Marketing wine is not for the faint-hearted, or stupid
As a guy with more than a little interest in the marketing side of the wine biz, I’ve always been fascinated by how an unknown winery becomes famous–how a famous winery stays famous–and how, and whether, a winery that’s lost its glitter can regain it.
The best way for an unknown winery to get famous is for wildfire to strike. That’s the metaphor Heidi Barrett once used in explaining to me Screaming Eagle’s vault to stardom. It just kind of happened, a combination of word of mouth, good reviews and mysterious luck. That’s very rare, of course, so lately I’ve seen wineries using all sorts of tricks to become known: donating a portion to charity, appealing to mommies, unusual packaging, hiring celebrity consultants, ownership by some washed up athlete or rock star, etc. etc. blah blah. (Not saying that a winery that donates to charity is necessarily doing so to get famous. But it can’t hurt.) However, no matter what the approach, it’s very hard to go from nowhere to the top. I’d say one in a thousand new brands can do it.
How a famous winery stays famous may be the easiest question to answer. It’s simple: continue to out-do yourself in quality. No tricks, no shortcuts, no smoke and mirrors. Shafer and Williams Selyem (to name a few) stay on top year after year, because they take nothing for granted, and spare no expense. On the other hand, a brand like Gary Farrell (sadly) seems to be content to drift along on past laurels. It may work for a while, but not forever. Only long enough for people to catch on.
Which brings us to the final challenge: How can a winery that’s lost its glitter ever regain it? Is it even possible? Here, we venture into the realm of metaphysics. The short answer is that it’s next to impossible. I can think of very few brands that were up, then down, then went back up again. Davis Bynum may be trying to resurrect itself, in its Tom Klein era, after a long period of obscurity following its glory days. We’ll see how Bill Foley’s properties–Chalk Hill, Sebastiani, Firestone–fare, and the answer will provide insight into Foley’s real motive: whether he’s interested in boosting quality, or just stringing these brands along while he can. (As far as I’m concerned, the jury’s still out.) There are a number of interesting properties that were never famous to begin with, but were well-regarded, and who haven’t exactly slipped, but just never really shined. Turnbull Wine Cellars is one: they’ve been in a twlight zone for years, neither culty nor roadkill. I keep waiting for them to make a move.
I was thinking about all this yesterday due to an article, “Sometimes a brand isn’t worth saving. Here’s how to tell,” that appeared in the interesting daily business blog, Fast Company. Although it’s not about wine companies, but more about consumer goods brands like Dove, K-Y Jelly and Sierra Mist, its conclusions are applicable to wineries as well. The author asks five questions whose answers provide hints to a company’s viability.
1. Can its value proposition be redefined? For a winery, this means making the product relevant to the greatest number of people possible. If a winery already is doing this, all it has to do is remain relevant (cf. my remark above about continuing to out-do quality.) Relevance in wine these days means either affordability or a high price-quality ratio (e.g., Williams Selyem Pinot Noirs are not particularly affordable, but they give huge quality and pleasure for the price, so people are willing to pay it). But unfortunately, from where I sit, most wineries seem unable to define their value proposition. They don’t know what they stand for. There’s a lot of whistling past the graveyard.
2. Is the category growing, or does it demonstrate growth potential? The author used the example of K-Y Jelly, which started as a surgical lubricant, then hit the big time when manufacturer Johnson & Johnson realized people were using it for a sexual lubricant. Sex being a “growing category,” J&J hitched their wagon to an ascending star. What wine categories are growing? There’s that silly Moscato thing, but unless you were already onto it, it’s too late now. What’s growing is what’s always grown: Chardonnay and Cabernet Sauvignon (in California). Only they have to be affordable. That’s still where the action is. Pinot Noir is growing, but there’s no such thing as affordable, good Pinot Noir–a contradiction in terms. I wouldn’t enter this Pinot Noir market unless I knew I could get 100 points from Heimoff.
3. Is it [the brand] on trend? Hummer is so off trend, it’s not even funny. So is fur, although it’s trying to make a comeback. Luxury brands in general seem off trend–not in tune with today’s penchant for value and modesty. “Natural” is on trend, but I don’t think “natural” is enough to sell a wine. There may be enough consumers into “natural” for Sierra Mist, or some natural form of cosmetic, to make it, but there aren’t enough wine consumers who will buy on a “natural” basis alone. What’s “trendy” in wine is wine itself: drinking it, serving it at dinner parties. So overall, wine is a good business to get into. But the winery needs a solid plan.
