REthink Wine Blog

There are now nearly sixty wineries participating in The Direct-to-Trade program and as the Channel Development team continues to move forward with our aggressive Direct-to-Trade marketing campaign, the projects are becoming more and more exciting. This spring, the Channel Dev team started with a product catalog featuring over twenty wineries and over fifty wines. The catalog was sent out to over 2,000 trade accounts and sparked incredible interest and many sales for our partner wineries. We plan to release these catalogs on a regular basis to continue to promote sales in the 12 states we are working in, so if you’re interested in featuring your winery to trade accounts please contact us to discuss featuring your Direct-to-Trade portfolio.

Our most recent project was a small in-house tasting that featured over 30 of the wines on the DTT platform. We invited respected members of the trade to join us and taste these wines in an effort to get professional feedback on the wines and create a trade tasting format for the Direct-to-Trade program. Among those who joined were Master Sommelier Chris Blanchard, writer Alan Goldfarb of Appellation America, Kimberly Charles of Charles Communications and the Society of Wine Educators and Cristin ‘Moxy’ Castro of Impressa Brand Builders. Some of the stars of the show were the Brooks 2006 “Janus” Pinot Noir from Willamette Valley and Eden Vale’s 2004 Malbec from the Rogue Valley in Oregon. On a 100 point scale adjusted for price Master Sommelier Chris Blanchard gave them a 95 and 92 respectively.
Stay tuned for more coming from the Channel Development team.

I recently had quite a serendipitous episode that drove home the idea that we must approach Direct-to-Consumer e-mail marketing much different than we approach Direct-to-Trade e-mail marketing. While eating at one of my favorite spots Cesar trying to choose a bottle of Albarino, our waiter saw me struggling with the menu. He approached our table and asked if he could help and soon started going into the generic, descriptive words that typify all Albarinos; crisp, citric, and somewhat high in acid… Being in the industry these descriptions weren’t very helpful and after explaining I had a bit of background he then started describing one of his favorites. He went into the details of the vineyard location, the soil at the site, age of the vines and even the wine maker, I was sold. The key is that that once we find our audience we have to modify our message appropriately.

We’ve nearly mastered the art of wine focused DTC marketing, crafting messages that paint beautiful pictures of family, hard work and the individual journeys that lead each of us to the Napa Valley (or whatever valley or peak you claim as home) where we could fulfill a lifelong passion of wine making. Now that we enter the realm of DTT e-mail marketing we must reassess our message as we’re speaking to a different audience. As Direct-to-Trade sales increase every month , one of the many tools used to sell wine through this channel has been e-mail campaigns. Some of the most successful campaigns focused on messaging that included:

*The value of the channel. Direct from the winery to you! Currently unavailable in your market. The exclusivity of your product in their market is one of the biggest selling points!

*These are wine savvy people who taste through piles of wine on a weekly basis; the black cherry and cocoa descriptions are useful but let’s get into the meat and potatoes of what makes your wine stand out from the rest.

*Who’s your Wine Maker?

*Where is your vineyard? What kind of sun exposure do you receive? Does it sit in a unique micro climate that lends itself well to your particular varietal?

To break it down even further, when marketing Direct-to-Trade, there are essentially two groups to focus on; on-premise and off-premise which denotes the location of which the wine is consumed namely restaurants or retailers. What information is pertinent to off premise accounts?

*Scores. Shelf talkers are an effective selling tools in wine shops and highlighting scores on shelf talkers help sell wine. If you doubt the validity of this, take a look at the holes on any shelf in any wine shop and 9 times out of 10 you’ll find a shelf talker.

*Quantity discounts. More applicable with off premise accounts as they are more apt to purchase quantity.

*Currently unavailable in your market!

And for on-premise accounts?

*The availability to purchase in quantities of six. Cellar space is precious in any restaurant.

*The cuisine at your target restaurant; a big, bold Napa Cab won’t fare well on a menu featuring summer salads.

*Currently unavailable in your market!

Thoughts?

The Wine 2.0 “Spring Fling” event, in case you hadn’t heard, was held this last Thursday at the Crushpad in San Francisco. The Crushpad, takes up the better part of of a city block in The Dogpatch neighborhood, just past AT&T park. The event started at seven, so some colleagues and I hailed a cab just before and made our way over. We spotted the entrance marked with Roshambo’s fifty foot wine wagon, check out the website to sneak a peak, it’s pretty impressive. Afraid of being a bit early, we found just the opposite, as it seems fashionably last was somewhere around six-thirty.

We walked in, grabbed our goblet, and started the second leg of the evening. They claimed to have over 40 wineries participating and I believe I tasted from at least 45, so lack of winery participation didn’t seem to be a problem. Soon all the faces from OWC and various wine related groups on Facebook seem to come to life. The 2.0 portion of the event included the who’s who of wine related sites such as Lloyd Benedict of American Winery and Mark Angelillo of snooth. It’s interesting to see that not only is the average age of wine consumers dropping, those that are bringing wine and technology together are the twenty-somethings that started their careers in tech and and saw the value it could add to the wine industry. Cheers to the folks who put the shindig together, I just need to clear the wallet out to make room for all the business cards I’ll collect at next years event.

