subscribe: Posts | Comments      Facebook      Email Steve

The struggle of small wineries

6 comments

 

This is a sad story, told by the Vancouver Sun, about a small British Columbia winery’s legitimate fear that it may get squeezed out of the market. It’s the same old story: Getting harder and harder to compete with the big wineries in shelf space, distribution and price.

When I read a tale like this, my heart goes out to the proprietors. It’s never been easy to sell wine (in either Canada or the U.S.), but it’s getting more difficult. I can’t imagine how emotionally upsetting it must be to put your heart and mind into building a small family winery, then find yourself in danger of losing everything, through no fault of your own.

There are a couple ways small wineries can fight back. One is, obviously, to focus on direct sales. Everybody I know is doing that, but it’s an uphill battle. DTC is trickier than it sounds. You can’t just build a website, start tweeting and Facebooking, and expect customers to flock to your door. It takes years of continuous effort, and even then, there are no guarantees. Of course, if you’re located on a busy road in a popular wine region, you can sell a lot of wine out the door. But not everyone is, especially in a place like British Columbia.

Nor is getting shelf space any easier, particularly in smaller cities and towns and more rural parts of the country. I suppose there’s some motive for a store to sell the local wines, but there’s probably more profit for them to sell distributor’s wines from large wine companies. Here in California wine country, I know that local markets do try to stock the local stuff. But the fact is that small family wineries generally have to charge more for their wine than a big wine company.

Here’s a shocking statement from the Vancouver Sun article: it costs [small wineries] somewhere between $10 and $12 to produce a bottle of wine. If the price point drops below $17, a lot of them are going to be squeezed out of business.” It’s not clear to me if that “below $17” price point is wholesale or retail, but either way, those little wineries up in B.C. seem like they’re facing almost insurmountable odds against them.

In California, small wineries can get away with charging a higher price than they can in British Columbia, but even so they face a dilemma: Do they go up against the popular premium-priced wines from big wine companies (which is virtually impossible, and would probably mean they’d have to sacrifice quality)? Or do they produce a quality wine that costs more than a comparable wine from a big company? There will always be consumers that prefer to buy a wine from a smaller winery, even if it’s more expensive than they want to pay for, simply because it’s a small winery.

But the majority of American wine drinkers are looking for something affordable, and that’s exactly where the big wineries have the upper hand. With their economies of scale and ability to sink their profits into better farming and technology, the big wineries seem destined to grab more and more of the profits.

The only way out—and fortunately, it’s not a complete fantasy—is this current “artisanal” or “craft” movement we see that happened first in beer, then spread to spirits and, finally, wine. It’s wonderful that consumers, mainly younger ones, are committing themselves to products they sense are authentically made by smaller producers. This is not entirely a guarantee of quality, of course, but there is a sense in which small producers understand that the only way for them to compete with the majors is to make wines so good that consumers will happily pay a premium price for them. Of course, there’s an equivalent challenge for big wineries: they, too, have to be artisanal, or at least present the image of homegrown.


When Mohammed won’t come down from the mountain

8 comments

 

So I called up this winery the other day. It’s not too far away from Oakland. I’m putting together another tasting and asked if I could buy a bottle of their Cabernet Sauvignon and have it shipped to me. The guy—the owner-proprietor, I think—said no. He said it’s not worth his while to “drive down the mountain” to send a single bottle. If I wanted to buy a case, he explained, that would be a different story.

I thanked him and told him I wasn’t looking for an entire case, so goodbye. No $ale. But the incident bothered me and so I put it up on Facebook and asked my friends, “What kind of a business model is that?”

Lots of comments, as usual. I suppose I think more about these marketing and sales issues since I’ve worked at Jackson Family Wines than I would have when I was at Wine Enthusiast. I thought the winemaker’s attitude was pretty dumb (not that he was rude about it; he wasn’t. In fact, he couldn’t have been nicer. He simply explained that he was way up in the middle of nowhere). The bottle price, by the way, was $27.

