2020: The Year Climate Change Got Real for American Wine

As I write this, I'm staring out at a dim, yellow landscape, the indistinct sunlight filtered through a thick layer of atmospheric smoke. I have a sweatshirt on because the day has never really warmed up here in town. We had a couple of days this past week, prime ripening season in Paso Robles, where it barely made it out of the sixties. A photo, no filter applied:

Harvest Apocalypse

We're not really complaining; as apocalyptic as it looks, the air has been cool and fresh at the surface, and we got a chance to catch up on harvesting after what was a scorching hot previous weekend. And plenty is ready. Pretty much all our Syrah. The Vermentino and Marsanne. Our first lots of Grenache Blanc. The smoke has reduced actual temperatures from model forecasts by some 20 degrees, and if we'd had the mid-90s weather that was forecast for this week, it's possible that new blocks would have ripened before we could get through the backlog that the last heat wave produced.

This smoke layer, driven by the fact that six of California ten largest fires ever are currently burning, is only the most recent of a series of unprecedented things we've seen in the 2020 growing season. A week ago, we had a heat wave that crested with back-to-back-to-back days that topped out at 109, 113, and 111. The Paso Robles Airport broke its all-time high with a 117 reading. And San Luis Obispo hit 120°F, which appears to be the highest temperature ever recorded in a coastal zone anywhere in North or South America.

Last month, we saw a trio of fires in the Central Coast produce so much smoke at the surface that we closed our tasting patio for four days because the air quality was so bad. On August 20th, San Luis Obispo had the worst air quality in the world. Those fires were sparked by a surge of tropical moisture, the remnants of Tropical Storm Fausto, that moved up the California coast and produced thousands of lighting strikes on August 14th and 15th. The fires lit by those lightning strikes were fueled by another heat wave that pushed temperatures over 105°F each day between August 15th and 18th.

Paso Robles is hot in the summer. Summer days over 100°F have never been rare here. But the increased number and distribution of these days, the fact that records are falling more often, the earlier and earlier beginnings to harvest (and the shorter durations between veraison and harvest), and finally the new, tropical-influenced rainfall patterns, are new. A few data points that I look at:

  • Over our first 15 vintages, 1997-2011, we started our estate harvest in August 40% of the years. Since 2012, we have done so 78% of vintages. Similarly, in those first 15 years, there were six times we harvested into November, and another four that finished October 28th or later. Over the last 8 years, we haven't once harvested in November.
  • It's not just harvest. This year's gap between veraison and harvest was just 35 days, breaking our record of 36, set in both 2016 and 2019. Before that, the record was 39, in 2015). 2013 was the first year that we saw 40 or fewer days between veraison and harvest. So, in less than a decade, we've seen this critical ripening period shrink by 15%. Crucial growing periods are getting hotter. 
  • Our total growing season degree days, a rough measurement of the number of hours in which it's warm enough for grapevines to photosynthesize efficiently, shows that since 2000, our five warmest years have all come since 2012.

All those data points are indicative, but none of them are likely to on their own pose much of a threat to winemaking here in Paso Robles. But they feed into two phenomena that do: droughts and fires. I'll address droughts first. I wrote a 3-part blog series back in 2014 about our move toward dry farming as a part of being ready for what seems likely to be a drier future. In the research for that, I looked at EPA projections for rainfall showed that, depending on our success in reducing emissions, coastal California would see between 20% and 35% less precipitation annually by the end of the 21st Century:

Southwest-precip-change

That research has since been reinforced by studies of warming in the Pacific Ocean, which will have a complex series of consequences, including increased rainfall in places like northern Australia, the Amazon, and Southeast Asia, but less rainfall (and a later onset of the rainy season) in coastal California. This suggests that droughts, particularly the multi-year droughts like the one we saw between 2012 and 2016, will become more common.

Next, fires. It's not like California is a stranger to fires, but severe ones are definitely happening more often. I moved out here in 2002. The first time after that there was any smoke here was July 2008, when I wrote in a blog that two big fires to our north had burned some 73,000 acres in three weeks. (Note that that figure seems almost quaint now, with the horrific Creek Fire east of Fresno burning 160,000 acres in the first four days.) The second fire I noted in the blog was in 2016. Except for 2019, we've seen scary fires in California's wine country each year since then, and 2020 has already seen the most acres burned on record:

The fires are driven by a number of factors, including higher temperatures, lower humidities, poor utility maintenance, human encroachment into wildland areas, and accumulated fuel in the forests after a century of fire suppression. All of these encourage fires to be bigger, faster-growing, and more destructive than before. But what has set the worst ones off in recent years has been climate-related: either through dry winds spurring (and spreading) fires through downed power lines in periods before it has rained in California, or by tropical moisture that has sparked summer lightning.

The fires that impacted Northern California in 2017 and 2018 were produced by late-season (October and November) windstorms that spurred fires from an aging electrical grid. This is largely a governmental and regulatory failure. But while these windstorms aren't new, and don't particularly appear to be a function of climate change, thanks to climate change the time of year when these storms are common is more likely to still be summer-dry. That is why the climate change-driven later onset to the rainy season is a significant contributor to the number and severity of fires.

2020's fires in California have been different. The storms this summer that produced the first series of wildfires were driven by tropical moisture that was pulled into California. A warming climate produces more and larger tropical storms and hurricanes. 2020 has already seen so many tropical storms that I've begun to read articles about how NOAA might run out of names. The direct impacts of tropical storms and hurricanes on California are rare: minor compared to their impacts in the Atlantic or the Gulf of Mexico. But the more of these storms that form, the greater the chance that tropical moisture can end up in unexpected places. These occasionally produce enough moisture to provide some short-term fire risk reduction (such as the July 2015 storm that dropped more than two inches of rain on us) but more often produce extensive lightning with only limited moisture. These sorts of storms introduce extreme fire risk. 

The combination of warmer days, dryer (and later-beginning) winters, and more frequent incursions of summer tropical moisture has combined to produce drastically more days with very high fire risk.

So, what to do? That's the hard part. Most of the response has to come at the governmental level. Investments need to be made to modernize utilities. Forest management practices could be improved to reduce the amount of fuel that builds up. Cities, counties, and states should adopt growth plans that reduce the human/wildland interface as much as possible, both to reduce the opportunities for fires to start and to minimize the loss of life and property when they do. But ultimately, if climate change itself goes unaddressed, all these initiatives (none of which are easy or likely to come without resistance) are likely to be overwhelmed by the growth in the number of extreme fire days and fast spread of fires that do start.

Here's where regenerative agriculture comes in. One of its tenets is that agriculture has an important and necessary role in the reduction of greenhouse gases (and especially Carbon Dioxide) in the atmosphere. And plants, after all, are the best engines we have in doing so, since photosynthesis uses CO2 as one of its inputs, turning that carbon into carbohydrates. But modern farming produces more emissions than the plants it grows consume. Some of that is the fertilizer, derived mostly from petrochemicals. Some of that is the fuel for the tractors and other machinery. And some of it is the processing of the agricultural products.

