I got involved in one of my more interesting Twitter conversations in a while this week. It began with a post from Robert Joseph, wine producer, writer, critic and consultant, sharing a 2019 Harvard Business Review article that talks about how wine has leveraged education marketing to create lasting connections with consumers. I shared the article with my own thoughts in a Tweet:
Thx @robertjoseph for sharing this @HarvardBiz piece. Wine often gets criticized for its marketing, yet it’s a product that engenders tremendous loyalty and brand association. This is a great explanation why, and what other industries could learn from it. https://t.co/y1ghm4UdDd— Jason Haas (@jasonchaas) November 15, 2021
The conversation that followed was one of the reasons that I find such value in wine Twitter. Wine experts across borders and roles (including Robert himself) weighed in to give their thoughts on the piece, expand on which sorts of wines benefit from this marketing, and which don't. The consensus of the conversation seemed to be that wineries who have good exposure in the direct-to-consumer world can use this sort of marketing to great effect, but it's harder to leverage for the wines that are sold wholesale, except to the extent which that sort of marketing impacts the opinions of writers and reviewers.
That distinction between direct marketing to consumers (for direct sales and relationships) and "influencing the influencer" marketing for a cumulative impact on harder-to-reach restaurant and retail sales makes intuitive sense to me, probably unsurprising given that it's how we have approached our own marketing at Tablas Creek. One of the first things I realized when I joined my dad out here twenty years ago was that we'd set ourselves a major challenge in making wines that were blends (which didn't have a category in most outlets) from grapes that people didn't know and couldn't pronounce, made in a part of California they'd never heard of, with French names that mostly didn't mean anything to them. That was at least four strikes against us. As I wrote a few years ago here in a piece I titled 30 Years of Tablas Creek: 10 Things We Got Right (and Wrong) we decided that our only viable way forward was to do our best to bring people into our world by pulling the curtain back on our own decision-making. And little by little it worked. We opened our tasting room and took as many people as would join us on tours into the vineyard and winery. We started an educational seminar series here and prioritized outside events where we could be up on stage telling our story. We wrote newsletters with pieces researching the grapes we grow and the way that we grow them. A few years later, I started this blog. Over the last decade, social media has given us ever-more-powerful tools to connect the educational content we've been producing with customers and key people in our distribution chain.
Fast-forward twenty years. We have gone from struggling with built-up inventory, slow-growing sales, and little market presence to sustained success. We have direct relationships with 11,000 wine club members and another 30,000 mailing list members. Our retention rate in our wine club is somewhere between two- and three-times the industry average. The same wines that were a struggle to sell in wholesale two decades ago (heck, even one decade ago) are easier and easier. And our relationships with the writers, sommeliers, and influencers out in the world have grown with our profile. So, I'm predisposed to agreeing with the sentiment in the article, but it's not just us. We're part of a larger trend, where in just the last decade direct-to-consumer sales, the lifeblood of most smaller wineries, has nearly tripled (graph from the 2021 Sovos DtC Wine Shipping Report):
The set of characteristics that make wine particularly fertile ground for education marketing are well laid out in the HBR article:
Consumers looking to buy a bottle of wine confront thousands of choices. In fact, many of the shoppers we spoke to described the experience as stressful; they were fearful of making a poor choice and looking ignorant or of missing an opportunity to make an evening more special.
While our own experience has convinced me that making an investment in educating your customers and those who might be in a position to reach new customers can work, I'm more interested in what it is about wine that dictates a different sort of marketing from most consumer products. I would submit that it boils down to three things.
Wine Can Be Complicated and Intimidating
Although wine has been a routine part of many societies for millennia, the modern wine world can be daunting. A bottle of wine in a neighborhood wine shop might come from any of 100 regions and 50 grapes in 25 countries. Some wines are named by the place they come from. Others are named by the grapes they contain. Yet others are fanciful names. Wine labels are famously arcane and many of the words foreign. What's more, wine in popular culture (think the "Somm" series of films) often celebrates the competitive, arcane memorization of obscure facts or the remarkable challenge of identifying wines through blind tasting done to achieve wine certifications through the Court of Master Sommeliers or the Master of Wine program. Those feats of deductive logic all paint a picture of wine as something to be mastered through obsessive study, and I would submit make most people less confident in their own judgments. I get wine lovers every week telling me, apologetically, "I just like what I like". Why should this be something you need to apologize for? Giving people a vocabulary to explain what they like, or an understanding of what goes into a wine they love, helps people feel like they have a safe harbor in what can feel like a big, rough ocean of wine. No wonder it's a good way to foster loyalty.