What did my Facebook friends say? You can read all the comments here. Most of them roundly criticized the guy. Jeff Stai, from Twisted Oak, wrote I’m way up in the mountains and I’ll sell you a bottle. wink emoticon.” He added Today’s one bottle sale is next month’s five case sale.” Bill Smart said the guy’s business model is “One that is not going to last for very long?” (Bill did put it in the form of a question.) Chris Sawyer said the business model is a “case study [in] how to inflict bad mojo on your brand.” Sean Piper said “If you ever buy a bottle of my wine I’ll personally hand deliver it to you.”

And yet, the guy had his defenders. Neil Monnens wrote, “More power to him…Imagine you are his friend or family and he leaves you to go down the mountain to sell one bottle of wine to someone…it’s not worth it. Good for him.” Victoria Amato Kennedy wondered “What was the profit margin on the one bottle after factoring in gas/shipping costs/time?” I understand that, but I would have paid whatever shipping cost the guy charged me. The fact of the matter is, he was too lazy to drive down the mountain. As Patrick Connelly wrote, “Bad customer service = increasing selling difficulty.”

If I had a little family winery (which this was) I’d drive down the mountain! How hard can it be? It’s summertime, no rain, easy-breezy. Besides, even if it’s a 30-minute drive to the UPS Store, aren’t there other things the guy can do while he’s in town—buy groceries or supplies, call on an account, have a nice meal, see a friend? I’m sure that people who live up in the mountains always have lists of stuff to do when they’re in town.

As I’m constantly reminding people nowadays, you do what it takes to sell your wine. Establishing customer relationships is one of those things. Although I didn’t identify myself to the guy, how did he know I wasn’t buying the wine for a Parker tasting? I could have been some rich Silicon Valley venture capitalist looking for a house Cabernet. You never know. Sending somebody a bottle of wine can sometimes change your life in unexpected, great ways. But first, you have to be willing to come down from the mountain.


Thoughts on those sommelier lunches

1 comment

 

Today I am speaker, or host, at a buyer’s lunch for Jackson Family Wines. The venue is Farmshop, a restaurant in the tony Marin County town of Larkspur. I’ve never eaten there, but if you’re a wine-and-food geek in the Bay Area, you’ve certainly heard of it. Farmshop earned a coveted spot on the 2015 Top 100 restaurant list compiled annually by the San Francisco Chronicle’s restaurant critic, Michael Bauer. Our lunch menu was specially created by Chef Jason Purcell to pair with seven JFW wines. Our guests—22 and counting—are important wine buyers in the Bay Area.

But that’s not what I want to talk about. Instead, I want to expand the conversation to the topic of these buyer lunches and dinners. These are important ways for wineries to connect with people who might buy their wines, and not just any people: high-end on- and off-premise accounts that will showcase the winery’s wines the way they hope to be be portrayed.

Being present on the shelf of a good wine shop and, even more, on the wine list of a top restaurant is more vital than ever. The Holy Grail for wineries, of course, is direct-to-consumer, but that’s a long, hard road, and the thinking among the smart set is that being on a wine list represents a shortcut, or perhaps stimulant is a better word, to DTC. I’m not sure exactly if that’s true, the assumption, I suppose, being that if a customer buys your off the wine list and falls in love with you, he’ll seek you out in the future by joining your wine club or ordering your wine from your website. That is hopeful, but not proven. But if your production is small enough—and many of the wines I’ll be showing tomorrow are–you can afford to forgo DTC if enough retail accounts buy you.

Wineries have different personnel they can choose to represent them at such venues, which combine entertainment and serious eating with the educational analyses of the wines. Obviously, there’s the winery owner and/or winemaker, who often but not always is the same person. This is a winery’s best bet for putting forth a personality who can talk about the wines being presented, as well as using herself as a selling point; having a “face of the winery” is very important for branding, although not all winemakers and/or owners like being put in that position, and some refuse to do it. But it’s necessary these days, and not a bad place to be, since your audience arrives excited and expecting to like you. All you have to do is live up to their expectations. And who doesn’t like to be liked?