Regenerative agriculture leads the way toward building carbon content in the soil, through a combination of permaculture, cover crops, reduction in tillage, and the replacement of chemical inputs with natural ones like compost or manure. Soils with more carbon content also hold more moisture, which will help California wineries weather the droughts too. We showed in the application process for our new Regenerative Organic Certification that it was possible to increase our soil's carbon content while growing grapes even in a dry climate like Paso Robles.

Regenerative farming is not just for wineries. It's what all farms, from row crops to orchards to fibers to livestock, should be moving toward. But vineyards offer some of the lowest-hanging opportunities for better farming, because wine is a value-added product with the resources to invest, and the investments tend also to make higher-quality grapes and longer-lived vines, providing return on the investments.

I can't imagine how California, Oregon, or Washington wineries can live through the 2020 vintage without worrying about how climate change might impact their future. A small silver lining could be encouraging more of that community to move toward regenerative farming. Consumers have a role to play here too. Before this year, there wasn't an available standard for moving to, measuring, and being audited for being regenerative. Now, with the launch of Regenerative Organic Certification, there is. If your favorite wineries are not farming regeneratively, you should be asking them why not. It's one of the tools we as farmers have to take some control over what is likely to be an increasingly volatile and dangerous future that might look like last week a lot more often than any of us would want. 

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When we reopen post-Coronavirus, things will look different. But safe and fun aren't mutually exclusive.

Six weeks ago, I wrote a blog thinking about what reopening might look like post-Coronavirus. At that time it seemed far away. Now, we're getting down to the details of reopening, which I'm anticipating will happen sometime in June.

[Editor's Note June 9, 2020: We have received permission from the state and county to reopen. Our first day open will be Wednesday, June 17th. Thank you for your patience!]

When I wrote that blog, three weeks into most stay-at-home orders, the idea that businesses would reopen into a very different reality hadn't hit most people yet. The hope was that we could crush the curve in a month or two, and then reopen more or less as we were before. Now nearly every state has begun reopening, to some degree at least, and California has entered stage 2 of its Resilience Roadmap. In this stage, restaurants (and wineries who serve meals) can reopen for in-person dining under distanced guidelines.

At Tablas Creek, we're not a restaurant, and don't feel it's wise for us to try to become one just to reopen a few weeks early. Food, after all, changes how wine tastes. There's a reason that professional tasters don't evaluate wines over a meal. And great food (as well as great food service) is hard, particularly if you have to provide "bona fide meals" as specified in the state protocols.

If I thought we were looking at months before we could reopen, I might evaluate, but I really do think that we're in the home stretch, and reopening tasting rooms under new safety protocols is a matter of weeks away, not months. After all, as a recent letter from CA regional wine associations to the governor points out, if serving food and wine can be done with an acceptably low level of risk, serving just wine is (if anything) safer. There's less prep, fewer utensils, less cleanup. Less to sanitize.

Outdoor tasting - Flight

We don't know exactly when that will happen. But we do know that when it does happen, we want to be ready with plans that we're confident will provide a great experience, safely. So, what can customers expect? Much of what I predicted in my April blog, but a few additional things. Here's what we're planning:

  • Tasting by appointment only, so we can regulate traffic flow, make sure that we don't have people building up in our parking lots, and be sure that we can take great care of the people who do make the journey.
  • Get to know our patio. We'll be doing all our tastings outside for at least the next few months. We have a great patio space with several shaded levels, and we're making some alterations to ensure that everyone has their own space. Why outside only? I dive into why we think that's so critical below.
  • Plenty of time between groups to clean and sanitize spaces. We're leaving roughly double the time that we figure most guests take for a tasting with us between bookings. We want to make sure we have enough time for a relaxed tasting, and to clean and sanitize spaces, with no one having to wait.
  • All seated flight tastings. We're planning tastings of six wines, which we'll serve in two flights of three. We're getting cool no-touch carriers to bring the wines to guests' tables. That way we don't need to stay in guests' space as long. That level of spacing just isn't possible across a tasting bar.
  • No groups larger than six. Large groups in and of themselves encourage people to abandon physical distancing, even if you ask them to maintain it at your facility. Plus they're inherently chaotic at the winery. I feel like this is a part of not encouraging behavior that is likely to have negative consequences.  
  • Face coverings for us, and for you until you're seated. Our team will be wearing face coverings, and we'll ask guests to as well until they're seated at their tables. We'll have disposable masks for anyone who needs one.
  • Education and health checks for our team. We're working with our team to help them monitor their own health. No one who is showing any symptoms will be allowed to come to work. We have always granted paid sick leave for our team members, so they have no economic incentive to work while they might be ill.
  • No merchandise browsing or picnicking. We'll be restricting our merchandise to a few items that we can display on the wall behind our check-out table, and then getting items from boxed stock as requested. And because we'll be using our whole patio to properly space out our tastings, we won't be able to accommodate picnicking. We apologize!

As we learn about how Covid-19 spreads, it's clear that the most important thing to avoid is creating spaces where virus particles accumulate and stay. That's why the rates of outdoor transmission are so (happily) low, particularly with distancing guidelines observed. Earlier this month I shared on Twitter this terrific piece by UMass epidemiology professor Erin Bromage. In it, he investigates where significant spread occurs and where it doesn't. Because infection becomes much more likely as sustained contact with virus particles occurs, the risks are high in enclosed indoor spaces without much fresh air flow, low elsewhere. And while I love our tasting room, and feel confident in our cleaning protocols, it's not a space I'm comfortable welcoming guests in right now. There's not a ton of air flow. It's surrounded by our cellar (a space without much air flow, for obvious reasons). We only have one door. It's just not feasible to match the level of air circulation we can get outdoors.

Fortunately, we've got our patio. We did the math and figure that we can easily seat 50 people at a time, with plenty of distance between groups. Plenty of shade (and yes, we know there will still be some hot afternoons and are installing both fixed and portable misting systems to help ameliorate this).

Outdoor tasting - View from below

On our patio, with our other safety and cleaning protocols, I feel that we can open with exceptionally low risk to our guests and team. And that's critical. This is a marathon, not a sprint. I'm expecting that we'll need to operate in a Covid-19 environment for a long time. If you feel you can operate each day 99% safely, that sounds like pretty good odds. And if you're just open a few days, that's probably OK. But if you have to be successful every day for a month, your likelihood of zero mishaps drops to 74%. If it's six months, it drops all the way to 16%. A year, and your chances are just 2.5%. That's just the relentlessness of exponential math. But it drives home what the stakes are as we contemplate how to reopen. Each additional step that we can take to reduce our risk of catching or transmitting the virus, even if it's minor and incremental, makes a big difference over time.

Outdoor tasting - tables

For years, we've gotten requests for outdoor tastings. This wasn't the situation in which I'd hoped to add them to our lineup, but I do think it's going to be a great experience for our guests, and I'm confident that we can sustain it as long as we need to, safely.

