Usually, at this time of year, I'm locking in the plans for the market visits I'll be making for the busy fall selling season. When I travel, I typically spend my days riding around with distributor reps calling on restaurant and retail accounts to show them our new releases, and my evenings hosting in-store tastings and winemaker dinners to help those same accounts tell the Tablas Creek story to their customers. But I won't be visiting any out-of-state markets the rest of 2020. That's for sure, and I think the first half of 2021 is likely to be more of the same.
Instead, I've been scheduling Zoom meetings and arranging for sample deliveries to wholesale accounts, working on a national strategy to organize virtual tastings around the releases of the 2018 Esprit de Tablas and Esprit de Tablas Blanc, trying to figure out what sorts of trade visits to Tablas Creek we can safely host, and finalizing details with my guest for Wednesday's Instagram Live broadcast.
I think it's safe to say that this pandemic will be a generation-defining event, in the way that 9-11 was, or the Vietnam War. Covid has spurred changes large and small to nearly everyone's personal and work lives. I've been thinking a lot about which of the changes that we're making to our business will be things that will endure even after the pandemic is in the rear-view mirror, and which will fade away as we get back to normal life. Here are my current thoughts.
Things that seem like they will endure
- Virtual trade tastings. These sorts of tastings have been (in my opinion) exceptionally effective. We've figured out how to rebottle wines into sample bottles and get those samples to the restaurant and retail buyers (and media) in a relatively cost-effective way. Then, over Zoom, we can present the wines, have a conversation, show photos, answer (and ask) questions, and generally be interactive. Compare this to the closest thing in the before world: a trade lunch or trade seminar. People have to physically get to your location, you always get tons of cancellations, it's expensive, and it's inflexible. What you lose from being online is negligible, but what you gain is massive. People can be anywhere. There are no commute costs and no one cancels because they're stuck in traffic. You can add people up to the last minute, and you can even record the events for people who couldn't join you to watch later.
- An increased focus on reaching consumers online with live events. At Tablas Creek, Neil and I both started doing live broadcasts weekly at the beginning of the pandemic, him on Facebook and me on Instagram. They've both been sufficiently compelling that although we've moved to an ever-other-week schedule, we're planning on keeping them going indefinitely. I've written about how one of the things this pandemic has done is encourage us (and other wineries) to meet consumers where they are, rather than force them to come to us. This is a great way to do this, at very low cost, and they're archived and posted on our social media channels for people to revisit at their leisure.
- Shift toward e-commerce and delivery. Our baseline of weekly phone and internet orders during the pandemic was roughly three and a half times what it was last year. That's a huge increase. I know that some of it was an unsustainable surge in people stocking up, and some of it was that everyone was at home cooking instead of out at restaurants (and so they needed to buy wine to go with those meals). But that's a lot of customers who now know how to use the online tools who didn't before, and I think it's extremely unlikely that the baseline will go down to where it was before. I've read in other industries that the pandemic spurred five years of changes in behavior in a few months. That sounds right to me, at least for this metric.
- Tastings by appointment at wineries. We've always been proud that you didn't need an appointment to taste at Tablas Creek, and felt that allowing someone who is recommended to visit to make a spur-of-the-moment decision to do so was central to our mission to spread the word on the Rhone Rangers category. But we realized that there was no way that we could control our flow of tasters (which then allows us to maintain distancing and ensure a good experience for those who come) without appointments. So, we implemented them. The results have been quite positive. The average sale per customer has gone up about 13%, as have wine club conversions, and we haven't lost much traffic, because when visitors see that Saturday is sold out, they've been booking Friday or Sunday visits instead. That means we can give everyone better experiences, and we've seen the results in sales and club signups. I can easily imagine not wanting to go back.
- Fewer wine cruises. We've hosted wonderful cruises that brought people to Beaucastel and around French, Spanish, and Italian wine regions each odd-numbered year since 2013. And we were far from the only ones. By the past few years, it seemed like every winery, wine region, and wine association was sponsoring a wine cruise somewhere. I don't think they will go away, but I do think that we'll see fewer of them, as I think it will take a long time for people's tolerance for close quarters and enclosed spaces to return to where it was pre-Covid.