The winemaker or owner isn’t always available, of course. So who else does the winery send to represent them? Well, it’s often someone from sales, marketing or P.R. who is affiliated with the winery in some way, and can speak credibly about the wines. You need a credible presence, because buyers don’t want to feel jerked around by someone who doesn’t have credibility and is only trying to sell stuff–timeshares or Tupperware or whatever.

The hope on every winery’s part, at every trade or consumer event, is to have someone of unimpeachable credibility represent them. This isn’t exactly a new development—winetasting events at restaurants are as old as the hills. But it’s become more polished in recent years, especially with the advent of the “new sommeliers,” people with advanced knowledge of, not only wine, but culinary affairs. They don’t want to go to a lunch just anywhere, and indeed, if the restaurant doesn’t spark their interest, they’ll pass on by the event. Somms have become more pampered than they were in the past—not passing judgment on that, just saying—and so it takes more than it used to to coax them out and make them happy.


What wineries need for the market

14 comments

 

A recent article in Wines & Vines about the Master of Wine Bob Paulinski, who now works for BevMo, was on the topic of “Making Your Wine Brand Stand Out.”

It caught my eye because, like most articles on the same topic, it asks a pertinent question—one that all wineries are asking—without providing any definitive answers. Not that that’s Paulinski’s fault, since answers are few and far between.

Yes, a wine brand “needs to be compelling.” But how? Everybody wants to be compelling these days—to have a great story that turns people on, hopefully enough to buy the wine. Paulinski suggests there are at least three ways to accomplish this.

  1. “The wine must…have some legacy.” By “legacy” he means, I think, that it’s well known to the population, and that people have some sort of understanding, no matter how rudimentary, of the winery’s place in history. Paulinski mentions Kendall-Jackson Vintner’s Reserve Chardonnay in this regard. He is right to say that it is a legacy wine; that is a huge factor in creating loyal customers. The same might be said of, say, Jordan Cabernet Sauvignon, Sonoma-Cutrer Chardonnay, or any of the wines that routinely make Wine & Spirits’ top wines in its annual restaurant poll.

These all are “legacy wines” that are known, liked and trusted by consumers, which is why all those F&B managers put them on the wine list. But obviously, it’s awfully hard to become a “legacy winery,” so there have got to be alternative ways of becoming “compelling.”

  1. Another way, according to Paulinski, is to have a “unique quality.” That is, the winery or wine should be somehow different from all other wineries or wines. Now, it’s hard to be “unique” if you’re making a varietal wine that 3,000 other California wineries are making. So what else makes a winery “unique”? The owners or winemaker can be unique in some fashion, but let’s face it, unless you’re Boz Scaggs or Drew Barrymore or someone like that, to most consumers you’re just another owner or winemaker. Are there other ways of being “unique”? Yes. Just yesterday, I was talking with a successful documentary filmmaker, and I asked him if he could make a good film about anyone at all. “No,” he said. “Some people are more interesting than others.” I’m not sure I agree; I think a good writer can make anybody’s story compelling. But first, the winery has to hire a good filmmaker or storyteller. Stories don’t tell themselves, they’re told.
  1. This ties into Paulinski’s third way to be “compelling,” which is to “be highly targeted.” What does that mean? It means that the winery has identified precisely the audience it wishes to sell to, and then crafts its message to that audience. As an example, Paulinski mentions “Reckless Love,” from a winery named Rebel Coast. Check out their website.

It’s pretty clear whom they’re targeting: with their “nubile models in bikinis” (Paulinski’s phrase), they’re after younger consumers, and a specific type of younger consumer, at that. (I don’t have to characterize the type. You can figure it out as well as I can. Burp.)

That’s fine and good, but the problem of being highly targeted like that is, (a) you’re eliminating millions of potential customers, if not actually turning them off (I wonder how women feel about those “nubile models”), and (b) the minute someone comes along with a more compelling and nouveau message, all those fickle consumers will shop elsewhere. So how do you manage to be unique and targeted while maintaining customer loyalty so that you, too, can become a legacy winery one of these years?