What do you think? Are you ready to go back wine tasting? And under what conditions? Are there things you're particularly concerned with? Please share in the comments.⁠


Why we're going to be a better business after this Coronavirus shutdown

Last week, I made a small appearance in Eric Asimov's excellent assessment of how the various disruptions caused by the Coronavirus are impacting American wine producers. If you haven't read For American Wine Producers, Fear, Uncertainty and Hope go read it now. OK, welcome back.

New_York_Times_Jason_Haas_Apr10_2020
Jim Wilson/The New York Times

The article included a photo (right) from Eric’s last visit to Tablas Creek, in the depths of the 2012-2016 drought. The 2015 article that resulted noted that at Tablas Creek, "the vineyard has managed to thrive despite the drought." And that's true. We had a string of excellent harvests as the drought really took hold, with each of 2014, 2015 and 2016 producing memorable wines across three different vintage signatures.

Re-reading the article today, I don't think I emphasized to Eric enough that we made it through that drought not principally because of our location (though we do get more rain here than much of the Central Coast, thanks to our location at altitude, in the Santa Lucia foothills, and relatively close to the Pacific) but because of a series of extraordinary actions we took to reduce our demand for water.

These included rethinking how we planted new vineyard (much more widely spaced) so that we could set them up for success dry-farmed. It included new, deeper-rooting rootstocks. It included micro-emitters for frost protection. And it included investing in cover crops and a much larger animal flock. The flock and cover crop together increase our soil’s carbon content, which allows it to hold more moisture. In Paso Robles, we don’t have a water table at root-available depth, and it doesn’t rain for six months every year. The soil is our reservoir, if we allow it to be. [For a deep dive into how our farming changed during the drought, check out my 3-part series Dry Farming in California's Drought.]

Why mention this now? While the outside shock is different, we’re in the middle of another shock right now that is forcing us to rethink how we operate. Coronavirus is a demand shock rather than a supply shock like a drought, but we’re having to reinvent ourselves as a business the way we did as a farm last decade.

Without many of the ways we’ve always interacted with customers (tasting room, events, festivals) we’re investing in new technology. The first things we rolled out utilize the live interactive capabilities of our social media platforms. I've been hosting Instagram Live broadcasts every Wednesday at noon PDT, inviting a guest to dive into the world of Tablas Creek. Neil has started hosting weekly tastings on Facebook Live, also with a guest, of two wines each Friday at 5pm PDT. Our tasting room has launched virtual Zoom tastings, where customers can choose a pre-made pack of half-bottles, order wines they want to open and discuss, or just taste through wines they have on hand, led by one of our senior tasting room team members. We've ramped up our investment in video; we've been adding a deep-dive into a recently released wine to our Chelsea and the Shepherd series each week, and now have a YouTube channel to collect them all.

What do all of these initiatives have in common? We're meeting customers where they are, instead of asking them to come to us. We didn't really have a choice; with our tasting room and restaurants closed, and events canceled both here at the winery and around the country, the typical avenues through which we'd interact with our customers are unavailable. But I'm convinced that many or most of these new initiatives will remain valuable enough to keep doing them even once we can reopen our tasting room, resume pouring at festivals and reschedule those restaurant wine dinners that we'd planned to host this spring. After all, we’d discussed doing, or even made starts on, many of these new initiatives before the arrival of Coronavirus, but this crisis made us attack these new programs with urgency.

All of these new initiatives have in common that they are location-independent. Of course, when you're stuck in your house, it doesn't really matter whether Tablas Creek is 30 miles away or 3000. But I'm convinced that the lessons we're learning will allow us to better connect with customers near and far. Even our local customers weren’t making weekly trips to visit us. What's more, the majority of our current customers and an even larger share of our potential customers don't live an easy drive from Paso Robles. In the periodic surveys we do to former wine club members, we always see responses that they weren't able to take advantage of the events we offered because of their distance from Paso Robles. We think of limitations like that as constant, but they're really not. We weren't utilizing the tools we had to offer opportunities to learn about and become more connected to what we're doing. But we are now.

Jason on video chat with Sadie

After the drought ended, we realized that the new things we’d learned to do in the vineyard led to healthier vines, better fruit, and wines with more character even when they weren’t existentially necessary. I don’t think it’s coincidence that 2017-2019 is maybe our best-ever run.

I think we're going to see something similar here. Just as we emerged from the drought better farmers, so too will we come out of this crisis a stronger business and industry.


We're not about to reopen. Which means it's the right time to think about what that will look like.

Wherever you are and whatever you do for work, I hope you’re weathering the current storm OK. Here, even though as an agricultural enterprise we've been able to continue our farming and cellar work, we've had to begin reinventing how we work as a business. I feel good about the things we've added, including Instagram and Facebook live weekly broadcasts, virtual tastings over Zoom, and an increased investment in sharing what's happening here over video. We even have our own YouTube channel now.

New Tasting Room - EmptyAgricultural businesses are classified as essential, because we’re working with perishable products that often have only one harvest a year, and are the building blocks of the food and drink supply chain. But unless we want to risk infecting our workers and our customers, that status doesn't give us leave to operate as though the business environment were normal. When we were blending at Tablas Creek week-before-last, we made several changes to do what we could to minimize the risks that if one of us were infected but asymptomatic we might transmit the virus. I talked about some of those in last week's blog. With six people distributed around our big conference table, we all had plenty of space. We all pulled and washed our own glasses and dump buckets. The sample bottles were wiped down before they were poured, and only one person picked up and poured each bottle. We kept doors and windows open so there was air moving in the room. We'd all been quarantining at home the previous two weeks, and everyone was healthy. As we've started physically blending the wines, we've limited our cellar team to two people at a time.

Even as we're reevaluating how we can safely operate under current conditions, I've spent a lot of the enforced downtime thinking about how and under what conditions we and other hospitality-facing businesses will be able to reopen. At some point, the shelter at home Coronavirus restrictions will be lifted. I've come to the conclusion that it's very unlikely that we'll go back to pre-Covid status quo.

I'm clearly not the only one thinking about this. As discussions ramp up on lifting local and national restrictions, some of the heavyweights of the American business community are weighing in. The American Enterprise Institute, which you'd think would come down on the side of restarting the economy sooner than later, laid out some pretty rigorous preconditions in their report on how the economy might reopen:

"...when a state reports a sustained reduction in cases for at least 14 days (i.e., one incubation period); and local hospitals are safely able to treat all patients requiring hospitalization without resorting to crisis standards of care; and the capacity exists in the state to test all people with COVID-19 symptoms, along with state capacity to conduct active monitoring of all confirmed cases and their contacts."  