4. Is its revenue sizable? This means that a brand that’s doing well should attempt to do even better, using its revenues as leverage. Gallo does this better than anyone. They have the smartest product development team in the business; if there’s an unmet niche out there, they’ll fill it–and if someone beats them to it, they’ll do it better, for less money. Of course, regular wineries can’t do that. But what a regular winery can do is make their product so vital to the consumer that the consumer believes he or she can’t do without it. Two Buck Chuck did that. It’s doable and replicable for other wineries–I don’t mean retailing a bottle for $2, but finding something special and being the first one out there to do it.
5. Is it [the product] strategically useful for developing the company’s competencies? This is a lot harder for a wine company to accomplish than for, say, Procter & Gamble, which moved into health and beauty products based on Oil of Olay’s succcess. But what a winery can do is identify its most successful product, then figure out a way to spin something else off from it. Robert Mondavi famously did this with Mondavi Woodbridge. Before you say that was a failure, let me remind you that Woodbridge was not a failure: the collapse of RMW was due to going public, which in turn drove the Board to make many other mistakes, chiefly an unsupportable expansion. Woodbridge was actually a success. I don’t think it caused product confusion with the parent winery. So piggybacking on a proven commodity can be a good tactic, provided it’s done right.
However, as the author says, “As it turns out, not all brands are worth reinventing.” There are an awful lot of wine brands in California alone that don’t seem to have what it takes to stand the test of time. I wish them well–but I believe in five years we’ll see dozens of brands, extant today, that will be non-existing in the year 2016, and deserve to be.
Interesting that you started with Screaming Eagle, but then went on to say that in order to stay famous, you should “continue to out-do yourself in quality. No tricks, no shortcuts, no smoke and mirrors”
Which is NOT how Screaming Eagle has stayed famous. It has used the rick of pricing to keep itself legendary, the smoke and mirrors of exclusivity, of closing off its list like Hermes with a handbag to make it even more desirable.
Are they continuing to out-do themselves in quality? WHO KNOWS??
Steve, i know many cases of outstanding wineries that make great wines year in year out, customers love their wines, the reviews are awesome, but they don’t have that sticking power. i buy the wine, i love it, the price is decent but the re-purchase rate is just heart breaking.
Different markets? Different culture? No one seems to know why this happens where i currently live.
Great article, Steve. As someone who teaches wine marketing all over the world, I would say that very few wineries ask themselves these questions. Instead, they simply make good wine (don’t most wineries, these days?) and hope for lightning to strike.
Most wineries don’t know what category they are in, don’t know how to become the leader in that category, ignore the trends in the wine business with great enthusiasm, and define their company not in terms of how their product appeals to consumers, but by how their geology affects the microclimate.
Houston? Way too many problems here !
Wineries are not so different from other industries which, when they reach a psycological and/or fiscal comfort level, stop doing what works.
Steve,
That’s a great list for us wineries to keep in mind. For every winery that I know of that went out of business or is struggling, I can point to one or more of those concepts. Now how writing me about a blueprint for striking fire?
Under the heading “Can its value proposition be [re]defined” I would add this: That the quality of a winery’s relationships is just as important as the quality of its wine.
Relationship marketing, one-to-one marketing, database marketing — call it what you want — this is where a winery can separate itself from the pack, almost in spite of trends, reviews and the economy.
Talk to the club manager at most competent wineries and they will tell you about their most rabid fans — the folks who spend thousands with them year in and year out. This type of marketing is under the radar of all but those who are in the club, so it is hard to judge at a distance. But it, too, is not for the faint-hearted or stupid. It requires dedication to the discipline of direct marketing and fanatical delivery of customer service.
Wine is an experience business. Wine marketing should be as well.
Fred sez: “That the quality of a winery’s relationships is just as important as the quality of its wine.”
Couldn’t agree more this issue, Fred. I think Steve addressed that very issue some months ago in one of his blog entries. It never ceases to amaze me how many wineries are clueless on this very point.
Last year, I tried a new winery’s tableau of wines. Liked them a lot and sent him my TN’s, even mentioning I knew one of his relatives from another context. Not one word in response…not even a thank you. Met him a month later at Family Winemakers tasting and jogged his memory. “Ohhhh..yeah”
was his only response. Didn’t bother to send in my order for the three cases I had requests for.
Stupid.
Tom
Gee Steve, when did you join the Club For Growth?
The goals and metrics that work for a Gallo don’t work for small wineries. Any small winery that is trying to build its brand thinking it is competing with one of the big, established players is certainly not faint of heart, but is definitely stupid.
