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Monday, February 1, 2010

Selling Wine in Tough Times

The Recession

This isn't the first tough period for California wineries and it's not the last. And it'll be temporary. The big question is, which wineries will survive?

Marketing

I see lot of buzz and employment offers around branding and social media. Somehow re-establishing their existing brand with consumers or twittering will increase sales in a down economy.

Internally-focused

I've seen wineries in the past year raise tasting room fees to help cover sales shortfalls. How dumbass is that? This is the kind of thing that happens when people without a customer's perspective make decisions directly affecting customers.

What Customers Want

This is soooo easy -- VALUE. You can't just slap "Napa Valley Cabernet" on a bottle and charge $90 or "Russian River Pinot" on a bottle and charge $45 if you're not well-established in that market.

If people have traded down from N.Y. steak to hamburger it's clear they're also trading down from $50 Cabernet to $8 Malbec.

Unfortunately, California has a history of not lowering prices when sales go south. Marketing types believe you have to maintain the perception between price and quality. But there are"tricks" such as putting the juice under another, lower-priced, label.

I'm on my own quest right now to find drinkable Pinot Noirs for under $25. I'll let you know the results later.

Customer Relationships

It's not about "brand" and "tweets" in these times. More than ever it's about relationships with their best customers. And connect and building relationships with new ones. Many want to be seen as friends of their favorite wineries and want to be treated special. "Special" can be an impromptu tour, a reserve bottle opened, or a two minute chat with the winemaker.

A Winery's Biggest Asset

Some will say their vineyards or winemaker, I give them partial credit for those. Others will fail completely saying it's something like their brand recognition or their Facebook presence.

By far a winery's biggest asset are their ambassadors. These are the people who promote a winery and its wines telling others things like, "What a great winery" or "What a great Chardonnay." It's the best advertising and it's free. These people are primarily wine club members, but also their biggest buyers and other enthusiasts that aren't in the club.

I love Siduri, Russian Hill and Stryker wineries, and don't mind telling anyone personally or on the Internet. I'm not in any wine clubs and I'm definitely not their best buyer. It's great free advertising for them when someone asks on a wine forum, "What wineries should I visit when I'm in Sonoma?" and I respond.

Identify Key Customers

Obviously, the wineries know their own wine club people, but often don't know their top ten purchasers, and rarely others that are enthusiastic about them, but don't belong to a club or spend a lot of money with them.

Wine Club Members

Their single most important asset. What do they do special for their club members?

  • Discounts - Everybody does this
  • Events - Most people do this--everybody should. It's mostly for people local to the winery. They should charge a fair price to attend--just enough to cover costs. Members should be able to bring friends. Everybody does luncheons or dinners. Are there any fun events like blending seminars, picking grapes, etc? Is the winemaker at the events? Does the owner do the barbecuing? What do they do for people who can't travel to the winery very often?
  • Keeping members - What do they do at at the member's first and second year anniversary because, statistically, this is when they will drop out? How about birthday cards signed by the owner? Members should be family. Whenever I'm present in the tasting room and a new person signs up for the club I always say (loud enough for all to hear), "Welcome to the family!"
  • Drops - Lots of people will want to drop shortly after joining. Maybe they get home and realize, "OMG, we joined eight wine clubs while we were on vacation!" So they call up and ask to cancel. There should be an incentive to get them to stay.
  • Treatment - Is the wine club manager available when club members show up? Do they have a special tasting maybe in a separate room with the wine club manager? Or do they belly up to the bar when it's two- or three-deep with everyone else?

Customer Contact

Have you ever called a winery after opening a bottle of wine that was bad--maybe corked? What was the response?
A. Told to take it back to where you bought it.
B. Asked you to describe exactly what is wrong and how it was stored.
C. They apologized and sent out a replacement for free.

Rock Stars

The winemaker and owner are celebrities to most customers. They should have lots of contact with customers, especially club members and big buyers. Part of the winemaker's job is to answer customer questions, sign bottles, and be at winery events. If they don't like being the center of attention then maybe they should be the assistant winemaker. (Just kidding, kinda)

Wine Sales

Overall, wine sales are up, but travel to the wine country is down. People are still buying wine and there is an opportunity to see them buy more, but maybe not the $45 Pinot Noirs.