Surviving Consolidation in the Wholesale Wine Market

This week, like much of the California wine community, I'll be making the trek up to Sacramento for the Unified Wine & Grape Symposium. "Unified", as this enormous trade show is known within the indistry, is a chance to see the newest in technology, to check in with friends and colleagues from other regions, and to take in a program that includes seminars on viticulture, winemaking, wine marketing, and business/operations. We always have a cohort there, partly to see what the exhibits have to offer but mostly to support NovaVine, the nursery with whom we partner to sell Tablas Creek vine cuttings. For NovaVine, Unified is one of the year's best marketing opportunities.

I have been invited to speak on a panel Thursday afternoon -- a part of the marketing curriculum -- titled "Surviving Consolidation: How to Position Your Brand for Success".  I'll be representing smaller wineries, and will be joined by representatives from the worlds of wine wholesale and retail, as well as Ed Lemay, the Senior Vice President of Marketing at Constellation Wines, who brings the perspective of a larger supplier. I spend a lot of my time thinking of how to prosper in a crowded wholesale market, and thought that while I was putting together my notes for Thursday's session I might share a few of the key points here. For the longer version, please come see us!

It's worth pointing out that I'm not sure that all of this is much more important because of consolidation than it was before.  Sure, there are many states with fewer options for distributors, but the wholesale market has always had more wines than it could possibly focus on, so these strategies for making sure that you, as a small-to-medium size winery, get your share of the attention are likely the same that they've always been. They're just more important now.

  • Know what makes you distinctive. And focus on it. There are thousands of wineries that are competing in the wholesale market, from your neighbors to wineries elsewhere in your state to others from around the world.  If you can't reduce what makes you distinctive down to a few sentences, the game of telephone -- in which you need to educate your wholesaler's management, they need to educate their sales team, those salespeople need to sell to their restaurant and retails customers, and those restaurant and retail buyers need to speak to the end consumer -- breaks down. One place I see many wineries get into trouble is in the assumption that because their model works in their tasting room, it will necessarily translate into the wholesale market. Tasting room customers are faced with many fewer options than any buyer in the wholesale chain. It's good marketing overall to keep yourself focused, but make particularly sure your story for the wholesale market is concise and logical -- as well as memorable.  
  • Demand the information you need to evaluate success. You need to be engaged with your wholesalers. Make sure you're regularly getting inventories, account lists and how many (and which) samples are being pulled. Know what the pricing and the deals are that are offered.  Know (and care) whether your 100 cases are being sold to 30 restaurants or 3 retailers. And then review this information regularly so that if what you're seeing isn't what you want, you can communicate this to your wholesaler. Just showing that you're interested in this information helps tilt the playing field in your favor.
  • Be a good partner. Most wholesalers are filled with talented, passionate salespeople who want to do a good job. You can help them succeed with your brand in many ways: by going regularly to their markets and working alongside them. By being generous with samples, to help make sure that your wines are in their bags often. By taking good care of them when they come out to visit, and when they send out their VIP's to see you. And by giving them the tools they need in point of sale, positive media attention, and marketing support. You are in this together.
  • Work together to set your goals and strategies. Is there a particular wine or two that you need your distributor to focus on this year? Or a particular type or list of accounts you'd like them to target? Or a sub-region that needs work? You should be conducting regular (annual, at least) reviews with your wholesalers to communicate this to them. Make sure you listen to them when they tell you what is working and what isn't, and involve them in the solutions to the problems you identify. The more ownership they have over the initiatives you work out, the more likely they are to see them through.
  • Build and use your own restaurant, retail and consumer relationships. Nothing gets a distributor's attention like accounts asking for your wine. When you are out in the market, collect cards and drop a thank you note after you're back home. Then, stay in touch. Share directly news of new releases, special offers and positive press. And don't forget your consumer mailing list. When you have a cool new placement or a feature at a retailer, share the news with your fans in the area. The fans will appreciate it, the account will be grateful (and maybe even surprised) by the support, and the distributor will know that if they work on your wines they'll be rewarded. Success breeds success, so each time a distributor rep puts your wine into an account and sees it sell through and be reordered, it makes him or her that much more likely to think of your wine the next time there is an opening to fill. Of course, failure breeds failure, too. Don't chance it if you have the power to help.
  • Be careful in franchise states. Nearly half of states have some sort of franchise law that restricts or prohibits suppliers from leaving a distributor that is not performing. In those states, your recourse is less and of course distributors are less responsive. Consider insisting on an opt-out clause in a contract before you sign on. If the distributor refuses, it may be a sign that you're better off not doing business with them anyway. And remember that just because a distributor is a great fit now, they may not be if they are bought by someone else, although your franchise tie will likely remain in force. But even in franchise states, all of the above fundamentals still hold true, and distributors in these states have the same goal as anywhere else: to sell wine. 

It's worth also mentioning that I'm assuming you're already making a good product and pricing it fairly. If not, you're going to find executing a successful wholesale strategy difficult, no matter what else you're doing. The wholesale market is less forgiving than your tasting room, where your customer service, and the time you can spend with your customers, makes a greater difference.

Anyway, this is just a teaser for Thursday's discussion, at which I'm very much looking forward to hearing the other panelists' (and the audience's) perspectives and ideas. I hope you can join us. If you won't be there, please add any ideas or feedback in the comments section.


Is the bloom off the user review site rose?

Last March, I wrote the post Has TripAdvisor overtaken Yelp for winery visitors, suggesting that of the two major user-review Web sites, TripAdvisor seemed to be replacing Yelp as the preferred forum for people writing user reviews of Paso Robles wineries.  The graphic I included in that post showed a pretty dramatic shift over time:

Reviews by Site

The graph also shows a steady increase in the number of user reviews posted for Tablas Creek on the two sites, from 10 in 2008 to 15 in 2009 to 22 in 2010 and 42 in 2011.  With the first quarter of 2012 showing as our busiest quarter yet for user reviews (18) I fully expected to see continued growth.  But something happened around the middle of last year, and while our annual total (63) was still our highest ever, the quarterly total peaked in the second quarter at 25, then declined to 13 in the third quarter and just 7 in the fourth quarter.  I have gone from checking the sites daily for new reviews to now checking only every week or so, and getting used to seeing the same months-old reviews I saw last time.  The curve looks a little different now. To smooth out some of the noise, I've added a rolling average, which averages each quarter with the quarters before and after:

User Reviews Trend thru 2012

It's worth noting that my conclusion that TripAdvisor -- which to most wineries at the time was much less salient than Yelp -- was a player to watch turned out to be true. TripAdvisor tallied nearly three times the number of reviews of Tablas Creek as did Yelp in 2012.  But by sometime around mid-fall the flood of user reviews had turned to a trickle.

I was curious to know whether what we were seeing, both in the drop in user reviews at the end of 2012 and the dramatic shift toward TripAdvisor and away from Yelp, was standard for our area.  So, I picked three other popular, well-established Paso Robles wineries (Justin, Adelaida and Eberle) and took a look at what they'd seen.  I found that the shift toward TripAdvisor and away from Yelp is real, and dramatic.  In 2011, the four wineries (including us) showed 133 reviews from Yelp and 44 from TripAdvisor.  In 2012, Yelp reviews declined 34% to 88, while TripAdvisor reviews grew 390% to 216.

