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.

Satori in Sonoma

Studs Terkel“We are more and more into communications and less and less into communication” … Studs Terkel

My father instilled in me an innate curiosity about life and people. He taught me that having the right question may be more important than having all the answers. And most importantly he taught me to listen. I’ve always been interested in how people arrived at their career choices. Was it an accidental journey or a planned path that you’re now walking down. Since my life’s work has been in the wine business, I’m for the most part interested in people who have traveled a similar road. My Socratic style was inspired by Studs Terkel and his examination of the average American working stiff. When someone asks, ‘will there be anything else, sir’, I often respond question in question, “what’s the meaning of life?” This always stops the questioner in his/her tracks. A moment of reflection is sometimes given to a substantive response, but for the most part it often devolves into an embarrassed laugh, or worse into some platitude or other. Whenever I have the opportunity to talk with someone during a wine interaction I like to ask about their first memorable wine experience. What’s that? Well, since you’ve asked, I’m more than willing to share my story.

My father, Howard Corcoran was a character, and in the Irish oral tradition told great stories. He graduated as the Valedictorian from Central Catholic High School in Wheeling, West Virginia and then from West Virginia University with a degree in Law. He never sat for the bar, but instead followed his widowed Aunt Margie to Florida, where she was the business manager for the architect Addison Mizner. His aunt had been married to Arthur McConnaughy the founder of Island Creek Coal Company, the genesis company of what is now ConocoPhillips. My great Uncle was killed defending his mine during a strike, and Aunt Margie was Jerome KernleftBreakers Hotel Palm Beach with a then significant income. So off to Palm Beach with Dad to be near her sister Virginia, who’s husband operated the men’s haberdashery at the Breakers Hotel. Dad quickly landed a job for $1/day as a clerk in a brokerage office, and lived on a yacht owned by American composer Jerome Kern, with his roommate Johnny Love. At night Dad and Johnny headed a jazz combo that played during the high season at all the big parties. This was in the middle of prohibition, but the swells weren’t about to do with out their champagne or booze. My Dad and Johnny had a sideline business of also supplying the party favors. The yacht was used to sail over to Bimini to pick-up a load of Cordon Rouge Champagne, Seagrams whiskey, and Kennedy Scotch. And then the boys sold their haul to the social 400 who inhabited Palm Beach for the winter.

My Mom and Dad got married after the end of Prohibition just as the New Deal was helping to drag the economy out of the SCAN0009depression. I came along as the last of five kids towards the end of the famed boomer generation. I grew up listening to these by then romanticized stories, and knew that in some way, some how wine would be part of my life. My parents often had dinner parties, and Sunday meals were always formal sit downs at the long claw and ball foot table in the big dinning room. Wine was often part of these occasions, and we were always allowed to taste the wines and encouraged to share our impressions. Knowing my Dad’s story, I often asked my father’s friends and business associates about the first time that they thought of wine and went wow.

I still ask this question. I ask it of store owners, and clerks. I ask sommeliers, and chefs. I ask university professors, distributor owners and winery entrepreneurs. And everyone has an answer. That moment of enlightenment seems, while always different, to be a memory worth sharing. Although I grew up enjoying wine with my family in the appropriate social situations, my moment of zen came on theCh Pavie Label
Empress Lilly Riverboatbalcony of my Disney office in Florida tasting samples while creating the wine list for the Empress Lilly Riverboat restaurant complex at Lake Buena Vista Village. It was the mid 70’s and I was tasting the 1970 Ch. Pavie, and all of the sudden I got it. This, my moment of sudden enlightenment, was soon followed by a trip to Sonoma County, California. At the end of a long week I was sitting in my rental car on a cloudy, rainy winter day in the parking lot of the Dry Creek General Store sipping on a bottle of Dry Creek Vineyards Zinfandel. The sun finally came out from behind the dense clouds and a focused beam of light hit my car. At that moment, I knew that this was my home… satori in Sonoma.

Andre TchelistcheffThat my story, but what’s yours? I’ve been so fortunate due to the circumstances of my life and career to have asked this question of governors, congressmen,senators and CEO’s. I especially enjoyed asking this question of some of the icons in the wine industry, including Joe Heitz, Hans Kornell, Mike Girgich, Andre Tchelistcheff, Robert Mondavi, Henri Jayer, Jacques SeyssesJim Barrett, Warren Winarski and Jess Jackson. Their stories were all unique, but what great stories they were to hear. One of the best lessons that any successful wine salesperson can learn is to ask the right question and then listen to the answer. So, do your remember the moment when you first drank a wine and thought, wow? I‘m listening.