Similarly, JPMorgan Chase's Jamie Dimon, in the annual letter to his shareholders he published last week, predicted a complex series of events that would need to take place before the American economy could start to get back to normal, and ongoing restrictions once it does:

"It is hoped that the number of new COVID-19 cases will decrease soon and – coupled with greatly enhanced medical capabilities (more beds, proper equipment where it is needed, adequate testing) – the healthcare system is equipped to take care of all Americans, both minimizing their suffering and maximizing their chance of living. Once this occurs, people can carefully start going back to work, of course with proper social distancing, vigilant hygiene, proper testing and other precautions."

We won't be the only (or first) economy to figure out how to safely relax the restrictions that have allowed us to slow the spread of Covid-19. An article in the New York Times examined how a few European countries are going about restarting their economies. From their conclusion: “The gradual acceleration of economic activity is accompanied by strict new rules requiring people to cover their nose and mouth in shops and on public transport — and many more months of strict social distancing.

So, what will a winery tasting room look like once we can reopen, whenever that is? It won't, I don't think, look like it did over the last two decades. We will almost certainly face restrictions to the activities we can conduct, and even if we don't, we will need to operate responsibly. I'm thinking it may resemble the brief period after social distancing measures were announced but before all tasting rooms had to close. Restaurants removed tables. Our tasting room moved to tasting-by-reservation so we could keep six feet between groups. Everyone started cleaning and disinfecting much more rigorously.

This is the time, before we're faced with the imminent arrival of customers, when we should all be thinking about we can reopen safely. How many customers will we safely be able to welcome at a time? What sorts of events will we be able to hold? What will we need to do to make sure that our team is safe? I don't know, but am trying to plan for it. Assuming we'll just go back to status quo ante isn't smart.

This great article by Thomas Pueyo called "The Hammer and the Dance" was widely shared last month. We're all working on the hammer now. But there will be a longer period of the dance, where we've reopened but are constantly mitigating risks. Now seems like a good time for us all to start thinking about what that will look like, and examining the pieces of our business that will likely have to change.

I look forward to figuring this all out, as a community.


Are we really saying that wine can't compete with hard seltzer on... authenticity?

January is the season where the wine community gets together at events like the Unified Grape & Wine Symposium and the Direct to Consumer Wine Symposium. In preparation for these gatherings, some of the industry's most important thinkers and researchers pull together the data from the previous year and assess the state of the industry.  Two reports that I always read are the Silicon Valley Bank State of the Industry Report and the Sovos/ShipCompliant Direct to Consumer Wine Shipping Report. The keynote "State of the Industry" talk at Unified often provides the take-home messages that then make their way into print headlines.  

As you would expect, some assessments are more pessimistic, while others focus on the positive. This year, it seems like most of the headlines focused on the negative. An article that I thought threaded the needle pretty well to give a balanced assessment was Bill Swindell's piece in the Santa Rosa Press Democrat: US wine shipments increase slightly to 409 million cases in 2019 (although it's worth noting that the original headline was more pessimistic: "US wine shipments increase slightly, despite fears").

Bill points out in his article that despite slight overall growth there are major issues for certain segments of the industry. Lots of grapes went unharvested in 2019. Grape and bulk wine prices on the open market are down, squeezing growers. After years of strong growth, sales flattened in 2019. And younger drinkers (mostly the Millennial generation) have been slower to adopt wine as their beverage of choice than previous generations. So, what's the outlook?

I think it's complicated. The fact that growers are having trouble selling their grapes appears to me to be due to two things:

  1. There has been a ton of speculative planting in recent years. The 2018 California Grape Acreage Report (the most recent year available) shows some 637,000 acres of wine grapes in the state, including 47,000 planted in the last two years and therefore non-bearing. That's new acreage greater than the total acres in Paso Robles, planted just in the last couple of years, and growth of 21% since 2008. And most of this acreage isn't being planted by estate wineries. It's large plots, owned by growers hoping to sell grapes to wineries on the open market.
  2. By and large, the big American wine companies are struggling. According to the SVB Wine Report, the seven largest American wine brands saw a total sales decline of 3.09% last year. That may not sound huge, but as those brands amount to between 68% and 70% of the domestic market, that decline totals some 3.4 million fewer gallons (1.4 million fewer cases) sold. That's a lot of volume for small producers to soak up. And looking locally in Paso bears this analysis out. It’s growers who contracted with these behemoths who are hurting most, leaving grapes unharvested, while demand for premium vineyards has remained strong.

Of course, there are also the demographic challenges that the SVB Wine Report pointed out. Younger generations aren’t adopting wine as fast as the industry hoped they would, with Millennials' share of the wine market growing only from 14% to 17% in the last five years, even though that time frame saw the youngest millennials reach legal drinking age and the oldest approach 40. That said, although I haven't been able to find exactly the right data to prove my point, I'm pretty sure that they're drinking more wine per capita than previous generations were at their age. I'm right in the middle of GenX, I grew up in the wine business, and neither I nor my friends were drinking much wine at age 25. I think it's even less likely that baby boomers were drinking as much wine at age 25 as millennials are now. The peak of the boomer generation would have been 25 in 1980, when cocktails and beer were ascendant and the total American wine market was half the size it is now. Wine coolers? Maybe.

Importantly, things are still growing for quality producers. While wines with prices below $9 showed declines in both sales volume (between 3.5% and 4%) and value (around 2.5%), the picture looks better up the price spectrum. Wines between $9 and $12 were more or less flat in both value and volume. All the categories above $12 showed growth in both volume (between 7.5% and 8.5%) and value (between 4% and 8%). And direct sales from wineries — mostly toward the higher end of the price spectrum — grew 4.7% in volume and 7.4% in value.

What are we to make of all this? I think it's naive to assume that the wine market is somehow immune to the market constraints of supply and demand. Growers shouldn't be able to plant unlimited additional acreage and expect to sell it regardless of quality. Wineries shouldn't be able to muscle whatever production they make into the US market even if they have no path to market or way of connecting with customers.

As far as I'm concerned, that thinking is a relic. Producers need to be focusing on quality. And on responsibility. And on storytelling. And on transparency. If there’s something to learn from analyzing millennials’ buying trends, I think it should be to align your production with customers’ values. Last year’s darling category — hard seltzer — took lots of smart people by surprise. At the DTC symposium, a presenter pointed out that they're making a big deal about it being "pure", to the point that it's part of White Claw's motto. The White Claw home page lists carbs, calories, and alcohol, and the cans all bear a "gluten-free" logo:

White Claw Home Page

Wine is a natural product, made from a healthy raw material (grapes) with relatively benign farming inputs. But somehow hard seltzer has seized the mantle of the new "healthy" alcohol. Why are we as an industry allowing this to go unchallenged? It’s disappointing that the big national wine companies haven’t made any serious efforts at meeting this head-on. Are they just not wired this way? If I were in their shoes (and, let me be clear, I’m happy I’m not) that would be priority number one.

If transparency is at least part of the answer, it will require a major shift in how wine is marketed. The mystique and exclusivity that is a staple of most luxury wine marketing is, I think, part of the barrier that the wine industry has erected between itself and millennials, because it can often come off as elitism.

