Company started tracking our performance. Gallo purchased the Mirassou brand a few years later; and, David is still driving sales leading to the continued dynamic growth for the Mirassou brand. Michael Stedman, after years in New York has returned to California to lead the marketing efforts at Domaine Chandon. Once again the truth was and is in the math.

The Solution

So you can imagine my interest when I read that on Tuesday February 9th, 2010 VinTank and Brixiom Systems announced a new strategic partnership. VinTank is the well known Napa, CA based strategic digital think tank. Brixiom Systems, is an Atlanta, GA based technology company that has developed SaaS (Software as a Service) based customer relationship management (CRM), sales force management (SFM) and warehouse management systems (WMS) designed specifically for the beverage industry. As such Brixiom Systems provides via the cloud, a product that incorporates wine and spirits product and business rules and integrates this unique design with traditional customer management resources. And this actionable CRM product is available anywhere that access to a browser is available – your desktop computer, your laptop, netbook or smartphone.

At the working demo today, Wednesday February 24, 2010 VinTank Founder and Chief Strategy Officer Paul Mabray kicked off the meeting with this on-point statement: “Sales is a science that requires sophisticated management tools, and surprisingly there has been a deep void in trade Customer Relationship Management (CRM) tools for wineries. Only now, with the introduction of Brixiom Systems, is there a product that truly understands the nuances of B2B wine sales management.  We are excited about the leaps and bounds this tool will give the wine industry for better visibility and business intelligence in managing the traditional sales channel.”

Mr Mabray introduced and then turned over the meeting to Andrew Suss, Founder and CEO of Brixiom Holdings. Mr. Suss, a Vanderbilt University Chemical Engineering graduate, started his first company The Charter Group while still a student. TCG provided software solutions and strategic IT consulting services for public and private companies and for educational and governmental agencies. Mr Suss went on to found Brixiom Holdings in the Spring of 2008 with the goal of providing online tools to the drinks industry. Mr Suss launched his presentation stating that “We are truly excited to Introduce Brixiom Systems solutions to the Wine and Spirits Community.  Our products allow for an unprecedented level of information visibility, and enable remote users to access corporate data from wherever they are, via the web and smart phone devices” As the demo progressed, I realized that in this seamless sales automation solution developed by Andy Suss, that rather than shoehorn an existing CRM solution to fit your business model, Brixiom Solutions provides a customizable, scalable, affordable and integrated sales relationship package with transactional, engagement and analytical features with a dedicated beverage industry interface.

VinTank Partner, in charge of Business Development & Operations, Clay Wallin, a Vanderbilt MBA who in early 1999 co-founded eSkye Solutions, discussed working on a similar product in the formative days of eSkye, but ran into a wall at the enduser level. Under Clay and Smoke Wallin’s leadership, eSkye developed market dominant eMarket Channel applications and sold to Orion Wine Software In 2008. Mr. Wallin noted that “Brixiom Systems is a unique tool for wineries, importers, and distributors to collaborate like never before. It enhances sales productivity, and the reporting is robust and customizable”

The Message

In October of 2009 Wine Business Monthly published my CRM product review, that focused on specific functional CRM solutions for sales force automation. While these are all superior products with specific applications within the Sales, Marketing and Operations departments of wineries, none have the level of integration that Brixiom Solutions offers to contemporary winecos. The beverage industry reporting functions (compliance, taxation, samples, bill-backs) alone will allow a level of efficiency and savings that will more than justify the modest cost.

I’ve often observed that the recommendation of the adoption of new technological solutions in the consumer facing segments of the beverage industry business is often met with the look of someone who would much rather be someplace else. The investment in new technologies is often avoided by wine companies who view their current non-integrated systems as adequate to their needs. Is that really working for you anymore in this saturated and hyper competitive market? If I was either an enterprise wineco, or a small family winery, I would want to grab the competitive advantage that Brixiom Solutions provides by improving information flow and program execution. Become the supplier of choice to your distributor partners by increasing channel communications and collaboration. Differentiate your wineco from the competition by being seen in your marketplace as technologically advanced. If you do, you will see improved trade and sales efficiencies resulting in reduced cost of sales (COS) reduced points of friction and improved targeted distribution.

Copyright © 2010 Think Wine Marketing Blog® All rights reserved.

The Conversation

Naked City Detectives, Harry Bellaver, Paul Burke, & Horace McMahon“There are eight million stories, in the Naked City. This..has been one of them.”Stirling Silliphant (The Naked City ABC TV series 1958-63)

The Rain

The sound of rain, and just not the sound of rain falling, but the sound of people talking about the rain at the end of what had may just have been the perfect vintage, seemed to divert attention away from the economy, at least for the time being. While the rain, and all the wine country conversations that the rain started, provided a welcome relief from the constant drone that it’s hard out there. It’s really not the time to take your eye off the ball and to forget the market challenges inherent since the onset of the ‘Great Recession.’ For each winery and each winegrower or vineyard owner there’s an unique story. The folks on the flats in mid-Napa Valley likely had a different take on this year’s growingDoug Shafer giving his take on Vintage 2009 season weather than the folks in Calistoga, Carneros, the Vaca or Mayacamas ranges, or in Western Sonoma County, Mendocino, the Willamette Valley, Walla Sun and rain in Oakville, CA looking at the RObert Mondavi Tokalon VineyardWalla or in Santa Barbara. While each unique story suggest a similar outcome, this is a vintage that will unfold over the next several years. Perhaps the critics will pronounce estimates of Vintage of the Century or speculate that the rain has dashed all hopes for a positive result. Perhaps I lack the prescience or the hubris to judge the future of an entire vintage during harvest and crush, but I do have an understanding that a vintage is the sum of the individual experiences of each participant. And, I have an understanding that it’s in the telling of your story that will connect you to your customers.