And I found that the dip in reviews I'd noticed in the second half of last year was echoed by our neighbors, though we saw a larger decline than most.  Here are the four wineries' results for 2011 and 2012, using a stacked area graph that allows you to get a good sense of the aggregate:

User Reviews Four Wineries 2011-2012

My first thought was that this could be explained by the number of customers visiting Paso Robles.  After all, the summer season is typically the busiest one in Paso Robles, and the winter the quietest.  But when I looked deeper, I found that at least at Tablas Creek our tasting room traffic doesn't vary that much by quarter.  Our smallest quarter last year was indeed the fourth quarter, but at 6880 visitors it was only 12% less busy than our busiest (the third quarter, at 7815).  I don't have any reason to think that our traffic trend differs significantly from the other wineries in the area, so I tried dividing the total number of reviews for each quarter by that quarter's traffic.  The results show that per Tablas Creek customer, we are seeing a decline in user reviews submitted for the four wineries:

User Reviews per Customer

There are few possible ways of explaining away the development, none of which I find particularly convincing.

  • Perhaps there is a different type of customer who visits in the summer months, a younger, more tech-savvy customer, who is more likely to post a review on Yelp or TripAdvisor.  Maybe, but If you look at the results for 2011, the two summer quarters showed the lowest percentage of reviews per tasting room visitor. Why would this reverse itself in 2012?
  • Perhaps there is something about the four wineries that I chose that makes us all subject to some trend that is out of step with what's really happening.  This is possible, but seems far-fetched.  Other than that we're all in Paso Robles and all of roughly similar scales, we represent wineries that are in different parts of the AVA. Could, say, newer... or smaller... or larger wineries have been getting more reviews at the end of last year even though our traffic stayed steady? I just don't see how. The implication would be that there is a specific sort of person who writes these reviews and that sort of person hasn't been visiting Tablas Creek, Justin, Adelaida or Eberle as much in the last six months even though our overall traffic numbers are steady. Maybe they're now boycotting Paso Robles in favor of other wine regions? I have trouble believing such an explanation.
  • Perhaps there are as many user reviews being written, but there is a new competitor in the field that is siphoning off reviews from both Yelp and TripAdvisor.  The obvious option is Google, whose Google+ allows users to write reviews. But the five Google+ reviews of Tablas Creek include only two written in the last year. The other competitor mentioned sometimes is CitySearch, which has only three reviews of Tablas Creek, just one written since 2008.  So, if they're moving away from TripAdvisor and Yelp, where are they going?

In the absence of another plausible explanation, I'm left to think that there has been some sort of shift against both Yelp and TripAdvisor among their users in the last six months.  Unless this is a statistical hiccup that will correct itself over the coming months (possible if unlikely) the possible conclusions are that we're seeing the bursting of a bubble that will eventually lead to a steady but lower-level number of new user reviews, or that this is the beginning of a long-term trend that will result in the category's gradual obsolescence.  I would tend to suspect the first explanation: that like with many new technologies, lots of people jump onto the bandwagon when they see their peers doing the same, but many find that it's just not for them. And it is work, writing these reviews, uncompensated work at that.  It's easy to imagine a reviewer getting fatigued with what's involved.

From a practical standpoint, even if it is true that user reviews are declining, the sites are still important for wineries to monitor. Both sites (particularly Yelp) are search engine goliaths, and there is well-documented evidence that even a single negative review can make a significant difference to a restaurant. A decline in the authorship of reviews doesn't imply a decline in readership, and in fact good reviews are more important now than ever, as there are fewer reviews being written and a negative review is proportionally more influential with a lower volume of other reviews in which it can get lost.

Still, I was interested to see that what seemed like an endless escalation of user reviews has not just slowed, but reversed itself. We'll see, over coming months, what this means.


Common-sense sustainability

I'm in New York this week, helping kick off the release of the 2010 Esprit de Beaucastel and 2010 Esprit de Beaucastel Blanc.  My hotel, like most hotels these days, has one of the signs that tells you that in order to help protect the environment, my sheets and towels -- clean when I arrived -- will be changed only every fourth day, saving untold gallons of water and pounds of detergent.  Does the hotel really care about this, or just about the dollars they're saving in water, labor and soap?  It's a Kimpton, so probably they do care.  But many less environmentally-conscious hotels do the same thing, and I think that it's one of the best examples of a common-sense approach to sustainability that can, applied on a broad level, have enormous benefits to the use of resources without any noticeable detriment in customer experience.

As much as we prize (and praise) efforts that businesses make toward environmental responsibility, I'm a realist, and believe that the only ones that really stick are those that have a net positive impact on the business's bottom line.  I don't mean that individual businesses always act in a purely profit-maximizing fashion.  But I do think that eco-conscious ideas won't be widely enough adopted to make a measurable impact if they don't also offer the business some business-friendly incentive, whether that be lower costs, increased production, or improvements in product quality. I don't think that favorable publicity or public image is enough. Look, for example, at the paltry share of US energy production that comes from solar (less than 1%) despite the appeal of renewable energy and the widespread use of incentives.

Along these lines, we've been trying to think of things that we can do that will help us use resources better while saving (or at least not costing) us money.  I can think of two good examples that we've implemented in the past few years, both of which we've been getting lots of inquiries about from other local wineries.  I'm very interested in hearing about other similar initiatives.  If you have come across other good ideas, please share them in the comments.

For years, we had ordered pallets of bottled water each month, so that guests who we took out into the vineyard in the heat of summer wouldn't wilt, and no one would get dehydrated in the midst of their day of wine tasting.  Still, I always hated seeing the pallets arrive, and thinking about the impact of the production of these water bottles and the thousands of bottles each year that ended up having to be recycled or in landfills.  So, we installed a water filtration system outside our new tasting room and ordered several hundred stainless steel canteens. Each morning, we fill up the canteens and put them on ice outside the front door:

Canteens

We have another bucket nearby where we ask people to return the empty canteens, and then we wash them at the end of the day and refill them.  Sure, we lose a few that wander off into people's cars, and there's a little extra expense from the washing, but each canteen is only about four times as expensive as one water bottle, and there's no way we lose 25% of the canteens we use.  It's saving us money, preserving resources and making a point about sustainability at the expense of a little extra work for us.  I'll take that deal any time.

I would put our decision in 2010 to move to lighter-weight bottles in a similar category.  Long-time followers of the blog may remember the public debate we had about whether the winery's image was enhanced by our larger, heavier bottles and our ultimate conclusion that these larger bottles provided negative utility for our customers, making them harder to store, more difficult to lift and move, and more expensive to ship.  Two years later, I find it hard to believe that we ever thought that the larger bottles were a good idea.  Not only did the change save roughly 90,000 pounds of glass weight, and the associated higher costs of producing these larger bottles, trucking the empty glass to the winery and the filled cases from the winery, and shipping the bottles to our customers who ordered the wine, but we've stopped getting complaints about how the bottles we put our wine in don't fit in people's wine racks.  I find myself now suspicious of wines in these big bottles, thinking that they must be trying to impress with their package because of something missing on the inside.  Has this move resulted in lower sales off the shelf, or other indications that the image has suffered?  We haven't heard a single comment that would suggest it.

