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:

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:

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:

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:

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.

Photo of the Day: Donkeys on Guard

Some photos are too good not to share.  As regular followers of the blog know, we have two donkeys that help guard our mixed flock of sheep and alpacas from coyotes, bobcats, mountain lions and other predators that might threaten the smaller animals.  Donkeys will bond with other species in their herd, and they're big enough, and stubborn enough, to stand up to anything we have in our fairly wild patelin.  Our Assistant Tasting Room Manager Jennifer Knoll got this shot of the two donkeys yesterday, looking down through our Counoise block, looking alert.

Of course, the donkeys also perform the job that the other members of the herd do: they eat the cover crop, fertilize with their manure, and mix things together with their hooves as they wander around.  More animals means less tractor passes, fewer weeds, and less need to fertilize.

The larger donkey in back is named Dottie.  The smaller gray one is Fiona.  Keep up the good work!

Our most memorable wines of 2012

As we move forward into the new year, I asked some of our key team members to reflect a bit on what wines stuck with them from 2012.  Some chose Tablas Creek, but most did not (and those who did all chose different wines!).  The wines they chose are every bit as eclectic as you might expect, but are, equally as you might expect, great reflections of the amazing team we have here.  They are presented to you in alphabetical order, in the original words of each person, except I'm saving my comments for last.

Neil Collins, Executive Winemaker and Vineyard Manager
As someone who spends far too much time indulging in wines both fine and not so much this is generally a tough question. However not so this time around. Whilst on the east coast attending a charity event as the Tablas Creek guy behind the table, I took the opportunity to visit the Haas family home in Vermont. Splendid place. Now Robert Haas is not known for pouring the not-so-much ones anyway, but on this occasion, WOW. An absolutely perfect rack of lamb on my plate, the wine served was a perfectly cellared 1978 Clos de la Roche out of magnum. As I sniffed the glass I was taken aback with its subtle beauty, I glanced at Bob who with a glimmer of a grin merely raised an eyebrow in agreement, a rare one. The wine was stunning, with the lamb even better! Had I not already been seated I may well have fallen to my knees. I am a lucky boy!!

A slightly more attainable bottle was a Madeleine Cabernet Franc, my favorite non-Loire Cabernet Franc to date. CHEERS NEIL

Darren Delmore, National Sales Manager
My most memorable wine of 2012: 2008 Ramey Chardonnay Hyde Vineyard, Carneros, California.The Hyde Vineyard, in my opinion, is the best Chardonnay vineyard in America, and winemakers working with this site, like Whitethorn, HdV, Patz and Hall, and Ramey, have stories of harvesting Chardonnay at sky-high sugar levels, supernaturally low PH’s, and significant natural acidity levels. The matching of varietal to site is spot on here. Place, time, occasion and food are all key factors in determining an impressionable wine, and the Ramey ticked all the boxes. This was my first Father’s Day, even though my son was in the womb, and on a golden late afternoon on a ridgetop in Anderson Valley, I matched this weighty, citrusy, barrel-fermented beauty with a local abalone that was bigger than my face.

Chelsea Franchi, Assistant Winemaker
When prompted to talk about my most memorable wine of 2012, I have a feeling I will deviate from my peers in terms of criteria for my finalists.  While I did have some lovely wines this past year, for me, the most truly memorable wines are those that are shared with my favorite people in the world.  Sometimes that means the wine is a special bottle from a well-respected producer, a bottle that has been saved in the back of the collection waiting for the perfect occasion, or sometimes, it can be a bottle picked up from Trader Joe’s the day of the party and enjoyed with fabulous company. 

That being said, I’ll choose my wine this year based on the company it was enjoyed with and, I suppose, the way in which it was presented.  My family always enjoys a bottle of bubbles on Christmas morning and this year, we made it all the more memorable by sabering the bottle with a ski.  Why a ski?  Well, why not?  I certainly do not encourage this kind of behavior, but I will say it was exceptionally fun (and my skis are in dire need of a tune anyway, so I wasn’t particularly worried about the edges).   Tell me that doesn’t look fun.  And memorable?  Quite.

Nicole Getty, Wine Club and Hospitality Director
I did not consume very much wine in 2012, as I was pregnant for most of the year, and even on special occasions, it was not appealing to me. However, a few days after my son was born, we celebrated with what I had been craving- a margarita with extra salt! Oh, and lots of salty chips and salsa! I plan on digging out some of my bottles of wine from my wine fridge in 2013 (including of course Tablas Creek and Beaucastel that I’ve tucked away).

Levi Glenn, Viticulturist
2011 Domaine de L'Idylle Mondeuse Noir (Vin de Savoie): Not a blockbuster is the traditional sense, this wine wins with charm, not brawn. It lies somewhere on the spectrum between Cru Beaujolais and St. Joseph, and is grown high in the French Alps. Aromatically it just jumps out of the glass with its bright macerated cherries, but as it opens up intense fresh ground pepper aromas starts to dominate while a warm stony minerality lurks below. Its light ruby color mirrors its impression on the palate. In the mouth the wine is lively and light on its feet. A nice punch of acidity hits you on the back end, and entices you to take another sip. A great example of a wine that is intense without  being heavy, and true food wine. Pair with a traditional Raclette meal.