Back to the conclusion of the Santa Rosa Press article I linked in my second paragraph: “The people who are successful right now are the people who have focused on the quality of the wine and the quality of the experience”. That shouldn’t be shocking. But it's clear that, at least in terms of experience, there's improvement to be made. In a bombshell of a blog post last weekend, Silicon Valley Bank's Rob McMillan shared a letter he received recently from a friend who spent such a disappointing weekend visiting wine country with his GenX daughter — being ignored and taken for granted at one winery after another, all while spending thousands of dollars — that they decided next winter they'd visit the Grand Canyon.

In retrospect, I think we'll realize that lots of wineries have had it easy in recent years. The market was growing fast enough that it absorbed larger quantities and higher prices every year. New states were opening up through liberalized shipping laws, offering wineries direct access to customers and enticing millions of new vacationers to visit wine country. Premium wine regions and highly rated wineries saw enough demand that they didn't need to focus on customer service.

Whether 2019 was a blip or the start of a new era, I think this is a good time to refocus on providing great wine and great experiences, being transparent about how wine is made, and — most importantly — accelerating the improvements in industry practices so that the transparency shows a picture we're proud of. It seems like that would improve things both short and long term.

Are we really saying that wine, made from fruit in a natural process that is millennia-old, shouldn’t be able to compete on authenticity with hard seltzer, an industrial triumph of marketing, developed roughly 15 minutes ago? Give me a break. Let's have this conversation.

Tablas Creek Vineyard  Newly Pruned


Are the gloomy messages about the state of the wine industry warranted? I say not for wineries like us.

I've spent much of the last two weeks at wine industry symposia: first the Direct to Consumer Wine Symposium in Concord, CA, and then the Unified Wine & Grape Symposium another hour north in Sacramento. I spoke on panels at both, at the first on measuring ROI on winery events, and at the second on technical and market challenges and opportunities for rosés. But I also took advantage of being there already -- and the free passes that come with being a speaker -- to sit in on some of the other sessions. Both events began with "state of the industry" reports, with quite different outlooks.

DTC Wine Symposium SessionPhoto courtesy DTC Wine Symposium

The core message I took home from the DTC Symposium was mostly positive: that direct-to-consumer wine sales continue to grow at a healthy rate, with shipping totals topping $3 billion for the first time in 2018, and growth coming broadly across wineries of all sizes.  What's more, the tools that wineries have to capture, analyze, and fulfill these consumer-direct sales have never been better.  The take-home message from Unified was less positive, with worries about declining sales at restaurants and supermarkets, grape market oversupply, demographic challenges for wineries as their prime customer base (mostly Baby Boomers) ages, and challenges connecting with Millennials through traditional wine marketing. These have spawned some much-discussed articles (within the wine community, anyway) containing lots of hand-wringing about what the future might bring to California wine. A couple (click-bait titles notwithstanding) will give you a sense of the worries:

In a second piece, on his own blog (Millennials are talking but the wine industry isn't listening) Blake Gray identifies some of the barriers that may be keeping Millennials from gravitating toward wine, at least at this point in their lives: the industry's resistance to transparency in labeling, its steadfast promotion of just a small handful of grape varieties, and an inability (or unwillingness) on behalf of wineries to engage with the Millennial consumer. I'd add a few others, including the often high price of premium wines and winery experiences, which puts them outside the reach of many cash-strapped Millennials, the marketing of wine as elite (which often crosses the line and comes across as elitist, to an audience that prizes authenticity), and the dominance of shelf space in the wholesale and grocery markets by a handful of large wine companies, when what every study of Millennials indicates they want is 1) a closer relationship with real people behind the products they consume, and 2) confidence that those products are produced in a way that matches their values.

So, which is it? Are wineries in good shape, or are there dark clouds on the horizon? As is usual with complicated questions, it depends on where you're looking, and over what time frame.

Let's look at the negatives first. Some of the largest wine companies (including Bronco, Gallo, and Constellation Brands, all of whose sales skew toward lower-priced wine in chain retail) saw sales decline last year. Many traditional fine dining restaurants have closed or rebranded as consumer trends have shifted toward more casual experiences. Nielsen data showed that overall wine retail sales declined slightly (0.5%) by volume last year, at least in the 70% of retailers that participate in the Nielsen data collection.1 The combination of distributor consolidation and winery proliferation have made it harder for most small-to-medium wineries to sell through the wholesale channel. And tasting room visitation was down in many established regions in 2018, including Napa and Sonoma, even as tourism was up.2 So, if you are a small-to-medium winery who wants to sell their production through wholesale, a large winery whose sales skew toward the lower end of the retail spectrum, or a winery in an established region whose customer acquisition mostly happens in your tasting room, you likely have cause to worry.

On the positive side, winery direct-to-consumer shipped sales grew again in 2018, by about 12%, to more than $3 billion, a figure nearly triple what it was just in 2011.3 Wineries can now ship to 90% of the US population, with the right permits. The average price of a bottle of wine sold increased both in three-tier retail and in direct-to-consumer last year. Although tasting room visits are down in many areas, our experience is that people are spending longer when they do visit, are more interested than ever in learning the story and the practices behind the wines, and are happy to spend more: our average sale per visitor was up 8% last year. The price ranges of wine that saw sales declines were the under-$10 bottles (at which, I think it's fair to say, California does not excel) while all higher price points saw sales growth. And most importantly, total winery sales, when you take direct-to-consumer into account, grew 4% in 2018. That means that the pie continues to grow, and it seems like it's primed to continue to grow in the segments that most impact wineries of our general size (small to medium) and profile (producing wines between $25 and $60, with DTC providing the majority but not the totality of our revenue).

Some of what I see as more equivocal data has been painted in the most negative light. There are some demographic trends that wineries need to plan for. Wine's largest audience, for the last two decades, has been Baby Boomers, and with the average Boomer reaching retirement age -- the time at which, historically, cohorts start spending less on wine -- they will need younger generations to step in. And GenXers, of which I am a proud member, have been doing so. Will Millennials, who are a larger cohort than GenX, step up when it is their turn? It remains to be seen. But I think that the doom and gloom about them is pretty overblown. The median age of a Millennial is 30, but the Millennials at the peak of the demographic bubble are just 24. Were many Baby Boomers drinking wine at age 30, let alone 24? No. How about GenX? Not much. Millennials are drinking more wine than preceding generations were at the same age, which should be a positive enough trend. But I think the news is better than that, at least for wineries like us. They are also much more likely to drink craft beer or craft cocktails, to be interested in the source and making of the foods and drinks they consume, to have grown up in a wine-drinking household, and to be open to trying wines from new grapes and new growing areas.