Sure, we do plenty of environmentally friendly things that don't save us money, most notably our commitment to organic and biodynamic farming.  But we're convinced that the benefit is in the grapes that we harvest and in the quality of the wine that we can make.  For us, the expense is worth it.  Are we happy that we're leaving our piece of land in better shape than when we found it, all while not exposing ourselves and our customers to chemicals?  Of course.  But do I expect other wineries and vineyards to necessarily make the same farming choices?  I'm not sure; it depends on the calculus that they do as to the value of the higher quality product that would result.  But I think that there are some common-sense steps toward sustainability that most any winery could implement right away, and am curious to hear any others that you've found appealing.  Even if it means asking your customers to participate in some small way... from returning an empty canteen to hanging up their once-used towel.


The power of print

Last weekend I noticed a small flurry of online wine club signups, as well as a surge in online orders.  We hadn't sent out a recent email (we do that at the very end of the month).  We hadn't gotten any particularly noteworthy press.  It wasn't until it lasted for a few days that I realized we had sent out our summer 2012 newsletter and it had started to hit mailboxes late last week.

Summer 2012 NewsletterWe have always thought of the principal value of our newsletter being marketing, education, and engagement with our consumer and wholesale customers.  Sure, we include an order form in it, but we don't ever get a lot of them back.  And we really don't push sales.  I think of the newsletter in the same way that I think of our work with social media: we're maintaining mind-share, personalizing our business, and educating: doing whatever we can to bring people inside our world, at least for a little while.  We figure that sales will come organically as a result of this marketing.  But when I went back and looked at the impact of our last newsletter, I realized we'd been underselling the direct sales impact of our print newsletter.

We sent our first newsletter of the year out in early February.  For the next two weeks, we nearly doubled the online club signups and orders that we had been averaging (from .22 VINdependents, .37 VINsiders, and 1.91 orders daily to .73 VINdependents, .60 VINsiders, and 4.4 orders).  By my rough calculations, that newsletter directly added sales of around $30,000 in just those two weeks, based on the average long-term revenue a new club member brings in and the actual extra sales from the additional orders we received.  The impact with this newsletter if anything has been more dramatic.  It's a busier time of year, and our online averages have gone from .30 VINdependents, .55 VINsiders, and 2.05 orders per day to 1.00 VINdependents, 1.71 VINsiders, and 5.71 orders per day.  In just a week, the added value to us has been something like $40,000. All this is beyond the intangible marketing, member retention, event promotion and wholesale trade benefits we've come to expect.

Print newsletters are not without costs.  To send ours out to the roughly 18,000 people for whom we have addresses, it costs us something like $15000 in printing, handling and postage costs.  Would an email, which costs us very little, have the same impact? Not exactly. We do send emails out as a regular part of our marketing program: every month to our VINsiders, every couple of months to our VINdependents, and a couple of times a year to our entire mailing list.  But I have the sense that the cohorts that each medium reaches don't overlap 100%.  Of course, there are some mailing list members for whom we only have a physical address and no email, or vice versa.  But even within the group that has both, there are people who will ignore an email (or have it caught by a spam filter) but will read the newsletter (and the opposite). Two areas where print dramatically outperforms email for us are with the trade (who are apparently so bombarded with messages from the hundreds or thousands of suppliers they work with that they ignore all or most) and in spurring wine club signups (since you are typically emailing existing club members).

For me, all this suggests that we're making the right choice to continue to maintain a balance of communication between email and print.  And that even though the print newsletters are relatively costly, the sales and wine club signups they drive -- without us trying to drive sales -- more than pay for their expenses. So the marketing benefits, and all the benefits that we get with elements of the wholesale trade, are gravy.


Nine lessons the Kimpton Hotel Group offers wineries

Last week, Meghan and I escaped for a night down to Santa Barbara to see David Sedaris perform.  We stayed downtown at the Canary Hotel, a few blocks away from the Arlington Theater where he would be performing. When we checked in, it was during the evening wine hour that Kimpton Hotels are known for, and we sipped on glasses of a local Sauvignon Blanc while the clerk completed the registration.  We were greeted warmly, told that we had been moved to a corner room with a balcony, and then were on our way.

I am not a particularly loyal traveler.  I choose airlines based on the rates they charge and the convenience of their connections, even though I'm an elite member of United.  I pick rental car companies based on price, though if it's close (and it only rarely is) I'll give Hertz and Avis the benefit of the doubt due to their superior customer service.  Between Hilton, Hyatt, Marriott, Westin, and the like, I really don't care and mostly can't tell them apart.  But if there's a Kimpton in town, you'll most likely find me there.  As I was thinking about why, I realized that there are lessons here for wineries, and have tried to apply these lessons to Tablas Creek.  Below are nine lessons I take away from Kimpton's success.