Runner-up: 2010 Chateau de St. Cosme Gigondas: From my favorite appellation in any country or continent, this wine shows the cool side of Grenache. This AOC is higher in elevation than most in the southern Rhone, and while it doesn’t have quite the worldwide recognition of Chateauneuf-du-Pape, the best Gigondas wines can be equally as good. They have plenty of concentration in most vintages, but they usually more acidity than CdP, and tend to exhibit more rustic tannin structure. Villa Creek Restaurant in Paso Robles is pouring it, but get it while you can, because this wine just received the No. 2 spot on Wine Spectators Top 100 for 2012. 

Robert Haas, Founder
I have been privileged to taste and drink many stunning older wines in my 63 years in the wine trade: Bordeaux, Burgundy, Rhône back to 1870, Napa Cabernets of the '70s and '80s, and some remarkable Champagnes in the days when the special cuvées were made in the hundreds of cases rather than the tens of thousands.  This year I particularly delighted in two great 1981’s:  A Vosne-Romanée Orveaux of Mongeard and a Beaucastel.  I wrote blogs about them: A Summer Dinner in Vermont and A Truffly Duet.  

Two other wines struck me as outstanding this year, both from Tablas Creek.  One was on the young side, yet seemed in absolute perfect balance: the 2007 Panoplie.  It was surprisingly seamless from nose to finish and delightfully savory.  You can read about it in our blog, We Celebrate the Holidays with a Vertical Tasting of Panoplie.  The other was the 2011 Esprit tasted from one of the foudres after I returned from Vermont.  Its complexity, fruit and spices, all singing out in harmony, despite the fact that it was still nine months away from bottling, blew me away.  What a great release it is going to be later this year!

Sylvia Montague, Assistant Tasting Room Manager
I "think pink" a good amount of the time, not just when the temps begin to rise.  This year I was able to secure a case of the Robert Sinskey 2011 Vin Gris of Pinot Noir (after only being able to purchase one bottle of the 2010 while on a visit there in April of 2011) and have been enjoying them throughout the summer and fall.  It is dry, crisp, aromatic, nicely structured and above all, elegant.  The wine has great texture, a beautiful salmon color and pairs very well with a variety of foods.  To me it is, indeed, summer in a glass. The only dilemma is when to enjoy the one bottle remaining in my cellar…

John Morris, Tasting Room Manager
My life has changed a quite a bit in the last few years.  Formerly a life-long bachelor, I married two summers ago and became an instant step-father to three.  This has brought a new sense of purpose to my life, but as you might imagine, has shifted my priorities considerably.  Seeking out the pleasures of food and wine has taken a back seat to new shoes, dance and cello lessons, a bottomless refrigerator, and rather lengthy Christmas lists.  Meanwhile, my cellar has shrunk to a few precious bottles I cling to with hope.

However, at the risk of seeming a homer, I have my work to look forward to, and the pleasure of tasting Tablas Creek wine every day.  We recently bid farewell to the last bottle of 2009 Esprit de Beaucastel, my favorite vintage to date.  We dread the end of the 2010 Côtes de Tablas, which we all pretend not to see coming.  The 2011 Roussanne, released in the latest wine club shipment, is a revelation.  But the wine that has moved me the most is the 2010 Esprit de Beaucastel Blanc:  Waxy and honeyed, floral and savory, minerally and refined with a long, sophisticated finish, it’s the embodiment of what a white Rhône wine should be. 

Deanna Ryan, Tasting Room Team Lead
I would have to say the 2009 Esprit de Beaucastel Blanc for its fantastic balance of richness and acidity that never fails to satisfy, with or without food.  Also, the 2010 Counoise for its flirtatious gentility. I found it to be the ideal wine to reward oneself with at the end of a long workday.  Of course the 2010 Mourvedre is another strong contender due to its subtle layering of flavors and gentle tannins. Cheers!

Jason Haas, Partner and General Manager
As for me, I've found my most memorable wines this year to be signposts on the development of Tablas Creek.  There are three that stood out.  The first was the amazing discovery that Cesar Perrin and I made on the incomparable wine list at Bern's in Tampa, FL.  On a night when I tasted my first birth-year wines (1973 wasn't a year that many people felt like keeping around) and some incredible old Riojas and Burgundies, our indelible memory would be a 1966 Pierre Perrin Chateauneuf du Pape -- the first-ever Haas-Perrin collaboration, that neither of us knew existed.  The wine itself was elderly.  But the discovery of its significance was a revelation.

Moving forward in time, the family dinner my dad blogged about last week, where he opened a mystery vintage of Beaucastel to find a remarkable bottle of 1981, was probably my favorite meal of the year. Like the classic dish it was paired with, the 1981 Beaucastel didn't shout at you.  It didn't elbow the meal's other components out of its way.  But it sang, on its own and with the food, mellow yet still utterly sure of itself.  I didn't want to get up from the table.

But if I had to pick one wine that I keep coming back to from last year, it was (as it has been each time I've had the pleasure to drink it) the 1989 Beaucastel that Cesar Perrin poured for us in a farewell vertical before he completed his year-long stint at Tablas Creek in April.  That 1989 was perfectly poised between fruit and earth, between richness and freshness, between youth and maturity, and for all its meatiness and juiciness tasted indelibly like the rocks in which it grew.

May your 2013 be equally as full of good food, great wines, and memorable company with whom to share them.