What's more, traditional marketing requires broad penetration into markets. For a winery like Tablas Creek, which does have at least nominal distribution in all 50 states, you might think that advertising or product placement or some other sort of broad approach that might touch hundreds of thousands or millions of people would be effective. It's not. We're not big enough to be on even a small fraction of the 100,000+ restaurant and retail outlets in the country. Last year, for example, we sold wine to about 800 different shops and restaurants around the country. That's less than a 1% penetration of the possible places one might find wine. All but the largest wineries will struggle to be in 10% of the available outlets. Compare that to, say, beer, where a larger brewery might expect to be in most retailers and a decent slice of restaurants. Or to one of the many products (think consumer electronics, or cars, or cereal) where there are perhaps a few dozen options, all of which are distributed pretty much everywhere in the country. And for a small winery, who sells most or all of their production direct from their tasting room or website? Forget about it. That means that small, targeted campaigns that reinforce your existing customers' connection with you -- and put them in a position to recommend you to friends and family with confidence -- are likely to be more rewarding.
While Most American Wine Is Made by Big Wineries, Most American Wineries Are Small
There are more than 10,000 wineries in America now, in all 50 states. Well over 90% of these wineries are our size or smaller. And yet the distribution channels are dominated by a handful of large wine companies; estimates are that the three largest wine conglomerates produce half the wine sold in America each year and the twenty largest firms account for 90% of the market. For these very large wine companies, or at least their largest brands (because it can be a full-time job keeping track of the many, many brands that these large companies make) the marketing choices probably are similar to many other consumer products. But it's a different story for most wineries. The rise of wine country tourism as a regular recreational activity has brought more customers to more wineries than ever before, accounting for 43 million visits from more than 13 million tourists annually. Combine these opportunities with the challenge of breaking into a national wholesale market dominated by big players, and you give small wineries both the motive and the opportunity to come up with new and creative ways to differentiate themselves. Education is one of the tools, with the winery tasting room an ideal environment to build lasting connections with new customers. Again from the 2021 Sovos DtC Wine Shipping Report:
Plus, no winery is in this alone. Wine buying is not zero-sum like car buying, where if someone buys a Mazda they're not also buying a Volkswagen. Most wine lovers don't drink a single brand or single grape, but instead use things they love as gateways into discovering other things they might want to try. Think about it this way. If someone buys a Rhone blend from another California producer, does that make them less likely to buy a bottle of Tablas Creek? No, I would assert that it makes it more likely. If they buy a bottle of wine from a different Paso Robles producer, same thing. So we're not competing with Bonny Doon, or Qupe, or Halter Ranch, or J. Lohr. The community of California Rhone producers works together to establish the category (see: the Rhone Rangers, or Hospice du Rhone). The Paso Robles community works together to establish the region (see: the Paso Robles Wine Country Alliance). This changes the incentives for wineries. We're likely to be working alongside other producers in our category to educate people about the category we share. We're happy to recommend other wineries to people who ask, because the success of our neighbors helps ensure our own. These sorts of relationships create a positive feedback loop that builds community but also incentivizes educational approaches because doing so makes your neighbors more likely to recommend their customers to you, because the more you know about the category the more likely you are to return.
Wine Buyers Are Just as Heterogeneous as Wineries
Did you know that Consumer Reports used to review wine? They don't any more. The idea that there is a single "right" style or category of wine feels hopelessly out of date. Some people love lush, oaky Chardonnays. Others prefer aromatic reds, or sweet wines, or funky natural wines that might be bottled cloudy. We each have our own preferences, which is great. But how do we learn which sorts of wines we're likely to love? That's where wineries have some control over what happens next. And it turns out wine is the perfect product for long-tail marketing.
There are something like 77 million regular wine drinkers in the United States. At Tablas Creek, we make around 30,000 cases (360,000 bottles) each year. We don't make enough wine for even 1% of the regular wine drinkers to open once a year. And our true number of customers is surely a lot less than that, given that many of our fans will buy multiple bottles per year. How many fans do we need to be successful? 50,000? 30,000? 11,000 (the number of our wine club members)? Whatever the number is, it's smaller than one tenth of one percent of the American wine drinking population. If we can thrive reaching less than one one-thousandth of American wine drinkers, and most wineries are even smaller than we are, most of us don't need to be chasing the same audience. We just need to be consistent in the style of wines we make and do our best to educate the consumers, trade, and media on who we are so they can help the people who might love us find us. It is for that reason that I think that you don't see smaller wineries chasing the current style or grape varieties that happen to be popular right now. Leave that to the big guys. For the rest of us, just let us find our niche and do everything we can to keep the customers who find us happy.
And the best tool for that? Education.