  • Get to know your customers... and show that you remember.  As a part of the loyalty program, you're asked questions like what sort of room you prefer (I like corner rooms because of the light and air flow), what sort of pillow you like (feather), what newspaper you like, etc.  And if you're one of their elite members, you get an even more detailed checklist of what you'd like to see and do.  And when you check in, Kimpton figures out how to make your preferences happen.  It requires both infrastructure and commitment, but the result is that your stays feel personalized.  As a winery, do you know what wines your customers particularly like?  Are you letting customers who have enjoyed a particular wine know when the next vintage is released?  Are you recognizing your best customers?  Are people greeted by name when they check out?  Your systems most likely have this treasure trove of potential information hidden inside.  It's up to you to figure out how to apply it.
  • Be friendly to the whole family. Before we even had kids, still in our twenties, we treated ourselves on the cross-country trip that brought us out to California from Washington, DC.  After more than a week of cheap motels and national park lodges, we splurged a little (it was still only about $100) and stayed in the Hotel Monaco in Salt Lake City.  When we arrived, grimy from a day of driving, with our dog, we were greeted warmly and Maddie even more so.  She was led upstairs, had a special bed for her, a treat on arrival and with the turndown service, and instead of being treated as suspicious (as we'd found in some "pet friendly" hotels on our way out) we were made to feel welcome.  Kimpton hotels are all pet friendly, and all, in our experience, equally kid friendly.  As a winery, have you thought about people who are coming with pets or kids?  We have a small table and chairs where kids can color while their parents taste.  And there's a bowl with water outside for dogs.  The cost is virtually nil, and the gratitude from guests who come with pets or kids is wonderful.
  • Offer consistent value. Kimpton hotels aren't cheap.  They're typically in the $150-$250 range, and there are doubtless cheaper options nearby.  But they pack a lot of comfort and personality for what they charge.  As a boutique winery, that's your job.  You don't want to be the cheapest, you want people to feel like whatever they pay they got a lot of value for.  It's also important that your best customers feel like they're being treated fairly.  This is particularly difficult in the ruthless online hotel marketplace.  If you find a cheaper rate online than Kimpton has on its Web site, they'll match it and offer you a $25 credit.  I'm not suggesting that wineries do the same, but if your wine club members are finding your wines cheaper at their local retailer (and with the Internet, the definition of "local" stretches a lot) they're not likely to be members for long.  Make sure you know what your wines are being offered for online, and figure out how to take action if you're finding that you're falling behind.
  • Make your workplace a great place to work. It's clear in every interaction with Kimpton staff that they enjoy what they're doing.  And the recognition has come: Kimpton was #16 in Fortune's Best Companies to Work For 2012.  For Kimpton, this includes rewarding employees who go out of their way to provide outstanding service, funding ongoing education, encouraging a healthy work-life balance and, most importantly, empowering employees to improvise and make on-the-spot decisions that will benefit their customers.  Working at a winery, particularly in hospitality, is similar to working in hotels in that you're "on" each day.  You see new guests every day, and each day will be many guests' first experience with your brand.  Do your employees feel valued?  Are they given the authority to make decisions?  Are they supported when they come to you with suggestions?
  • Be a good corporate citizen. Kimpton has been a industry leader through their Kimpton Cares program.  They have launched out-of-the-box initiatives like "Great Meetings, Great Causes" that try to bring their message of sustainability to non-traditional venues.  And they for many years offered free parking to hybrid and electric vehicles.  Do these make a difference in the world? Probably, to some degree.  And their commitment seems sincere.  But it has brought them lots of community goodwill and free publicity, which never hurts.  Many wineries are doing well here, whether farming organically or sustainably or supporting community causes.  But there is always more to be done.  At Tablas Creek, we've identified arts in our community as an area to dedicate significant resources to, and now are major sponsors of the Central Coast Shakespeare Festival, Festival Mozaic and the Paderewski Festival of Paso Robles. But beyond what we do ourselves, we've been able to leverage our position in the community.  My father founded the Winery Partners of the Foundation for the Performing Arts Center, a group now in its third year, which has together donated nearly a quarter of a million dollars in recognition of the importance of the venue to the county's cultural life and of the wineries in the county's economic vitality.
  • Focus on public relations instead of advertising.  Kimpton hardly advertises.  At first, this was because (like most wineries) the available funds were low and the market penetration of the stable of boutique hotels limited.  But more and more they believe in the higher return on investment of engaging with customers and writers, developing stories organically, and building via word of mouth.  Social media has only made that task easier.  I think that this is even more true for wineries.  Advertising is a blunt tool, where you reach a lot of people but aren't likely to convince many to take action because of it.  Worse, it's only valuable to the extent that you have already achieved market penetration.  That money that you could spend on an ad in a glossy magazine could almost certainly be better used to develop contacts with writers in the hopes of generating editorial coverage, or reinvested in creative incentives for your current fans to share their enthusiasm with their friends.  Is it more work?  Sure.  But someone else's testimonial for your brand is inherently more powerful than your own.
  • Know your history, and celebrate it. Most corporate hotels feel the same, whether they're in San Francisco or Sarasota.  Not Kimptons.  They make a point of searching out and renovating historic buildings and then imbuing them with the personality of their region.  This doesn't feel like a schtick... the way that, say, a W in suburban Atlanta does with its techno and neon.  Instead, the architecture is thoughtfully restored, the connection between the hotel and its neigborhood celebrated, and the space's history displayed and explained.  As a winery, take a look at the entrance to your tasting room.  What does it say about you?  Are you communicating your essentials?  You might be surprised at the story your facility is telling.  Are you slick or personal?  Fancy or down-home?  Artisan or industrial?  Traditional or modern?  There isn't a right answer, but it's important to know and to make sure that you are creating the impression you want.  For a case study, take a look at the blog post from last spring Telling the Tablas Creek story... without words.
  • Give people who don't know you yet reasons to discover you. Each Kimpton has a restaurant, often among the better restaurants in their cities.  These go far beyond the typical hotel restaurant and while they do provide hotel guests a place to have a quick breakfast or a late-night snack, they cater primarily to the local community.  A vibrant restaurant ensures a steady influx of potential new customers and friends of potential new customers, as well as adding to the prestige and reputation of the venue.  Most wineries won't have restaurants on-site, but it's important to stay visible to customers who don't yet know you.  Are you doing open houses for members of the hospitality trade?  Offering your site as a venue for industry events?  Partnering with non-winery businesses to host their events?  It's easy to open your doors and wait for your customers to find you, but being proactive can bring you so much more.
  • Be generous with the little things. Whether it's the complimentary wine tasting, the complimentary internet access, bottles of water in the rooms, the fruit in the lobby or the goldfish and bowl you can take to your room, things that other luxury hotels charge for are included with your Kimpton stay.  I hate the feeling of being nickeled and dimed.  As a winery, if you're charging tasting fees for people who purchase or event fees for your club members who are coming to buy wine, it's worth considering whether the benefits of loyalty and increased sales may outweigh the small amounts of revenue you're bringing in.

Is this a checklist that any successful winery has to mark off?  Of course not.  But most wineries want what the Kimpton Hotel Group has achieved: respect as purveyors of a consistently high quality product, in classy, comfortable environments, with outstanding customer service and positive impacts on their communities.

Sounds worth emulating, to me.


How to make the most of trade and consumer tastings

Last Sunday, I was standing behind the Tablas Creek table at the Family Winemakers of California tasting in San Francisco.  We were one of 340 wineries pouring wines for more than 1700 trade and 700 consumers (an additional 1700+ trade came on Monday).  Family Winemakers (as it's known in the trade) is, in my opinion, Northern California's best trade tasting each year, and brings out the sorts of top buyers from restaurants and retailers who you usually have to go see personally.  The potential value of a tasting like this is enormous, given the concentration of qualified customers.  And yet, I hear wineries complain after tastings -- even big, well-run tastings like these -- that they can't see the value.

One of our neighboring wineries commented that it was their first Family Winemakers tasting, and they wanted to know how our table was so busy.  Part of it, of course, is that, if not a household name at this point, we're fairly well known among the wine trade.  But that wasn't always the case.  And I don't believe that it's out of a winery's control how much value they get from a tasting like this.  It's no more a viable sales strategy to simply go to a trade tasting and hope that people come to find you than it's a viable marketing strategy to open your doors and assume your customers will walk in.  As I gave the winery next to us a few ideas of how to make sure that you squeeze every possible bit of value out of a big tasting like this one, it occurred to me that the ideas might make the basis for a good blog piece.

A few days after the tasting, I got an unexpected phone call that drove home the point.  One innovation that the Family Winemakers instituted this year was offering wineries the opportunity to pass along a $10 discount coupon to their customers.  It was a great strategy because it both gave the wineries a reason to publicize the tasting, and gave Family Winemakers the ability to track whose promotion was most effective.  Of all the 340 wineries who participated, apparently Tablas Creek's promotion was the most successful, resulting in 42 consumer tickets being purchased with our unique discount code.  OK, I'm pleased with the effort that we make.  But we're a mid-sized Paso Robles winery.  The greater part of our customer base is in southern California, and we have only about 1000 people on our mailing list in the Bay Area.  If our promotion was the most effective, when many wineries in this North Coast-dominated tasting have many times that number of potential local customers, it tells me that far too many wineries aren't making the most of opportunities like this one.  Here's a checklist for wineries:

  • Make sure that your mailing list includes location.  This will allow you to sort it for regional events.  If your top customer in Kansas City keeps getting notes about tastings and dinners in Orange County, they're probably going to get annoyed.  And the result will be that the only notes you'll send out are about events at your winery.  Knowing where your customers are allows you to target them selectively for dinners and tastings in their area.  And make sure you're asking for location wherever you're soliciting for new contacts, whether online, in your tasting room, or at events.
  • Select a good email marketing tool.  The tools for email marketing are incredibly powerful and remarkably inexpensive.  The two market leaders are Constant Contact and Vertical Response, and both are good options.  We use StreamSend, which I like for its flexibility and its lower cost.  And there are countless others as well.  Any of them will give you invaluable information about your email campaigns, including which links get clicked on and by how many people, what addresses are undeliverable, and what percentage of your notes get opened.  This information allows you to keep your database up to date and to learn from your past campaigns.
  • Send an email out to the geographically-relevant members of your mailing list roughly three weeks before every event you do in the market.  Your consumers (and, if the event includes a trade component, your trade) will appreciate knowing about the event, whether it be a multi-winery festival, a wine shop tasting, or a wine dinner.  And it's not a terrible thing for your trade supporters to know that you do these sorts of events; I've several times gotten an email back from a retailer or restaurant, who, upon hearing I'll be in town for another event, wanted to schedule something with me.  Incidentally, if you're worried your existing fans may crowd out new customers, remember that it's useful to have existing supporters at your events for several reasons.  First, they're likely to bring you new customers by sharing the information with friends.  Second, having a busy event, or a busy table at an event, gives you good buzz.  And third, you've helped support the events, restaurants and retailers who support you, which leads to good trade relations.
  • At each event, get contact information for as many of the people who come by your table as possible.  If these are consumers, have mailing list cards or a guest book out on the table, and encourage anyone interested to give you their information then and there.  Don't be shy; you'll get many times the number of people signing up if you suggest it than if you wait for them to ask.  If you see members of the trade, trade business cards with them, and note on the back what wines they were interested in.  If they don't have business cards, or if you already know them and it will feel weird to ask them again, keep a notebook handy to note who liked what.  It's the only way to have the information that will allow you (or more likely your broker or distributor) to follow up effectively. 
  • Have easy pocket-size take-home information about the individual wines you're pouring.  We started making cards like the ones pictured below for our wines years ago, and they're great to have.  At the tasting, it helps provide details about complicated wines (and our wines, being mostly blends, take some explanation).  After a big tasting, a card like this will help people remember their favorites, and having your contact information there makes it a lot easier for them to act.  Finally, from a practical standpoint, having individual cards helps make your larger, glossier, more expensive "about the winery" pieces more usable since they won't go out of date.
  • Esprit08talker   Cotesblanc08talker
  • Spend some time circulating around the room to see who is there, and encourage them to come see you.  Obviously, this is only practical when you have multiple people there to work an event.  But it can be great both in ensuring that key members of the trade taste what you've brought and in getting referrals from other tables.  Bring tastes of wine to other wineries' tables, or to the table of the restaurant serving food across the aisle.  At big tastings, lots of customers ask each table where else they should go.  Do what you can to make sure that you get your share of these recommendations.
  • Get the information about what trade stopped by your table and what they liked to your distributors and brokers within a week or so for follow-up.  Then check back in with the distributor a few weeks later to find out what came of the leads you gave them.  I'm not suggesting that you pester them, or demand a written report about every lead, but if the distributor knows that you care enough to follow up, they're likely to be more diligent in pursuing the leads you provide for them.
These suggestions aren't rocket science, but should help make sure that a winery is effectively covering its bases before, during, and after each tasting that it does, and giving itself every chance to succeed.  And given that everyone's budgets are tight right now, it's more important than ever. 

Building a successful winery tasting room experience before, during and after the visit

Next week, I'll be speaking as part of a panel at the Unified Grape and Wine Symposium in Sacramento. The panel is titled "How to Make Your Tasting Room More Profitable" and is being organized and moderated by California's most respected tasting room consultant, Craig Root.

I've spent a lot of time in the past eight years refining my thoughts on what makes a successful tasting room, and am at this point amazed to think one wasn't in our original business plan.  An indication that we're succeeding is that, according to Craig, the sales and wine club signups that we see at the Tablas Creek tasting room are roughly double the industry average.  I hope to see some readers of the blog at the seminar.  We'll go into more detail than I have here, but below are a few highlights of what I think are important things to be thinking about before, during, and after a customer's visit.