There are ways to define (or redefine) a value proposition that have nothing to do with wine QPR. The emphasis on growth is so 20th-century – we need to redefine success in light of a steady-state world. Innovative small businesses define new trends rather than following what the big guys are doing. Once the growth imperative is removed, the idea that revenues have to be utilized to make more revenues goes away. Likewise for the idea of spinning off new products based on core competencies.
I may be engaging in optimistic idealism here, but I believe that a farmer can define a brand by providing quality products, personal relationships and excellent service to just a few clients without ever increasing the acreage farmed. That farmer is not competing with Sysco, much less Cargill or ADM. Same with a small wine brand.
Steve,
Q: How can a winery that’s lost its glitter ever regain it?
Let’s start with… When a writer wants to help you, and we’ve all been there as writers, if you don’t get back to him or her, then you’ve got a lot to learn about marketing, I don’t care who you are.
While wine is just another commodity at the end of the day, name another industry where the competition involves 10,000 other brands from around the world. I don’t believe the meek will inherit the earth on this one, and if you’ve lost your luster, you’d darn well better get it back. As my Jose likes to quote: If you’re not busy being born, you’re busy dying.
Only solid marketing plans will succeed. Sitting in your barn and making 1,000 cases doesn’t mean, “They will come.” Something else has to happen on the marketing end.
And nobody can say, like someone else helping you can, “This wine is so fabulous because (fill in the blank). Didn’t winemaker XYZ do a great job of paying attention? and say how.
Steve, you’re so right on this one.
Can a winery that has lost its glitter ever regain it?
Yes, but most of the time it isn’t worth it. Usually, it’s best to disassociate yourself from the tarnished wine and make your comeback with a completely new brand.
You can bring back the quality which will cost you and you can convince the wine writer, sommelier, and retailer that the wine shines again. (That will cost even more.) You can even convince the consumer that the wine’s quality is back. But still none of these enlighted customers will buy it, because half the story is a negative and there are plenty of brands where the whole story is a positive.
The question becomes, “Do I really want to put that wine with the tarnished reputation on my store shelf, winelist, or dinner table?. My customer or my guests might not know about their big quality comeback. They might think I sell or serve crappy wines. Do I really want to bother trying to enlighten them? Probably, not.
Great post Steve,
After reading it I now know why my blood pressure is rising and my hair is graying.
Marketing requires continuous focus on the details. And excellent communication of marketing strategy with all stakeholders in the organization. With appropriate level of detail depending on job description. That fosters consistent brand messaging form the CEO to the vineyard worker. And ownership for the success of the brand from top to bottom. Think zappos.
One (self-serving) nitpick. You say, “…there’s no such thing as affordable, good Pinot Noir–a contradiction in terms.”
I have to disagree. There is good, affordable Pinot Noir out there.
Maybe not too many of them, but it is out there. (See point five.)
Cheers,
Philip Woodrow
Hahn Winery
Steve,
Defining who you are as a producer is important. Producing a quality product. Good price/value. Having packaging appeal is good……Marketing….How about hiring a good salesperson…Knock on doors, taste, tell the story, get people excited about the product. Not just marketing, but selling….Can’t afford a sales manager….Hire a broker. Pay when delivered. Every business needs sales people…..Gallo has salespeople at all levels. Sales people are your ambassadors to stability and growth.
It’s possible to regain lost glitter with consumers. It’s much more difficult (perhaps impossible) with the wine trade. Many key decision makers in the wine trade have been around for a long while, or have worked with other who’ve been around for a long while. Strong impressions from the past tend to stick.
I earned an MBA while only having a casual interest in wine, that is, if it was red, I liked it. A few years later, after moving into the wine bus. as a sales rep., it did occur to me: lots of wineries are awful at marketing. The back label is such a great place to stamp your self with some intelligent prose, yet most are awful. So, I’m with Paul Wagner (not a coincidence, eh Paul?). As for high scores, the trash bin of labels that have come and gone, is quite full of high score brands that do the shooting star thing, bright today, gone tomorrow.
K-Y jelly? Wine? A connection? Hmmmm.
So what do you think Coppola’s chances are of reviving Inglenook? That would be the mother of all brand revivals — from one of the best in the 50s, to one of the cheapest, lowliest brands now…back to what? a $150 bottle again?
I echo Paul Wagner’s sentiment! I took his Wine Marketing and Sales class at Napa Valley College 11 years ago, and with the help of half of my classmates, we came out with a business plan for Ceja Vineyards before it was launched in 2001!
Of all alcoholic beverages, wine is the most site specific – it has to reflect its birthplace, the vineyard – not the manipulation in the cellar!
Wine brands thrive and survive when the founders are experts and passionate about the wine industry! Wine must always reflect where the grapes are grown!