Well, these are precisely the issues so many wineries are grappling with these days. I think I have some insights that may be helpful to some wineries, but, as Paulinski correctly observes, “the wine market is not homogenous [sic]; what works for some won’t work for others.” True dat. Wineries need someone who understand their specific needs, not someone who will slap on a generic template that applies to all, and therefore none.


How to get publicity for your winery. Or not.

9 comments

 

Old friend Alan Goldfarb asks some pertinent questions in this piece that was published the other day in an online trade publication.

The quandary he poses for wineries: “With wine writers dropping off the face of the earth…to whom does a winery publicist turn to get PR/accolades/reviews when the writer pool is evaporating?”

As evidence of that evaporation, Alan cites several longtime wine columnists whose publishers have taken their columns away or drastically reduced their word count. He might have added the San Francisco Chronicle, from which wine writer Jon Bonné recently departed (he’s supposed to retain some connection to the paper and/or its website, but I haven’t seen anything yet).

Alan makes another compelling point: With the passing of print writers, the number of “new media” writers, such as bloggers, online radio hosts and videographers, has swelled. But—and here’s the rub—of the hundreds and hundreds of online sources, there are [only] about 20 (20!) who are worth yours and your client’s time…”.

That’s really sad, and frightening, too. Wineries need writers to tell their stories, and remind the world that they exist. But with fewer and fewer reputable channels all the time, as Alan asks, “To whom does a winery publicist turn?”

Indeed. Even if you take Alan’s “20” online writers who are “worth yours and your client’s time,” I doubt if any of them has the reach and clout that, say, Bill St. John did—he’s the wine columnist for the Chicago Tribune who, according to Alan, had his column “cut” last week. The Chicago Tribune’s average weekday circulation is 453,500, making it one of the biggest newspapers in the Midwest, and central to one of the nation’s most important wine markets. Do you think any of Alan’s 20 bloggers has that kind of readership?

Near the end of his article, Alan does cite a couple bloggers and other online sources whom he recommends. But it’s a pretty short list; his conclusion, as far as sending samples out, is for wineries to “proceed at your own peril.”

That would be my advice, too. The Internet has shaken everything up, and none more so than to hasten the end of traditional print reporting and replace it with “citizen journalism.” I liked traditional print journalism: I still read newspapers, and I trust them, believe it or not (I mean the news part, not the editorial pages of propagandists like the Wall Street Journal). In my current job, and even beyond it, I’m routinely reminded of the scurry to get publicity for your brand—any publicity, anywhere, so long as it’s generally positive. Winery executives have given up on trying to determine, with any precision, the return-on-investment of publicity. They wish they could, of course, but in the meantime, they’re happy with anything they can get. And yet, they no longer know how to get exposure, or even whom to approach for it.

You’d think that this “revoltin’ development” (T.V. fans from the 1950s, do you know who said that?) would mean the end of traditional P.R., which seems stymied at every turn. But P.R. is even more important than ever. Publicists are in demand, especially if they can demonstrate a grasp of new media. Like soothsayers of old, or necromancers who could divine messages from the gods through the intestines of a sheep, publicists today appeal to the utter confusion of winery proprietors, who have neither the time nor the personal inclination to master these arcane fields. In that sense, if you asked me how a winery should find and hire a reputable public relations expert to turn to for advice, my answer would be the same as Alan Goldfarb’s concerning bloggers: “Proceed at your own peril.”

BREAKING NEWS

Sunset Magazine moving to Oakland!

We welcome this great magazine! Thank you Sunset for believing in Oakland!


Winemaker’s choice: When marketing and the perception of exclusivity collide

52 comments

 

I had coffee yesterday with a winemaker from Napa Valley who works for a high-end winery: triple-digit Cabernet and all that. We were taking about marketing, when she said something about Napa wineries that intrigued me enough to write it down: “Do you want to sell wine,” she asked, “or do you want to be ultra-exclusive?”