  • Work to build your traffic year-round.  It's a lot easier to sell wine to people who have opened your front door than it is to sell it to people who haven't.
    • Cultivate partnerships. You are not the only one in your area with an interest in bringing people into town and giving them a good experience. Reach out to local hotels and bed&breakfasts and create co-marketing opportunities and specials that will give them a reason to be emailing their customers about you. Work with local restaurants to put together dinners that both you and they will market. This expands your base, supports your partners in your community, and ensures you stay visible. And don’t neglect the other winery tasting rooms in your area. Open houses every six months are easy and fun.
    • Encourage your supporters to come back and bring friends. You’re probably offering free tasting for your wine club members. Are you doing so for their guests? Are you offering some reward to members who refer you business?
    • Understand that your marketing (and your presence in the wholesale market) does have an impact on your tasting room. Make sure that you’re in the places where potential customers are. Go to wine festivals in your catchment area. Work particularly hard to ensure that your wines are on the lists of restaurants in your area. Know that one benefit to your wholesale marketing is spillover into your tasting room.
    • Do your part to ensure that you get editorial coverage. Most wineries think of press as principally beneficial to their wholesale marketing.  And great press does have a multiplier effect in wholesale, as the reviews you get are echoed by distributors and retailers.  But don't neglect the impact it can have on a tasting room.  When we got our last set of reviews from Robert Parker last August, our tasting room traffic rose 20% and our sales 35% over the rest of the year.  Be sure you are at least covering the basics by sending samples of all your new releases to the 20 or 30 key writers around the country a few times each year.  Total cost: around $2500 plus a few cases of wine. Possible benefits: enormous.
  • Make sure that you focus on each customer interaction. I am amazed by how many people we get in our tasting room who tell us stories of other tasting rooms with disinterested servers, overcrowded tasting bars, or salespeople whose only interest is a club sign-up.
    • Have sufficient staff on hand for your busiest times.  An enormous piece of being able to ensure a good customer experience and the sales that result is having sufficient staff on hand to handle your busiest times. This necessarily means that in slower times you'll be overstaffed, but if you calculate the value over time to your business of a single club sign-up or a single dissatisfied customer who would otherwise have bought a case of wine and told their friends, the cost of labor seems pretty minor.
    • Focus on giving everyone a memorable experience. If you do so, the wine (and wine club) will sell itself.
      • A hugely successful tasting room may convert 5%-7% of its customers into club members. That means that the vast majority of the people coming through your tasting room are not going to sign up on the spot. Be careful... if you are incentivizing your staff for club signups you may be encouraging them to focus their best efforts too narrowly.
      • Sell through education and enthusiasm, and make sure that the customers know the options in front of them.
      • Every person who leaves your tasting room happy is a source of repeat business and referrals.
    • Get an impartial perspective.  Consider sending in friends or family members incognito to get a sense of what the typical customer is experiencing.  Make sure it's someone who will be honest with you.
  • Be generous with the little things. Remember that your primary reason for being is (probably) to sell wine. If you focus on making money on your events or your fees, you may be doing so at the expense of wine sales. Some ideas:
    • Comp your tasting fee on a purchase. When we raised our tasting fee from $5 to $10 but comped it on any wine purchase, we found that the percentage of visitors coming to our tasting room who bought rose from 65% to 80%. Even a one-bottle purchase means that sometime in the future, that guest is going to open a bottle of your wine, often with friends, and relive the memory of having visited you.
    • Give away a logo glass. You’ll spend less time doing dishes, and your glass provides a reminder of the experience.  High-quality logo glasses sell for all of $2 in bulk.
    • Make sure that your wine club members know they are appreciated. Send them a welcome packet when they sign up.  Send a holiday card, and consider including a coupon (say, $20 off on their next order). It spurs new orders and keeps you top of mind.
    • Keep the costs of your events reasonable. An inexpensive (even free) event and an incentive to purchase while your customers are there can drive impressive sales. Adding a night-of-the-event-only 5% discount to our semi-annual wine club shipment tasting parties more than doubled our average sales.
    • Choose a wine each month to offer at a discount. This gives you something different to talk about each month in the tasting room, via email, or online (including through your social media). You can use this to focus attention on a new wine, or one whose sales are slow, or just rotate through your portfolio to raise awareness and excitement about the wines you make.
  • Put yourself in a position to continue the conversation with your customer even after they leave. Don’t assume that your connection ends when your customer leaves the tasting room. There are powerful tools available to maintain and even grow a connection that begins in the tasting room.
    • Build and use your lists. Are you asking all your customers if they are interested in joining your mailing list?  Adding just a small percentage of your foot traffic to your email lists (let alone your wine club lists) can give you a powerful tool to communicate special offers, share information about events, and generally build an ongoing connection to your base.  And once you have added these people to your lists, it's important to contact them regularly. An email every few months, with perhaps a print newsletter a couple of times a year, is generally seen as welcome rather than intrusive.
    • Work with new media to stay connected. The tasting room is your primary venue for creating a personal connection with your customers. Social media sites allow you to extend that connection, and help like-minded consumers find and follow you, and hopefully become customers.
      • Facebook should be a part of any winery’s marketing plan. With over 300,000,000 users, a significant portion of everyone's network is on Facebook. If you are not, you lose the opportunity to remain top of mind to a huge portion of your lists (it’s also a great way to make and maintain connections to distributors, trade and media).
      • A blog (like this one!) is a great way to personalize your business, communicate your core ideas and principals, and drive traffic to your Web site. It’s probably your best opportunity to tell an extended story.
      • Twitter can spur real-time interaction and feedback with an important (read: taste-making) segment 25,000,000 strong.
    • Make sure you're a good partner. Whether you're using social media or more traditional email or print marketing, make sure you provide valuable content in addition to (and probably more extensively than) you push sales.  Of course, sales are an important result of any marketing campaign, but if you cross the line and become one-dimensional or self-serving, or you'll push away the customers with whom you're trying to build a connection.

If you are going to be at Unified, and want the more detailed version of this, as well as the thoughts from the other panelists and Craig, our seminar will be 2:00pm on Thursday, January 28th.  I hope to see many of you there!


Truth, Fiction and Self-fulfilling Prophecy in Wholesale Wine Sales

Sure, consumers are cutting back.  And sure, sizzle is out in favor of substance.  But it is my belief that the wholesale wine market is perpetuating and strengthening the much-trumpeted phenomenon that consumers are only buying the least expensive wines.  The mechanism is that of the self-fulfilling prophecy.  How has it happened?  Read on.

First some background.  Those of us out selling wine in this recession hear, again and again, things like "no one is buying now" and "the only price categories that are working are under $15".  Yet, I have spent more time the first six months of the year out in the market than I have in years and have never had the wines so well received or seen such great sales result from my work.  Our least expensive wine retails for about $20, with the rest in the $30's and $40's.  I just got back from two days working in Northern California, where our sales declined more than 30% in the first six months of the year, and sold multiple wines into nearly every stop we made in the dramatically different markets of Monterey, the East Bay, and San Francisco.

So, what gives?  According to Wine Industry Insight, retail sales of wine in the $20-and-above price category rose five of the first six months of 2009 compared to the same months in 2008.  Of course, restaurant sales of wines have declined, although I have not been able to find anywhere which has quantified by what number.  Overall, the consensus seems to be that higher-end but not luxury wine (say in the $20 to $50 price level) has softened but not collapsed.

I've begun to suspect that there is more than organic reduction of demand at play in the wholesale sales declines I've seen.  Four principal factors have made me suspicious.

  1. Our tasting room sales continue on an upward trajectory.  So far this year, our tasting room sales are up 5% off of a substantial base, and we've continued to gain wine club members (we have about 200 more now than we did at the beginning of the year).  So, clearly our customers are not abandoning buying Tablas Creek.
  2. Our wholesale sales results have varied dramatically depending on how much time we have spent in that market.  Markets where we have visited, or where we have worked out programs that ensure that the wines are being shown to prospective buyers, are flat or up compared to 2008.  Markets which we have not visited and where we have not worked out independent programs are down, often sharply.
  3. Wholesale accounts that I visit mostly report that they have not been shown Tablas Creek as much in the past 9 months as they were being shown previously.
  4. We've had more issues than ever before with our wholesalers running out of stock of our wine.

All these factors lead me to suspect that the major culprit in the sales decline of mid-tier wines is what might be called gatekeeper nervousness.   As I mentioned in my post on succeeding in a poor economy back in February:

For a wine to sell in the wholesale market, the distributor manager has to believe in the product enough to maintain a healthy inventory, the distributor rep has to believe he or she can sell the wine enough to pull a sample and show it to his or her accounts, and the buyers at the accounts have to have enough confidence to buy the wine in a crowded and nervous marketplace.

All these gatekeepers have the power to block a prospective consumer from receiving the opportunity to purchase your wine.  If any tier worries that their customers are only interested in inexpensive wines, it's easy for them to focus most or all of their attention on those wines.  And if they do, they contribute to the creation of the environment that they fear.  As an example of how this fear of any but the least expensive wines can become a self-fulfilling prophecy, my dad came back from a sales trip through Connecticut having sold wine at every stop except for one retailer who said that as his customers are only buying wines under $15, he's only stocking wines under $15 in his store.  If he's only stocking under $15 wines, of course that's what his customers are buying!

The tendency to focus on only the least expensive wines is even more of an issue when it is your distributor or agent who is supposed to be advocating for you who is the reluctant gatekeeper, because in general you have hundreds or thousands of potential retail and restaurant accounts in each state but only one wholesaler. 

This is why, in the wholesale market, our principal focus as we move into the second half of this year is to make sure that our distributors are pulling enough samples of our wines to show.  I honestly feel that as long as this is happening, everything else takes care of itself.  And as we have pushed our distributors to show our wines more often, I have begun hearing from numerous distributor reps and managers who have been surprised with how well received the wines have been, and how many sales they have made, when they've shown Tablas Creek to buyers.

If you're a winery, how do you make sure your wine is being shown?  I have some suggestions. 