Are many Millennials hamstrung by the poor job market when they entered the work force and saddled with student debt? Absolutely. But even if they never attain the buying power of earlier generations, it seems to me that the sorts of wines that Millennials are likely to embrace are the sorts of wines that wineries like Tablas Creek would like them to embrace: smaller family run wineries, from organically farmed vineyards, incorporating grapes that may be outside the mainstream but are good fits for their growing locations, and wines that offer value, at whatever price point.

Does that sound like a gloomy future? Not to me.

Footnotes:

  • 1. Note that there are some important retailers whose data is not included, most notably Costco, and that the Nielsen data also does not include winery DTC sales.
  • 2. All these data points are from (and beautifully explained in) the 2019 SVB Wine Report, the industry's gold standard for data collection and analysis. 
  • 3. This data point and the ones that follow come from the 2019 ShipCompliant Direct to Consumer Wine Shipping Report

When the 3-tier system works as it's supposed to, it's a beautiful thing.

Every summer, I spend a couple of weeks in Vermont.  I'm from there, and my mom still spends summers in the house I grew up in.  My sister and her family are 50 yards away.  And I get a chance to remind my California kids that there are places where it's green in the summer and water flows.  It's a lovely tradition, and I always find it regenerative.

Up until a few years ago, my dad, who like my mom traveled back east for the summer season, would always schedule a couple of consumer events near their Vermont home, and since his health began to decline a few years ago I've tried to continue the tradition.  I did one of these a couple of weeks back at the small shop Meditrina Wine & Cheese, in my hometown of Chester, VT. Now, this isn't a shop that moves dozens of cases of Tablas Creek each year.  But they consistently have a few of our wines on their shelves, their owner Amy Anderson is knowledgeable and passionate, and she's supported Tablas Creek for years. And, as the only legitimate wine shop in town, it was and is a regular destination for the family when we're in town. Amy I discussed doing a tasting together when I was in town last summer, and worked out the details this spring.

Meditrina Tasting 3

About 40 people attended the Wednesday evening tasting, pretty evenly split between people who heard about it from the email I sent out, people who heard about it from the email that Meditrina sent out, and people who were wandering by and stopped in because they saw the (modest) crowd. In the end, Meditrina sold a couple of cases of wine, a few new people learned about Tablas Creek, our Vermont mailing list members were grateful that we did an event (and let them know about it) on the other side of the country, and we helped solidify some relationships.  It's the kind of event that is a basic building block the world over for marketing a family winery.

I do dozens of events a year around the country, typically a mix of restaurant wine dinners, festivals, and in-store tastings.  Why was this one so gratifying?  Well, everything worked as it should, and no one just took advantage of the efforts to make a little easy money. Those efforts began with the promotion of the event. Both we and the shop did our parts in promoting the tasting; it's been on our Web site since the spring, both we and Meditrina sent out emails to our local mailing list members the week of the tasting, and Meditrina posted about it on their Facebook page. 

Meditrina Tasting 2

The good work continued with the logistics and delivery. When the wines that Amy ordered didn't arrive as they were supposed to on the distributor's delivery truck, it looked like we might not be able to pull off the event. But Anton Vicar, the wine specialist for our VT distributor Baker Distributing, jumped into action. He made a special run to the warehouse so that we had wines to sell at the event, bringing them himself as the event was starting. And he hung out at the event after, socializing, making sure things were running smoothly, and interacting with the guests.

And Amy completed the trifecta by putting together an event that rewarded the people who came. The tasting was free. She invested in a nice platter of local cheeses and meats for some nibbles. And she offered great prices on the wines we were showing that evening, so people could feel good about taking wine home with them that night.

Where could this have gone wrong? 

  • The wine shop could have taken the extra business and not done the outreach to help share the winery's story. Or they could not support the wines year-round. (They did, and do.) Or they could have offered the wines at full markup and just taken advantage of the people we brought in. (They didn't.)
  • The distributor could have just said "sorry", asked that the wine shop take orders, and delivered the wine later in the week. Meditrina would have done so, but it'd have been extra work, and inconvenient for the guests, some of whom drove nearly an hour. (Thank you, Anton.)
  • The guests could have used the free tasting as a chance to try some free wine, not bought anything, and maybe ordered it later. But they didn't. They came with enthusiasm and good questions, and supported the shop that did the work of putting on this nice event.
  • Or we, as a winery, could have not promoted the event, and just taken the extra orders that came of it.  I hear all the time when I do events with accounts that the last winery they "partnered" with didn't do anything to ensure the event's success, and didn't turn out their own customers. (This drives me nuts. We always send out news about the events we do to our mailing list members, who are generally grateful. Why wouldn't you do this?)

In the end, everyone benefits.  The wine shop gets some new customers and some extra sales.  The winery gets some new customers, some extra sales, and the gratitude of some mailing list members.  The distributor gets some extra sales and the gratitude of both an account and a supplier.  And the customers get to try some wines they otherwise wouldn't have tried, and a chance to interact with a winery principal 3000 miles from home.

Meditrina Tasting 1

I know that there are times when I complain about the wholesale market in my blog posts.  And it can be frustrating, for all the reasons I explained above.  But this was a great example of how it can work for everyone, and why wholesale distribution should be a benefit to a winery's direct sales, and vice versa.

PS Thanks to my talented sister Rebecca Haas for taking the photos that evening.


Rethinking the Role of Wine Festivals in the Age of Yelp and Instagram

Last month, we participated in the Paso Robles Wine Festival, as we do every year. This year was particularly nice, with gorgeous weather and a great vibe at both Friday evening's Reserve Event and Saturday afternoon's Grand Tasting in the downtown park. If you came to see us over the weekend, thanks. We hope you had a great time. We sure did.

Paso Robles Wine Festival Cru 2018

Every year, we debate how much to invest in activities at the winery. This year, we decided to go (relatively) big.  On Sunday, we brought in Chef Jeff Scott and he made gyros from lamb we raised on the property. We also had Chris Beland come in and play music. Our patio was full much of Sunday, and everyone had a great time. All that said, our traffic was modest on Sunday (124 people) which continued a 5-year trend of downward Sunday traffic. It's been declining about 10% a year for a while now. And even our Saturday traffic (209, up a bit from last year) wasn't really an increase over a normal May week.

Friday, on the other hand, was our busiest in recent years, with 105 people. But overall, our weekend traffic (438) was right about at our average for the last 5 years, only slightly busier than a normal May weekend, and actually less busy than Wine Festival Weekend was in the mid-2000's.  Years ago, the Paso Robles Wine Festival weekend was a major source of revenue for the member wineries.  You poured wine in the park on Saturday.  On Sunday, you opened your gates (often to a line of cars) on Sunday morning and saw as many people that one day as you might in a low-season month. So, given the potential payoff, wineries pulled out all the stops in trying to get a high percentage of the park attendees out to the wineries, with food, music, seminars, and special open houses.  Given that it's now not that different from any other weekend, does it makes sense to do the same?  It's not like the decision to provide food and music were free.