The Bounce

In this brave new world of permission marketing, and in this time of growing consumer detachment and cynicism driven by the perceived systemic failure of our financial and Henry Paulson,  Bush Treasury Secretary governmental institutions, a review of your traditional marketing message methods has been necessitated, even as the mixed message on the state of the economy is being delivered by traditional mass media. A mention of the names Paulson, Geithner, and AIG tend to initiate a gag reflex in even the most jaded observer. However, today the DowTimoth Geithner, Obama Treasury Secretary Jones Market Index reached a 12 month high and once again climbed above 10,000, in part driven by reports that Goldman Sachs made record profits in Q3. Also noted as a sign that the climb from the bottom is underway are stories in Ad Age Talent Works that Google is Hiring again; and The New York Times reporting that Apple profits are up 47% on Strong Mac Sales. The story on the state of the wine business is even more mixed. Like the citizens of the Naked City, each wine business has its own story, some up by 10%, some flat, and some down 30%. Many wineries are going through an extended period of stress. Vic Motto, Co-Founder, Chaiman and CEO of Global Wine Partners, a St Helena, CA wine industry iBank recognizes the industry wide stress; but, doesn’t see a significant long term dislocation in wine consumer’s buying behavior. Having heard the sea change story before, most recently with the Vic Motto, CEO and Chairman of Global Wine Partnersprediction that Two Buck Chuck would drive consumers permanently away from luxury wines. Didn’t happen. It’s Mr Motto analysis that the American wine consumer is ‘aspirational’ and that wine is and will be viewed as an ‘affordable luxury.’ I’m also in the camp that believes wineries that survive this very tough period will likely, at some point, see a return to the pre-recessionary trends in buying patterns. In an October 15th Associated Press interview, Safeway CEO, Steve Burd sees signs of the turnaround in an uptick in the coffee sales mix and a move back to growth in the premium wines segment.

The Conversation

Technology has provisioned wine industry CMOs with a whole new marketing tool kit. Technology is a tool to be used and appreciated, but not one to be viewed as the long hoped foThe CLUETRAIN Manifestor silver bullet. How we now communicate with our customers has dramatically changed with the development of the web, email, texting, blogs, video, Facebook and Twitter. And in this new paradigm there are three words that have become the mantra of this new technological world in which we all now communicate our stories: transparency, authenticity, credibility. I’d like to add one word, human. This commonsense point was first made in ‘The Cluetrain Manifesto,’ by Rick Levine, Christopher Locke, Doc Searls and David Wineberger, first online in 1999 then in print in 2001, Copyright © by Basic Books. BTW: a 10th Anniversary edition of this must read biz book is now available. While the 10 year timeframe has dated some of the jargon, the core concepts of the treatise remain, especially those listed in the seminal 95 THESES:

  1. Markets are conversations
  2. Markets consist of human beings, not demographic sectors
  3. Conversations among human beings sound human. They are conducted in a human voice.
  4. Whether delivering information, opinions, perspectives, dissenting arguments or humorous asides, the human voice is typically open, natural, uncontrived
  5. People recognize each other as such from the sound of this voice

The first five points in the “Cluetrain’ 95 THESES are a construct that is now an unavoidable communications directive for your consumer facing business. People grow your grapes. People make your wine. People sell your wine, and people buy your wine. Your story, while sharing traits with almost all others in wine’s corner of the CPG market, is unique to your circumstances.