  1. Make sure you're receiving samples use reports from your distributors.  You can't know what to do if you don't know what's happening.  Even the act of running this report can spur a commitment to action from distributors whose performance on your wines has declined. 
  2. Be prepared to ask that your wines be included in promotions or contests that your distributors are holding.  Most distributors are running at least one competition for their salespeople at any given time.  Unsurprisingly, this dictates what is top-of-mind for the salespeople.  
  3. Focus on distribution goals rather than sales goals.  This may not be intuitive, but if you are judging your distributor's success on sales of cases, it's usually easier for a manager to set up one or two larger retail drops rather than twenty new placements.  But these big drops have gotten harder to set up in an economy where everyone is trying to move volume, and don't usually have the lasting impact that broader distribution has.
  4. Don't be reluctant to provide some samples at your expense.  Sample budgets have definitely tightened in this recession, and you may need to, in effect, seed the market to convince the distributor that the wines are viable to sample. 
  5. Make sure you are out in the markets working with your distributors.  They have to focus on your wines when you're there, and if you have good success in the market, it breeds more success.  Plus, working with a distributor is a cooperative effort.  If they see that you are supporting them, they're far more likely to support you even when you're not there.

Will these ideas work for everyone?  I don't know.  And are they relevant for wines that are in the true luxury category (over $75 retail)?  Maybe not.  But they at least give you a fighting chance, which is the minimum that you should be asking for.  And as the economy slowly climbs out of recession and consumer confidence begins to rebound, we need our wines on lists and on retail shelves to have a chance of taking advantage of the improved public mood.  And it's reassuring to remember that self-fulfilling prophecy can work in your favor as well.  If accounts and distributors see that your strategy has been successful, they're likely to expect that success... and redouble their efforts.

Now that's something to look forward to in the second half of what has been a very challenging year in the wholesale realm.


Making the most of time in the market

I had a distributor tell me last week that I should provide "supplier training" to their other wineries.  I laughed; it's good to feel appreciated.  But then I thought, why not?  There are lots of wineries, across the spectrum, who are realizing that they need to spend time out in the market if they hope to survive or grow in the current economy.  Many of the people spending time out in the markets haven't done it much in the past.  And I'm always amazed how grateful the reps I work with are for the follow up I do.  Is it really that rare? 

Effective market work includes things to do before you arrive (even when you are scheduling your work), other things to do while you are there, and follow-up to complete after you get back.  Here is some basic advice for all three phases of your market work:

  1. Ask your distributor for what you want.  If you know what accounts you want to visit (or even what types of accounts you want to visit) let your distributor know.  If you have a specific salesperson you'd like to work with, let them know that as well.  You won't always get what you ask for, but you're more likely to get it if you ask for it.  At the same time, be reasonable.  You can't spend all your time visiting the same top downtown accounts that everyone wants to be in.  And, you probably can be more effective by being more creative.  For example, we made a point a few years ago to visit the college towns in as many states as possible.  We figured that these areas would be more progressive in their wine tastes, and more receptive to the fact that we farm organically, and both turned out to be true.  Distributors don't always think this way.
  2. Make your days as productive as possible by scheduling evening consumer events.  When you're on the road, you can expect to spend your days (say, 10am to 6pm) working with your distributor.  But what about evenings?  Are there restaurant and retail accounts with whom you could set up dinners or tastings?  These evening events give you the opportunity to market to consumers, to build your mailing list, and to help the accounts who buy from you actually sell some of that wine they bought.  And you're there anyway.  Setting up these sorts of events requires some advance planning, but they are usually well worth the effort.
  3. Before you arrive, check to confirm that the inventory and pricing you expect are in place.  Distributors are busy.  They represent hundreds or thousands of wines, and typically shift their focus from week to week to whoever is coming to visit them in the market.  It's in your best interests to confirm 3 or 4 weeks in advance that the wines you expect to show are in inventory, that the pricing you'd like to see has been implemented.  There is no better time to ask a distributor to bring in wines than when you're about to visit the market, and your visit can be more productive if accounts who are interested can be shipped what they liked.
  4. Discuss with the salesperson you're working with who will ask for the sale.  It's easy to coast through a day of market visits, meeting and speaking with the buyers, and end your day with a series of "to follow up" visits.  Of course, once you leave the premises of the buyer, the chances of a sale decrease dramatically.  These visits are sales opportunities.  Make sure that someone is asking for the sale at each visit.  If a buyer doesn't feel able to commit right then, see if the distributor can set up shipment for a future date... in two weeks, or at the beginning of the next month.
  5. Take notes when you visit accounts.  A day that a winery representative spends riding around with a distributor will typically involve visits to 5 to 9 accounts.  I've always found that by the end of the day the specifics of which account liked which wine gets fuzzy.  If you take notes when you leave an account, you'll be in much better position to follow up later.
  6. Keep track of who you see at trade shows.  Trade shows are a challenge, because your table is often overwhelmed by waves of tasters.  Some will be wearing name tags, but many will not.  Some will have business cards, but many will not.  But the more people you can record (with, ideally, the name of the account, who you spoke with, and what they were most interested in) the better able you will be to give your distributor the tools to follow up effectively. Bring a legal pad where you can jot down notes and record as many as you can.   And don't be shy about asking someone who comes by your table who they're with and what their role is, or (even simpler, because it has all the information in one place) for a business card.
  7. Send your notes to your sales representative and his or her manager.  When you get back home, take a little time to write up your notes and send them to who you worked with and to his or her manager.  This shows that you expect them to follow up, and gives them a very useful tool for that follow-up.  And check back in a few weeks to see which of the pending sales have come through.
  8. Send a thank-you note to the key buyers you met.  Restaurant and retail buyers see dozens of salespeople each week.  It's remarkable how effective sending a simple thank-you note after you get back can be to fix a positive memory in the buyer's mind.  I don't think it really matters whether this is sent by email or written by hand.  It is, as they say, the thought that counts.

I hope this proves helpful.  Anyone with good strategies for successful work in the market (or, if you're in the restaurant, retail, or wholesale world, things that you've appreciated your suppliers doing) please share!


Succeeding in a poor economy: it's all about the fundamentals

I get questions every day from people asking how our sales are holding up overall and what we're doing to help survive the current struggling economy.  Most people look surprised, and then relieved, to hear we're doing pretty well, all things considered.  Our wholesale sales were down 11% last year because of a decline in the fourth quarter, but our tasting room sales were up 15% for the year and down just 3% in the fourth quarter.  Our traffic was up 5% for the year.  Our sales to our wine club were up 21% for the year, and we ended the year with about 3400 VINsider wine club members: more than 500 more than we had at the beginning of the year.

So far this year, we're holding steady in the tasting room.  Our January sales were up 4.5%, and our traffic up 9.5%.  We signed up 16% more new VINsiders this January than last.  A part of this improvement can be attributed to the day of the week on which New Year's fell (it was a Thursday this year, creating a four-day holiday weekend to begin the year) but we're seeing consistently good traffic out in our tasting room and our average sale per customer and the percentage of our customers who we're converting into wine club members are both at our averages from the past few years. 

So, given all this, I thought it might be helpful if I tried to enumerate what I think that essentials are for a winery who wants to be successful in this economic climate.  I've tried to give some context for my suggestions, as not all of these will apply to everyone's situation.  Most of it is not rocket science.  It's about focusing on the fundamentals and doing them well.