We think yes, for two reasons. First, our success with the customers we saw was great. We had our highest weekend sales in the last 5 years, and our second-best number of wine club signups. That's a win. But given that most of those came Friday and Saturday, I'm not sure how much to attribute to our events.  Second (and to my mind, more importantly), what we were doing was investing in the long-term success of the Paso Robles wine region. A regional wine event without the enthusiastic participation of its wineries isn't really that special to the people who attend.

Years of post-event surveys have told us that roughly 50% of the attendees of the Paso Robles Wine Festival are making their first visit to Paso Robles Wine Country. I feel like our most important job is making them fall in love with the place, so they return.  Whether we sell them much wine this time around or not, festivals are part of the marketing of our region, and that investment is a long-term play. We should both pour cool wines in the park and do our part to make sure that attendees have a great selection of things to do the next day. After all, the festival in the park only happens one weekend a year, and is put on in the hope that the attendees will then return, spend multiple days visiting wineries, and make visits here a recurring part of their lives.

I think that longer perspective can get lost if you look just at the post-event traffic numbers. The growing numbers of people who visit Friday and Saturday are likely at least in part the result of good work at past festivals, where attendees fell in love with Paso Robles wine country.  The Paso Robles Wine Country Alliance has done a great job, I think, in making the event more full-fledged in recent years, incorporating the many great restaurants of Paso Robles more and more, adding a reserve tasting, great seminars, etc.

I don't think that the higher average spend per customer we've seen in our tasting room on Wine Fest weekend (double what it was in 2011, triple what we saw in the mid-2000's) is a coincidence. And, more importantly, neither is the growth of our non-festival weekends. In 2003 (the earliest year for which I have good data) we sold about $9,000 in wine on the Sunday of Wine Festival to about 300 guests, part of a $12,500 week that was nearly double our $6,900 average non-festival sales week that year.  This year, on Wine Festival Sunday we also sold about $9,000 in wine. But it was to 124 visitors, and part of a $41,000 tasting room week that was only 13% better than our average week this year ($36,000).

And consumer trends only reinforce how important it is getting new people into the pipeline of your region or your brand.  A study published by Eventbrite showed that the majority of attendees of food and wine festivals are sharing photos of the event on social media. Peer to peer recommendations are the most trusted form of advocacy.  And a positive experience that is echoed on an online review site like Yelp has positive impacts on not only future customers' buying decisions, but on things as apparently removed as your search engine rankings.

So, for us, it's an easy decision. We will keep investing in the success of our community, and trust that these seeds we plant will sprout in the form of return visits and sales. And we're grateful we're a part of a community in Paso Robles where we're just one of many wineries who've made the same choice.


Facebook's new algorithm isn't the end of the world for wineries.

About a month ago, Mark Zuckerberg announced (in a Facebook post, of course) that Facebook would be revising the algorithm that decides what its users see in their news feeds. In an effort to make users' experience on the platform more positive, they decided that they would show more posts from friends -- particularly those that generated comments -- and fewer posts from brands and organizations, particularly posts that generated link clicks rather than comments.  The exact wording:

I'm changing the goal I give our product teams from focusing on helping you find relevant content to helping you have more meaningful social interactions.

We started making changes in this direction last year, but it will take months for this new focus to make its way through all our products. The first changes you'll see will be in News Feed, where you can expect to see more from your friends, family and groups.

As we roll this out, you'll see less public content like posts from businesses, brands, and media. And the public content you see more will be held to the same standard -- it should encourage meaningful interactions between people.

The analysis was pretty unequivocal: this was bad news for the brands and organizations that relied on Facebook as a principal means of sharing their content with consumers.  But given that Facebook's main source of revenue is the advertising that these very same brands pay to have their posts and pages be more visible on the platform, I also think that most people thought that the changes would be modest and gradual, like what happened when Facebook made a similar announcement in late 2013.

So, what have we noticed? There seems to be a small decline in reach of our posts, at whatever level of engagement we achieve, since an inflection point in early February where we noticed a few posts that we expected to be shown to a large audience achieve smaller reach.  So, I broke down what we've seen so far in February compared to what we saw in January. For modest-engagement posts (those that between 6.6% and 8.5% of our fans interact with) the percentage of our fans who see these posts has declined 13.4%, from an average of 1287 of our roughly 9100 fans to 1114.  For high-engagement posts (those with between 8.6% and 10.5% engagement) we've seen a decline of 11.1%, from an average audience of 1734 fans to 1450.  And for very high-engagement posts (those with 10.6% engagement or better) we've seen a 20.4% decline, from an average audience of 2239 to 1770.  That's significant but hardly catastrophic.  It's perhaps easier to see in graphical form:

Facebook engagement 2018 2

What's more, brands and organizations are is still in better position than in 2015, when I wrote a blog Is Facebook Even Worth It Any More? after our reach had dropped nearly in half since late 2013. Combining the data that I pulled then with what we see now, you see a graph that is more encouraging, and suggests that Facebook's algorithm writers realized that their actions in 2015 were too dramatic:

Facebook engagement 2018

So, where does this leave wineries, organizations, and other businesses that rely on Facebook? Not that different than where we were before. Our options remain:

  • Work to produce especially engaging content. If there is one thing that was true with "old" Facebook and remains true in this new era, it's that it will reward good content. It's worth keeping an eye on what sort of content the platform's coders decide is good, as this has changed over time. But from Zuckerberg's own post, it seems likely that producing content that people comment on and which engages them in a discussion, rather than content that people click on to take them outside the platform, will be rewarded.
  • Share links from sites Facebook respects as credible. If you are sharing links, pay attention to the source. Facebook has clearly been sensitized to the criticism that they served to disseminate dubious (and polarizing) posts during the 2016 election, and they are making an effort to weed out unreliable or misleading content. It has seemed to us (though our sample size is small enough that I would treat this cautiously) that Facebook is showing links to blogs less than links to mainstream newspapers and magazines. It would be logical for this split to continue.
  • Continue to invest in video. We've only posted a couple of video posts this year, but they continue to be shown to a larger audience than an image or link post that receives the same engagement. If you are able to post Facebook Live videos they receive even more of a bump. It's important to note that videos have to be uploaded directly onto the Facebook platform (rather than sharing a link to YouTube or Vimeo) to receive this bump. In fact, given that Facebook perceives these other companies as competitors, it's unsurprising that links to these other video platforms are some of Fecebook's least-shown posts, in our experience.
  • Build and use your email lists. Facebook (and social media in general) has never been a particularly effective platform for spurring immediate action. Announcing a sale or a special offer typically gets very low engagement. It's a famously ineffective way of promoting events. Instead, its impact is more subtle: you build mind-share, and keep your customers more engaged to your business or service. That shows up in the long run in loyalty, but it's exactly that: a long game. Email outreach, on the other hand, is still the most effective way of turning contacts into customers. And those contacts are yours, whatever the ebbs, flows, and algorithm changes of the various platforms. If your focus is in adding people to your Facebook or Twitter fan base rather than to your email lists, I would suggest you reconsider.
  • Be prepared to pay periodically. Even at relatively modest levels, doing so gives you much greater access to your fans and to those who you target, whether they be friends of your fans or others that fit specific demographics or interests.  We've paid to promote three posts so far this year, and have had these posts served something like 2800 extra times for each $20 we've spent.  Given that our average post is reaching something like 1400 of our fans organically, if we were to choose to promote one post a week, at $20/post, we might be able increase the total number of views of our content by 33% at an annual cost of around $1000.  That's hardly exorbitant. 
  • Don't put all your eggs in Facebook's basket. In the conclusion to my 2013 piece on the changes Facebook announced then, I observed that it was really Facebook's sandbox at that point. After dispensing with Myspace and blowing past Twitter in user base and revenue, their position looked secure.  It looks less so now. Instagram (which is, of course, owned by Facebook) now has over 800 million active users. Youtube has 1.5 billion. And they are far from the only options out there. Though both remain smaller than Facebook, which has 2.2 billion users worldwide, the demographics of both skew younger and both are growing fast.  Should you abandon Facebook and focus on other social media platforms? I definitely don't think so. But neither would I invest in it exclusively.