The Case Study

Mike BenzigerIt was harvest time in the fall of 1994. Mike Benziger came out of the winery office to check on the grapes to judge when to start picking on the Family’s Estate Vineyard, located in a collapsed caldera on the Sonoma Valley side of the old dormant Sonoma Mountain volcano. Times were good. The vineyard was always busy from the days of the Glen Ellen Winery start-up through the launch of the premium value tiered Benziger Family Winery. Wines that always over delivered. Mike should have been smiling, but instead he looked troubled. He cocked his head as he stood on the edge of the vineyard, puzzled that he heard nothing. Nothing at all. Just up the hill at his home in Jack London State Park, he rememberedBenziger Family Winery Ariel Shot hearing birds chirping madly as the sun broke through the morning fog. But as he looked down the neatly groomed rows of vines, he noticed that there wasn’t a wild flower, a weed or a blade of grass on the bare dirt underneath the vines. As he walked the rows, Mike noticed that there were no bugs on the vines or flying through the air, no dragonflies, no butterflies. Stopping and reflecting he knew what was bothering him, the vineyard was no longer a living space. Mike thought a moment and considered his options. He knew that this wasn’t the way things should be. At that moment in time he vowed to change the way things had been done, to change the conventional wisdom of how things had always been done. This ancient bowl had supported life Benziger Family Winery Bloggers Visitfor millions of years, and in just a decade of intensive modern farming that had all changed. But, it wasn’t working any longer, and the Benziger farming practices needed to revert to the old ways, to the ways defined by closed system agriculture. Benziger Vineyards needed significant cultural change to recreate a new living farm. And change they did, after 3 years of concentratedThe Insectary at Benziger Family Winery study, a sustainable, biodynamic vineyard started to take shape. The first step was to establish biodiversity. So island gardens were established within the vineyard space to help support beneficial insects; and between every 10th vine row a bed of host plants and flowers were seeded to support a vineyard population of the good guys. Sheep and cows were introduced as natural lawn mowers, with their waste the base of a closed system compost program, so that no chemical fertilizers would ever be needed or would ever be used. Land that was dead just ten years ago was, in less than a decade, now a classic biodynamic closed system living farm. Earth, nature and man came together in a special place that happens to be in my backyard, just north of the town of Sonoma.

Mike Benziger & Kathy Benziger Threlkeld talking with the wine bloggersOn Saturday, October 3, 2009 I had the opportunity, along with a group of wine blogger colleagues, to hit the Benziger Biodynamic Trail at the Benziger Family Winery on Jack London Ranch Rd, just up the hill from the village of Glen Ellen. Our tour group had the opportunity to interface with Mike BenzigerKathy Benziger Threkeld, Colby Eirman, Director of Gardens, and Winemaker, Rodrigo Sotto. The passion in the delivery, even from the well practiced folks at Benziger, was  impressive, especially in closeColby Eirman, Director of gardens at Benziger family Winery quarters over 3 hours. This was a one-on-one conversation and the telling of the story, starting with that moment of enlightenment in 1994. There wasn’t any ducking questions in the active exchange of ideas. We weren’t being sold on a story. We were being invited into an experience. This was a conversation between humans. A few points really stuck with me. The first was that ‘the wines weren’tRodrigo Soto, Winemaker at Benziger Family Winery necessarily better, but that they were different.’ That they reflected this place. The second point that hit a nerve with me was that ‘each year the wine was a time stamp of the vintage.’ Not once were scores mentioned as a descriptor of any of the Benziger grown and produced wines that we tasted that day, although the Rodrigo Sotto’s wines have gotten rave reviews and scores in the traditional wine press. My take away from the day with the Benziger Family and team members was one of transparency, authenticity, and credibility. A team that understood that their plan, in a world now dominated by pull marketing, was that by communicating in this human voice missionaries were created, replicating the message and influencing friends.

The grandchildren of the founder of Park Benziger & Company, and the children of the founder of Glen Ellen Winery, Bruno Benziger are well versed in the finer points of wineNow that's biodynamic, at Benziger Family WInery marketing. But, change must be in their DNA. First selling Glen Ellen, then converting a 200,000+ value brand to a slightly more than 110,000 caseMike Benziger pointing out the native raptor population at Benziger Family Winery sustainable, biodynamic super-premium/luxury brand, while changing their farming practice as stewards of the land. In a time of declining circulation numbers and disappearing newspapers, an effort has been made to maintain contacts with the traditional press, in both the wine and consumer lifestyle focused print media arenas. The Benziger marketing team has fully embraced new media, including Twitter, and wine bloggers. Benziger POS is also available as an online deliverable, further enhancing the green story, while insuring the timely delivery of product sheets, neckers, sell sheets and cut case cards on an as needed by market basis. If you go to the Trade/Media section of the Benziger web site, you can download the Chris Benziger narrated video sales presentation which is a masters class in wine brand marketing. And, if you ever find yourself near Glen Ellen, stop-in and take the tour. As a small family wine marketer, you need to identify and mirror the success stories. The Benzigers have successfully differentiated their wine brands in this difficult, brand saturated market. And, by the way, their wines just aren’t different, the Benziger wines exhibit a specific point of view and IMHO are damn good.

The Story

Mike Benziger in the wine caves at Benziger Family WineryThe Benziger family and team recognized that their best path to the market was through their authentic story told in a human voice to groups of consumers, members of the trade, and to traditional and new media writers. A story that has been replicated to the point that in 2008 almost 175 million media impressions were created. Even though the Benzigers produce in their Demeter Certified Winery 1.32 million bottles of wine, the consumer impressions and strong word of mouth campaign along with a vibrant visitor center program help to create demand beyond the produced supply.  Through their objective mastery of pull marketing tactics, tactics based on an authentic and credible story, the Benzigers have been able to not only create an awareness envied by any enterprise wineco, but a model for any family wine business. The question that now begs to be answered: what’s your story and what are your winery’s marketing plans to maximize brand awareness and sales in what continues, even as the turnaround starts, to be a challenging marketplace?

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

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.

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.

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.