- Wine and drinks to-go from restaurants. One of the relief measures that most states passed in the immediate aftermath of shut-down orders was to allow restaurants to sell beer, wine, and cocktails for takeout with their food. And it's been wonderful, with really no negative impacts on anyone that I can think of. While a few places might re-enact restrictions on this business, I think most of them will stay in place, not least because restaurants are likely to be struggling with reduced capacity or outside dining only for quite a long time. By the time things get back to normal, I just can't see state governments choosing to punish restaurants by taking away this revenue source.
Things that likely won't endure
- The end of wine festivals. There just aren't going to be wine festivals, at least not as we know them, until there's a Covid vaccine. Sure, events will move online. (Along those lines, if you want to experience the famously exclusive Aspen Food & Wine Classic, you can do so online for free. One of our wines is even included in a seminar!) But I don't think that this spells the end of wine festivals, because the online experience is so far removed from what you get if you go to an event and can choose from hundreds of wines from dozens of wineries, and sample tastes from scores of restaurants. That doesn't translate online very well, and as soon as people feel safe in crowds, I expect these sorts of events to come roaring back.
- Virtual consumer tastings. We pivoted to offer virtual wine tastings during the three months when our tasting room was closed. And we enjoyed them, and got lots of positive feedback. But as things have moved toward reopening, we've seen demand fall pretty sharply. In April, we sold 58 of our virtual tasting packs per week. In May, that declined to 23 per week. In June, it fell to 8 per week. Some of that was other wineries jumping into that same space. But a lot of it was, I think, Zoom fatigue, and the fact that sitting in front of a computer is a pale reflection of a winery visit, no matter how engaging a winery tries to make it. We're going to plan to continue to offer virtual tastings, but I don't expect the demand to be huge. The sorts of virtual events that I do think will endure are those that offer experiences that aren't a knockoff of what you can get at a winery, like panel discussions including far-flung members of the wine community, and offering deep insights into regions, grapes, or techniques.
- Cheap wine shipping. There were a ton of pressures, both short- and long-term, for wineries to offer free or discounted shipping during the first round of stay-at-home orders. And we did, offering $10 flat-rate shipping for more than three months. It seemed the least we could do to help people sheltering at home, and we were worried that the closure of restaurants would mean that a big outlet for our wines would disappear, leaving us with lots of extra inventory. As it turned out, we did lose most of that restaurant business, but the growth in direct sales mostly made up for it, though at the cost of hundreds of thousands of dollars in shipping subsidies. Boutique wineries can generally not easily replicate Amazon and other e-commerce giants' infrastructure of having warehouses around the country, and therefore being able to offer fast, cheap ground shipping. Many wines are made in tiny quantities, and the logistical challenges of splitting, say, 70 total cases of inventory of our newly-released 2019 Picardan among multiple warehouses and our tasting room are really thorny. Because wine is perishable, two-day shipping or faster is pretty much non-negotiable. And because wine bottles are heavy, air shipping is expensive. Even with the better rates that our fulfillment center can negotiate because of their volume, it's around $100 for us to send a case of wine to the east coast, and not much less to go to Texas or the Midwest. That's a lot of cost to eat if you're offering free or steeply discounted shipping, particularly if your wines aren't $50 or more per bottle. Essentially, nothing has changed since this Twitter thread I shared in February. All together, this means that I don't think that most wineries will be able to keep up free or nearly-free shipping indefinitely:
A short thread on customer expectations and wine shipping. 12 years ago, we surveyed wine club members who had canceled in recent years to learn more about why. One response we got repeatedly was that people expected free or very cheap shipping. https://t.co/JwhKebLKdb 1/— Jason Haas (@jasonchaas) February 21, 2020
So, I'm curious. What did I miss? Any big wine industry changes that you're seeing that you think are here to stay? Or that will be relegated to the dustbin of history as soon as we have a Covid vaccine? Please share in the comments.