Great question, especially in the context of Napa Valley Cabernet. She was referring to all these Cabs that cost an arm and a leg. In our conversation, we mentioned specific wineries, which I will not. What she meant, of course, is that these wineries seem to have a choice: they can get out there and market (in all its multi-faceted dimensions), or they can rest on their laurels and assume that their wines will be in demand for a long time to come.

Wineries that choose the latter—on the assumption that their cult status, high critical scores and in-demand waiting lists will always provide them with more customers than they can supply—somehow seem to think that marketing is a dirty word. There’s something grubby about it, they feel. Only pedestrian little wineries have to actually sell themselves; a great, grand winery does not. Does the Domaine de la Romanée-Conti have to get out there and hustle? Of course not, or so the argument goes.

Well, I don’t know if Romanée-Conti has to market or not, but I would think so. Wilson-Daniels, who distributes them in the U.S., used to invite me up to their St. Helena chateau once a year, along with a few other writers and critics, to taste through the entire range of seven new DRC releases of the vintage (La Tache, Romanée-St-Vivant, Romanée-Conti, Richebourg, Echézeaux, Grands-Echézeaux and Montrachet). It was terrific fun, but I think you’d have to view that as marketing, although I don’t know if Wilson-Daniels does it anymore. Anyhow, the lesson for me was “Even the Domaine de la Romanée-Conti has to market.”

And yet, quite a few Napa Cabernet houses don’t seem to think that they do. The apparently feel that what has worked for them in the past will work for them into the future. Marketing would dull the perception of exclusivity that they currently benefit from, and their fear is that, once a super-expensive wine is no longer perceived as exclusive, it may no longer be in demand from wealthy customers who don’t want to drink what everyone else is.

The thing to consider here is inventory. Now, you and I will never know how many unsold cases of (fill-in-the-blank winery) are piling up in some temperature-controlled warehouse. It may very well be that the winery everybody thinks is selling out every vintage actually has back vintages piled up to the ceiling. (This would be one of the winery’s closest-held secrets.) But I think this is the case far more than you’d think, and certainly, one hears rumors to that effect. Of course, a rumor is just that, but like they say, where there’s smoke, there’s fire.

When there were only a handful of Napa Valley Cabs that cost $100 or more, this was not a problem. But nowadays there are scores of them. I’ve long believed that it’s impossible for all of them to be selling everything, every year. There just aren’t enough people out there to buy it all up, even when you roll in China. Thing is, many of these proprietors are so wealthy that they’re not really concerned about selling everything. They can afford to sit on inventory for a long time, and besides, the wine may actually be getting more valuable as it ages. I knew someone who once bought out the entire production of a well-known Napa Valley Reserve Cabernet for an entire vintage, and then warehoused for resale it for ten years. They made a lot of money on that one.

Lest you think I’m suggesting that fostering the perception of exclusivity is somehow tainted or wrong, rest assured I am not. Rarity and desirability are integral to marketing anything, be it artwork, writing pens or wines. More than two thousand years ago, certain Roman and Greek vintners figured out how to do it (where do you think the concept of “the Comet vintage” came from?). The Bordelais proved masterful at it four hundred and more years ago, and they’re still pretty good at it. All that the Napans have done is to learn at the feet of the masters.

Bordeaux is Bordeaux; it probably will never go out of demand, even though that demand waxes and wanes throughout the centuries. But one cannot say the same of Napa Valley Cabernet Sauvignon, or so it seems to me. It has certainly solidified its hold on the imagination of wine lovers, but Napa does suffer from certain potential problems: it’s under attack from the low-alcohol crowd, prices are ridiculous, competition from elsewhere (including Bordeaux) is increasing, and younger consumers don’t seem to have the infatuation with Napa that their parents had. These things aren’t deal-killers, quite yet. But any one of them could prove hurtful to Napa, and a combination of them all might be the straw that breaks the camel’s back.


« Previous Entries

Recent Comments

Recent Posts

Categories

Archives