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

Focus on Blocking and Tackling

200px-Pat_Riley“When you’re playing against a stacked deck, compete even harder. Show the world how much you’ll fight for the winners circle. If you do, someday the cellophane will crackle off a fresh pack, one that belongs to you, and the cards will be stacked in your favor.” … Pat Riley

During Monday’s NBA Finals game 3 something seemed off with Kobe Bryant. His focus just wasn’t there. ThisKobe Bryant usually isn’t the case. Kobe is arguably one of the top 10 professional basketball players of all time. His skill set is matchless, and usually so is his focus. Needless to say, the Lakers lost. We’ve seen this lack of focus in sports before with the Pens’ goalie Fleury in last week’s NHL game 5 at the Joe, or with pitcher Barry Zito most of last year at the Phone Booth. It seems that a key observable attribute among those that succeed in any endeavor is the ability to focus on the task at hand. Focus that is the culmination Kennethfoxof awareness, preparation and execution. As a matter of course the wine business entrepreneur is often pulled in multiple directions, and in place of the necessary laser like focus on the end game these distractions tend to diffuse one’s original vision. In observing this situation, a former associate who prior to his life in the wine business was a senior US Navel officer was fond of saying that ‘a good Admiral always knew the outcome of the battle before sailing from port.’ So, like good admirals we should all have a thorough understanding of our brand positioning, and the strategy and tactics necessary for the competent and successful execution of same on the road to winery viability.

Without regard to a specific channel model, understand that you are in the wine distribution business. This is just the process by which your wine gets to the final consumer. This includes the selling, shipping, merchandising and promotion ofWine trade tasting your wine. In performing these functions it seems important to understand the unique and individual needs and wants of each and all of your customers – sales agents (including distributors), trade and consumers. It also requires an understanding of the marketplace and your competition. It is through the acquisition of this knowledge that leadership is developed in crafting quality products that fill the needs and wants of your targeted audience. Being a visionary in anticipating your future opportunities will allow you to continue achieving your brand goals. But, in order to shape your brand success you’ll need to identify, create and communicate your winery’s unique brand position.

Small to mid-sized wine companies need a keen awareness of the perceived attributes that determine their brand positioning. For Cabernet Sauvignonexample, where your wine grapes are planted, and the set of geological, geographical and cultural attributes inherent to this point of origin go a long way to the determination of positioning – i.e., take the vineyard location of Cabernet Sauvignon. While Cabernet Sauvignon’s organoleptic profiles, without regard to origin, share some similar characteristics, the point of origin provides some significant points of differentiation as to brand positioning. Cabernet wines grown in Napa Valley will tend to be positioned differently thaimages-7n Cabernet wines from Bordeaux, or even neighboring Sonoma; and, certainly on a different tier than the good Cabernets grown in Monterey’s Hames Valley or in the nearby Paso Robles AVA. Consider the unique brand position that Ste Michelle Wine Estates achieved for Washington State Cabernets. All of these are different but potentially good wine regions, but each is perceived to have a unique sets of attributes by critics and consumers alike. And these attributes tend to aid in directional decisions concerning volume, price, and channel, hopefully resulting in consumer take away.

images-8For those brands in broad market distribution, whether in a DDT or a three tier model, there are three basic questions to ask and answer:

Where are my wines now sold?
Where should my wines be sold?
How do my wines achieve desired targeted distribution?

Effectively answer the above inquiries and you’ll be worth every penny of your income aspirations. In other words, define the current state of affairs and establish brand goals. Yes, this is detailed work, but without targets, goals, and a foundation of specific in market knowledge, your house of cards is in danger of crumbling. So, roll up your sleeves and create an effective CRM list of targeted accounts, by market (geography), name, class (volume potential) and type (on or off-premise). The broad market is dynamic, so continually modify, maintain and update your CRM database.

Now that you have this baseline brand distribution intelligence, your future sales efforts should be directed towards increased markePalace Kitchen Seattlet penetration in your now targeted account universe. Goals should be established within each designated sales territory by account and varietal. Target specific goals should also be codified and achievement should be tracked. These targets, for example, could be wine list or WBTG placements in New American cuisine restaurants in Seattle, Portland and San Francisco. Or, fine wine retail placements and ads in Boston, New York, and D.C. Your case goods volume, price point, product mix, and brand intelligence will help to determine this market specific distribution strategy.

Focus

FocusThis is how the top 30 largest wineries tactically achieve their success. They do this in all their key markets. While it’s almost always a good idea to observe and mirror other successful wine businesses, you’re going to have to be more focused and crisper in your execution. You’re a much smaller business and your wines are at FOBs that exclude certain points of distribution. Take advantage of your unique brand positioning proposition. Focus your efforts on fewer markets. Perhaps look to hotels such as Four Seasons, or Ritz Carlton or Kimpton Hotels, and not just wine list or wine by the glass, but in addition pursue placements in banquets and events. Country Clubs and private clubs are an under serviced account base,  but once established they tend to be long-term loyalty accounts and their members represent a key demographic base of influencers. Some of my brands most sustainable distribution was achieved in private clubs, common in most major metropolitan markets. By the way, caterers are always looking for differentiated wines.  So, put on your game face and become a focused niche marketer. Focus on your execution, and focus on scoring those winning placements.

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