It's worth noting that Facebook is always a moving target, and these changes only make it more important to keep up on your own analytics data. I fully expect there to be additional changes implemented throughout 2018 and beyond. If February's one month decline in reach of roughly 15% is compounded the next several months, I'll be singing a different tune. But for now, it's not time to panic. It's time to make great content.


You can't evaluate what you don't measure

Tasting Room with People

Once we get into December, things really slow down for us.  The cellar, which has been on a three-month sprint, has put most of the year's wines to bed.  In the vineyard, the vines are going dormant, we've seeded the cover crop, and there's not much to do but hope for rain and wait until pruning begins in January. In the market, most restaurants and retailers have made their buying decisions for the holiday season and aren't really interested in seeing anything new.  Our tasting room, which might see 600 people a week in high season, drops to a third of that.  So, it's the time where I try to look back at what we've done for the year and evaluate how well we've done it.  I talk to other wineries, and industry experts, to see whether what we've observed is part of a larger trend, or if we're an anomaly.  In almost every one of these conversations, I hear the comment that we track data that most wineries don't.

Now, I'm something of a data geek.  I hate not being able to test a hypothesis out against real numbers.  And I hate it when I feel that the data that we're capturing doesn't represent the critical decisions that customers make.  Because that's the important thing about data: it lets you know, beyond anything anecdotal, whether you're doing a great job or not.  Are we taking great care of our tasting room customers?  Are we offering them wines they want to buy?  What about once they are club members?  Do they feel special?  And do we keep evolving along with the rest of the wine community?

I feel like many of the things we track are pretty fundamental, and am always surprised that not every winery feels the same way.  And, in fact, most of these aren't particularly wine-business-specific, and would apply to any retail business.  Here are the things that I think are baseline information:

  • Your real traffic. Most wineries track the number of transactions, the number of wine club signups, and the number of tasting fees.  Fine.  But there's lots of context in here that can slip through the cracks.  Do you track the number of people who don't pay a tasting fee, whether because they are club members, because their tasting fee is comped on a purchase, because they are industry members, or because they share a tasting?  You should be.  If you're not, how do you know how to evaluate a day where you make $1000 in sales to 20 customers?  If you only have 20 customers walk through the door, that looks a lot better than if you had 100.  Plus, traffic is remarkably consistent year-over-year, and knowing how busy certain times of year are helps you staff appropriately.
  • The percentage of your traffic that purchases.  For us, this is easy, since we comp the tasting fee on even a single bottle of wine.  And so far this year, just over 12% of our visitors have paid tasting fees.  I'm happy with this level.  But knowing what percentage of your visitors liked things enough to make a purchase (or, conversely, couldn't find anything that they wanted to buy) is a great indicator of how you're doing.
  • The percentage of your traffic that joins your club.  Absolute numbers of club members are, ultimately, what impacts the bottom line.  But percentages are more informative.  They are the best indicator of how often you really turn someone on to what you do.  And they help you know whether you're maintaining the quality of your experience when things get busier.  If you're not, check your staffing levels.
  • Your average sale per customer (or per transaction).  You can measure this either way, but knowing how much your average customer bought is critical.  Fundamentally, that's your report card on how well you did.
  • Where your sale originates.  Is a purchase made in your tasting room, by phone, or online?  Knowing that you've sold $20,000 in the last week isn't nearly as useful as knowing that you had $14,000 from your walk-in traffic and $6000 in response to an email you sent out to your mailing list.
  • How long your members stay members.  Or, conversely, your cancellation rate.  Now, every club is going to have a certain amount of turnover.  Customers get older, have health issues, lose jobs, and move overseas (or to states you can't ship to).  That happens.  And I'm really proud that our median duration of membership is nearly triple the industry average of 18 months.  But unless you know what your baseline turnover rate is, and are tracking closely enough to see a spike, you can't be quick about finding out why and addressing what you find.
  • What percentage of your emails get read.  If a customer hasn't opened one of your emails in some time, this is a red flag.  It could be that you don't have the right email address to reach people.  It could be that what you're sending out isn't compelling.  In either case, you should want to know.  Of course, also check on anyone whose email bounces back.  It's much harder and more expensive to make a new customer than it is to keep an existing customer.  Put in the time it takes to keep your lists current.
  • The percentage of your visitors from whom you capture contact information.  Becoming a club member is something that a small percentage, at best, of your customers will do.  Industry averages hover around 3%; we feel like with great wine and great service, you can push that up to around 10%.  But that doesn't mean that the other 90% of your customers are a lost cause.  Many of them purchase and would begin an ongoing relationship with you, if you can figure out how to do it in a way that would be welcomed.  An occasional email letting them know about a tasting or dinner near their home?  Or one that provides some useful insight into what's going on in the vineyards or at the winery?  Probably welcome.  Finding a way to start a conversation makes it more likely that they'll return to see you again on a future visit, that they'll want to buy the wines you make when they see them at their favorite restaurant, and that someday they'll become regular customers.  Do you have a mailing list in addition to your club list?  Do you provide information people want to read?  And do you segment your list by region so you can target emails properly and not overwhelm people?  You should. 

You'll note that most of these data points are percentages.  So without counting your traffic accurately, it's very hard to get the rest of the data right.  Consider adding a button on your register to ring up a visitor who doesn't purchase.  That means that the data is all contained in your point-of-sale system, and you don't have to reconcile paper tallies or Excel spreadsheets with your sales totals.

Whatever your method, having this information isn't just an opportunity to check yourself against your baseline.  It creates a shared vocabulary that will allow you to evaluate your performance against your peers, and to interpret the data that's available through industry associations, seminars, and articles. And more than that, it's how you know if you're succeeding at your fundamental goal: to create an experience, and an environment, where your customers want to begin, and sustain, a mutually beneficial relationship with you.