It's a commonly accepted tenet in business that times of change spur innovation. Covid was no exception. Its restrictions on travel and limitations on gatherings forced us to rethink how we share Tablas Creek with our customers and how we work together as a team. Now, eighteen months later, though it's not like Covid is entirely in the rear-view mirror, I feel like we've settled into another equilibrium that includes a renewed flow of visitors to our tasting room. Larger events are restarting, albeit often at reduced capacity and with new restrictions to limit the risks to their attendees. And wineries, for all our fears as we entered the pandemic, have thrived. One of the revelations from the preliminary results released from the annual Silicon Valley Bank survey of Wine Industry Conditions was that nearly a third of wineries surveyed are projecting their best year ever, financially, in 2021:
I've spent a lot of time thinking in recent days about how much we learned over the last eighteen months. I thought I'd share my principal take-home lessons here.
- Safety and a great customer experience aren't mutually exclusive. When we reopened our tasting room in May of 2020, we chose to open outside-only. In order to maintain distancing, we gave each group their own table, for a full two hours. To keep the number of times we had to be in the customers' space modest, we moved to serving wines in flights of three. We restricted the maximum group size to six. To make it reasonable given the larger physical space, we reduced the maximum number of tables that any one of our tasting room hosts had to cover to three at a time. All of these changes resulted in a more relaxed experience, with better time to connect to the person pouring the wines, and the opportunity to compare and contrast the wines in each flight. It's probably unsurprising that we saw our average sale per customer and the percentage of customers who signed up for the wine club rise 30%-50%. At first, I attributed this to goodwill from guests grateful for a safe, appealing experience in a time when so many of those were unavailable. But even as things have reopened, that increase has held up. I just think that the experience we're offering now is a superior one to the tasting experience we offered before Covid. That's why when we reopened our indoor tasting room, we tried to apply these lessons to create a similarly appealing customer experience.
- A great tasting experience means controlling your flow of customers. Equally important, I think, to the changes we made once customers got here was the implementation of reservations. At the outset, we didn't have a choice. We had twelve tables. If we hadn't required reservations, we would have had lines of dozens of people on weekends. We couldn't have kept people distanced. We couldn't have kept people cool while they were waiting. It would have been miserable, and frustrating, and unsafe. But we also realized that knowing how many people would be coming allowed us to always be appropriately staffed. It meant that our guests never had to wait, and that their tastings were never interrupted by us making room for another group that would then be at a different stage of the tasting, interrupting the logical flow of information. And we found that people redistributed themselves more evenly across more times and more days, instead of 40% of our weekly traffic arriving between 1pm and 4pm on Saturdays, as often happened pre-Covid. We learned that people who see that Saturday reservations are full will often make reservations on Friday, or Sunday, or earlier in the day. This is why even when we added capacity on our patios and reopened indoors, we kept tasting by appointment, with the option of accepting walk-in customers if we have space and staff to take care of them. That seems to me to be the best of both worlds.
- It's powerful to bring your marketing to where the people are. Before Covid, one thing that most winery marketing had in common was that it required customers to come to where the winery or winery representative was physically located. Whether that was a visit to the tasting room, going to a wine dinner, or stopping by a table at a retail tasting or a festival where a winery was pouring, we required customers to come to us. By contrast, most of the things we started doing during the first shutdown, from virtual tastings to live broadcasts to on-demand video, had in common that they could be accessed and participated in equally independent of location. Think how powerful (and how much more scalable) options like this are. Pre-Covid, 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 have done to former wine club members, we regularly saw 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. And those tools, from Zoom to Instagram and Facebook Live, are much more robust now than they were before the pandemic.
- Technology is often a great alternative to travel. Over recent weeks, I've been enjoying getting back out in the California market, visiting restaurants and wine shops and spending in-person time with the distributor reps and Vineyard Brands managers who represent us in the wholesale marketplace. In two weeks I'll host my first Covid-era wine dinner, at Mama Shelter in Hollywood. That should be great fun. Those sorts of experiences are hard to replicate using virtual tools. Other sorts of experiences, however, are at least as effective over Zoom or its equivalent. If I never have to go to another in-person board meeting, that would be fine with me. Spending several hours driving to and from a central location for a meeting of an hour or two is inefficient to start with. Add to that the restrictions that this places on who can attend and from where, and the challenges of integrating people who can't make it via polycom phone... no thanks. Give me a Zoom meeting I can do from my office any day. Similarly, those distributor sales meeting presentations, where you have 15 minutes in front of an often-distracted sales force, and you're the 11th of 15 suppliers they're hearing from that day? And you have to travel to wherever they are to do this? Zoom is 95% of the experience at a tiny fraction of the cost, time, and carbon footprint of attending in person. For the companies and reps too, think of the efficiencies. Instead of having to coordinate 80 people's travel from all over the state, rent a hotel ballroom and arrange for AV, losing a full day of sales because of travel, and likely paying for hotels for the farthest-flung reps, a company can knock out the meeting in the time it takes to meet, then have the reps out in the market for the rest of the day. It's a win-win. What's more, identifying areas like this where there are viable alternatives to travel, particularly air travel, is going to have to be a priority as we all try to lower the carbon footprint of our business activities.