  • Make sure that the customer experience when someone is coming to visit you is a good one.  I think that this point, for small- to medium-sized wineries, is as important as all the others combined.  I am amazed by how many people we get in our tasting room who tell us stories of disinterested servers, overcrowded tasting bars, or salespeople whose only interest is a club sign-up.  A hugely successful tasting room may convert 5%-7% of its customers into club members.  That means that the vast majority of the people coming through your tasting room are not going to sign up on the spot.  Focus on giving everyone a memorable experience, and the wine (and wine club) will sell itself.  This does not mean that wineries should approach sales as though the idea is somehow dirty: sell through education and enthusiasm, and make sure that the customers know the options in front of them.  Every person who leaves your tasting room happy is a source of repeat business and referrals.  An enormous piece of being able to ensure a good customer experience and the sales that result is having sufficient staff on hand to handle your busiest times.  This necessarily means that in slower times you'll be overstaffed, but if you calculate the value over time to your business of a single club sign-up or a single dissatisfied customer who would otherwise have bought a case of wine and told their friends, the cost of labor seems pretty minor.
  • Build and use your lists.  At Tablas Creek, we saw 22,000 people come through our tasting room last year.  Adding just a small percentage to your email lists (let alone your wine club lists) can give you a powerful tool to communicate special offers, share information about events, and generally build an ongoing connection to your base.  Once you have added these people to your lists, it's important to contact them regularly.  An email every few months, with perhaps a print newsletter a couple of times a year, is generally seen as welcome rather than intrusive.  And, for your core customers (read: wine club members) a little extra outreach in times of economic difficulty may well prove rewarding.  We've found that while our wholesale sales have suffered, the responses to our wine club emails are providing a consistent, growing return even over the past four months in this struggling economy.  One final word: there are wineries who fear to contact their club members out of worries that this will remind them that they want to cancel.  I think that this approach is self-defeating in the long run.  You may squeeze an extra shipment out of a few people, but the numbers of dissatisfied members of your base who you create, and the churn of returned or refused shipments, challenged credit card charges, and lost opportunities for between-shipment sales seem to me to far outweigh the gains.
  • Cultivate partnerships.  You are not the only one in your area with an interest in bringing people into town and giving them a good experience.  Reach out to local hotels and bed&breakfasts and create co-marketing opportunities and specials that will give them a reason to be emailing their customers about you.  Work with local restaurants to put together dinners that both you and they will market.  This expands your base, supports your partners in your community, and ensures you stay visible.
  • Stay visible.  This is not the time to cut your marketing budgets and hope to save your way through the economic downturn.  Sure, be selective about what expenses you choose (was that half-page ad in the glossy wine magazine really worth the $10,000 it cost?) but don't disappear.  When overall business is contracting or staying stagnant, you can be assured that your competitors are out there pounding the pavement.  Keep going to festivals.  Keep working in the market with your wholesalers.  Keep supporting the local organizations that are promoting your area and keep supporting the advocacy groups that focus the wines you make.  This will help ensure that you maintain your share of whatever business is out there, and will position you for fast growth when the economy does turn around.
  • Do your part to ensure that you get editorial coverage.  Writers in lifestyle and wine publications are struggling, too.  Newspapers and magazines are both being hit hard by a decline in ad revenues, and many are letting writers go or converting paid positions to contract labor.  This means that everyone in the media is being asked to do more work for less or the same money.  Help them out.  Come up with creative ideas that will make good stories (and relate somehow to your business).  Then pitch the writers who you know on these ideas.  Don't expect every idea, or even most ideas, to pan out, but you'll be surprised what does.  And not contributing ideas is a great way to ensure that they don't get used.  Plus, be sure that you're covering the basics.  Are you sending samples of all your new releases to the 20 or 30 key writers around the country a few times each year?  Figure that the total cost of doing so is somewhere around $2500 plus a few cases of wine.  Calculate what a full-page advertisement is in any of the key wine or lifestyle publications.  Do the math. 
  • Work with new media.  I wrote a little less than a month ago about Facebook and social networking for wineries.  In the month since I wrote that article, Tablas Creek's Facebook page has gained 130 new fans.  Extrapolate this power across months and years, and you will see how potentially valuable these inroads into social networks can be.  And Facebook isn't the only outlet.  A blog is a great way to personalize your business, communicate your core ideas and principals, and drive traffic to your Web site.  Getting involved in online bulletin boards can develop enthusiasm in an important base.  And new wine 2.0 sites like Snooth are just starting to show their power.  If you aren't particularly technologically inclined and are worried about your ability to execute in these new media options, find an intern to do it, or just ask a member of your staff who is recently-graduated from college.  You'd be surprised how easy and inexpensive it is to create a broad online presence.
  • Be more hands-on in managing your relationships with your wholesalers.  We're finding that a major problem in our wholesale efforts is overcoming the nervousness of our gatekeepers.  Clearly wine consumers have not stopped buying Tablas Creek; the people with whom we have direct relationships prove that.  But for a wine to sell in the wholesale market, the distributor manager has to believe in the product enough to maintain a healthy inventory, the distributor rep has to believe he or she can sell the wine enough to pull a sample and show it to his or her accounts, and the buyers at the accounts have to have enough confidence to buy the wine in a crowded marketplace full of people offering them hitherto-unimaginable deals.  That's a lot of people whose confidence you have to win or keep before the consumer even gets the opportunity to buy your wine.  You can overcome many of these hurdles by staying actively involved with your wholesalers.  Make sure you're receiving inventory reports every month, and accounts-sold reports quarterly.  A distributor can't sell wine they don't have in inventory, and won't sell a wine whose inventory is down to a few cases.  Know who you'd like to see the wine sold to, and make suggestions to the distributor.  Offer to support your wines by offering their sales reps (who usually have a limited sample budget) some samples at your expense. These ideas are good even in a strong economy (the wholesale market is a very crowded one, and distributor mergers have guaranteed that most distributors have many more wines in their books than they can realistically focus on) but become essential when times are tough.  And, be sure you're out in the market, working with your distributors.  It's important for you to hear what their customers are saying, and for the distributors to see that you care enough to support their efforts.
  • Focus on giving people value.  Value is an essential concept.  It does not mean that things need to be cheap.  But, it does mean that you need to think about what will remind or convince a potential customer that what you're offering is worth what they will spend.  Offer a special on a specific wine each month.  Or offer free or discounted shipping.  Be generous with events that will bring people out to the winery where a purchase is more likely to happen.  One example: we included a $15 discount coupon in the end-of-year gift that we sent to all our wine club members at the end of last year.  Just a few days later, we started getting orders from people who had received that coupon.  Would we have received those sales had we not sent out the coupon?  Probably a few.  But most, in my opinion, were spurred by people deciding that this little nudge was enough to tip their value scale into the black. 

These are just a few ideas, and nothing here should be earth-shattering for business owners or managers.  But for us they have meant the difference between lamenting the poor economy and being able to continue to grow even as the fundamentals of the economy have deteriorated.  I hope that this has proven helpful, and would love to hear from other business or winery owners out there who have also come up with creative ways of protecting themselves from the economic downturn.