- Having multiple ways to experience an event pays off. Just because people can start traveling again doesn't mean that all your customers will be able to come to you on your schedule, or that you should discard the virtual and on-demand pieces you've added over the last year. Our VINsider pickup party is a good example. We have about 8,000 VINsider Wine Club members. Twice a year, for nearly two decades, we have closed our tasting room on a Sunday just after wine club shipments have been sent out and invited any club members to join us. Once there, they get to taste the new wines, see and hear about what we've been working on, and enjoy some unhurried time with our team. Those events are great, and have attracted some 400 people to most recent sessions. But... 400 people (typically more like 200 couples) represents less than 3% of our members. And that was pre-Covid! During Covid, when we couldn't host gatherings, we pivoted to hosting a virtual tasting, where members could join me, Neil, and Chef Jeff Scott live on Facebook and YouTube to learn about the wines and our ongoing projects. The last two shipments, we worked with Master the World to give people the option of ordering tasting kits of 187ml bottles to accompany these tastings. And there's nothing about this that conflicts with an in-person event. This fall, when we resumed hosting an in-person pickup party, we still got about 500 people to join us live for our virtual tasting. Because the discussion gets archived, people who couldn't make it can still participate; the archives have received another 1,000 or so views. Finally, for four weeks after shipments went out, we gave members the option of tasting the wines in their most recent shipment if they visited the tasting room. We had another several hundred members take advantage of that. So instead of touching 2-3% of our membership after a shipment, we were able to interact with more than 2000: 350 members in person plus 500 members live virtual plus 1000 members archived virtual plus 600 or so members who came to the tasting room in those four weeks. I don't think it's a coincidence that our wine club cancellation rates over the last 18 months have been the lowest in our history.
- It's a big risk relying on just one or two sales channels. The pandemic produced unprecedented changes in the types of outlets in which wine was sold. Restaurants closed around the country, and when they reopened were often restricted to outdoor service or limited capacity either by mandate or by staffing challenges. Tasting rooms had to close for a stretch too. Many larger retailers saw increases in business, while smaller retailers often struggled unless they had built up a robust mailing list and e-commerce capability. And wineries had the challenge and the opportunity of an unprecedented surge in requests for shipped orders. By the end of 2020, it was clear that two sorts of wineries really struggled: those who were relying on foot traffic but had never translated that traffic into an effective mailing list or wine club strategy, and those who didn't have a robust direct sales business but instead traditionally focused on sales to restaurants and independent retail. I'm guessing that most of the 10% of wineries in the "Most Difficult Year in Our History" and "One of the Most Challenging" categories in the chart at the beginning of this piece fell into one of those two camps. And we saw challenges too from losing so much restaurant business and having to close our tasting room for more than four months. I've long been a believer in having wine available in different channels, because I'm convinced that each plays a role in reaching different customers and increases our chance of developing new fans. And that diversity proved to be a huge driver in our success over the last year and a half. Though we're a small player, we already had limited relationships in a couple of larger retail chains like Whole Foods and Total Wine, and were able to shift some of the wine we'd otherwise have intended for restaurants to the grateful retail outlets that were seeing a surge in business last spring. Although our tasting room was closed, we were able to work with our wine club and mailing list to offer out these wines to our fans, and with the shipping house we've worked with to handle the increases in volume. And now that restaurants are back up and going, we're poised to have our best sales year ever this year.
- It's all about connecting. I am sure that over the last year, many more people have seen the inside of my office, my back yard, or my living room than ever before. There is an intimacy to these sorts of virtual meeting platforms that so many of us experienced for the first time during the pandemic. These tools help address one of the areas where winery marketing is often weakest: establishing meaningful connections between the winery and the customer. You might buy a wine off a shelf at a retailer, or a list at a restaurant, whose connection to the winemaker or winery proprietor is third-hand at best: the winery sells the wine to a distributor, its national sales manager tells the story to the distributor sales team, a sales rep shares the wine with the buyer for that restaurant and retailer, and only then does the customer see it. These live virtual tools cut out all the layers between the producer and the customer, allow for direct interactions in ways that would previously have been rare, and give the customer a chance to really get to know the people behind the wines they love. That's a dream scenario for a business. The fact that it took a pandemic for us to learn to use these tools is a source of some embarrassment to me. But much better late than never.
Last July, roughly three months into the pandemic, I took a crack at predicting which of the Covid-inspired changes to the wine business were likely to endure and which to fade away as businesses were allowed to reopen. Rereading that list, I feel pretty good about my predictions at the time. But what I don't think I could have predicted was the extent to which I'd feel like we were a better business as we emerge from this pandemic than we were entering it. From the Silicon Valley Bank survey, it doesn't seem like we're the only ones. I'm proud that we've been able to do this while keeping our team and our customers safe, taking care of the vineyard and the wines during two different (and as far as we can tell, outstanding) vintages, and continuing our commitment to be on the leading edge of responsible farming, resource use reduction, and farmworker equity.
It seems like one last thing I've learned is to expect that my desk will look like the below photo fairly often in the future. I can live with that.