The Federal Reserves rate-setting committee is meeting once again this week and is expected to lower its key interest rate to a projected 2.5%. The rate now stands at 3% and just six short months ago it was at 5.25%. All this is in response to a frail U.S. economy and the deteriorating condition of global financial markets.
The wine industry is not immune to economic woes and as this wave of uncertainty rolls upon us we all need to prepare for what lies ahead, and how do we do this? We look into the past, and industry trends seem to suggest one thing that we’re all going to be happy to hear; per-capita consumption of alcohol has a propensity to increase during economic recessions. Although this is not wine industry specific, as wine’s share of overall alcohol consumption increases it becomes more relevant. Wine industry specific trends include:

- Disposable income tends to be spent at home during economic downturns. This may mean that while restaurant wine sales may see a lag, off premise sales could increase, channel volume may see some dramatic changes.

- Trading down. While we may not see an overall decrease of wine consumption we may see sales of high price point wines decrease while the “value wines” may find sales spikes

Aside from tracking historical trends and planning accordingly now would be a good time to re-access your sales channels. We all know the economic benefits of selling Direct-to-Consumer, are you allocating proper resources to the Direct-to-Trade channel?

In my humble opinion, Syrah is the most under appreciated varietal, often capturing scores in the 90’s yet rarely creeping into the triple digits, breaking the bank. It was with a bottle of 2003 Alban Seymour’s Vineyard Syrah that I first understood the descriptor “Bacon Fat”; this inky bad boy could have been served with a side of eggs. It was nearly black in color and the mouth, it carried such weight, only the smallest of sips were manageable. The complexity was stunning and had us calling out such things as huckleberry, blackberry, licorice and leather.
A couple of Inertia scouts recently went up to Washington and found a few partners that are creating some stunning Syrah as well. While these don’t carry the weight or alcohol (the Alban Syrah was up in the high 15’s) they’re big wines with incredible complexity. Look out for Waters Winery in Colombia Valley.

The way we shop has changed significantly during the course of commerce as we know it. The first Sears Roebuck catalog was delivered in 1893. The concept was revolutionary, and the goal was to deliver products, through the mail, to consumers without channeling them through numerous wholesalers along the way. $400,000 in sales in the first year and $750,000 in sales two years later, proved the concept. That’s roughly the equivalent of $8,000,000 and $15,000,000 respectively in today’s economy.

Can we parallel the Sears Roebuck catalog to today’s e-commerce “catalog”? I think we can. But instead of the 300 plus pages in the Sears catalog let’s say there were a million. The power of E-commerce is evident as sales increased 19% versus last year and wine sales increased at an even healthier rate of 35%. Purchasing wine on-line is fairly new; it wasn’t until 2005 that on-line wine sales really took off. I would be comfortable saying that sales are increasing at about the same incredible rate as the Sears Roebuck catalog. But the common misconception around e-commerce and wine sales is that placing a web-site on the net is going to cause your inventory to magically disappear. The numbers show the power of on-line wine sales but without proper marketing and sales strategy, you’ll have a great site that’s standing idle. Here are a few ideas to start with:

*Take advantage of social networking to build your customer database
*Holiday market and e-mail blasts
* SEO: Search Engine Optimization – It’s free and helps direct traffic to your site
* Affiliate Marketing - Links
*Read Wine Industry Blogs!

If you have your winery web site up and running and orders aren’t pouring in, it’s because E-commerce is powerful but it’s not magical.

Innovation stems from necessity. If the need for an alternative distribution channel was not previously evident, recent moves in the wine industry should make it so.
For decades, E&J Gallo was the world’s largest wine producer pumping out an estimated 75 million cases under more than 40 labels; Constellation Brands Inc. now holds this title. The recent acquisition of many big hitters including Geyser Peak and Clos du Bois, push the industry giant to a production level of over 110 million cases a year.

Throwing out some more numbers, in 2006 California’s top 10 wine producing companies introduced 41 new brands. Because of the sales clout these companies’ poses; shelf placement was achieved more often than not. A staggering 100,000 line items are now available to the U.S. wine consumer.

Consolidation of wine companies pair well with the shrinking number of wholesalers, as big distributors prefer big suppliers. From a small winery prospective, this means less access to large markets.

Many of the IBG partners I speak with have trouble claiming a spot in the distributors “book” as small producers are an irritant. If they do get a spot, the movement is often minimal as their vinification efforts age past perfection. In all fairness the mega distributors are willing to represent smaller wineries, although there is only some much time a rep can spend with an account and many of California’s 2,400 wineries are left in the cold searching for a solution to this quagmire.

Although the wine market’s competitive, it is growing, and there are plenty of pallets to please. One solution is the Direct-to-Trade channel. Does opening up this channel mean that smaller wineries will sell out vintage after vintage? It could, but along with producing quality wine they are also going to have to market and sell themselves. The competition is fierce but an alternative channel is now open. The power rests with the wineries once again.

For many years, I’ve been buying, selling and making wine. Of these three, I’ve found that selling wine was the most profitable. This is especially true in the restaurant industry. The key was whether or not I could sell the right product to the right people. It so happened that Paul Mabray and I crossed paths several years back in a Tapas restaurant. Located in Napa, Zuzu is the spot where one can pick up small plates of locally based ingredients with an ethnic flare. One can also indulge in a couple of glasses (maybe a bottle) of wines from an eclectic list including California, Oregon and most importantly, Spain.

Being the businessman that I am (or think I am) I was always on the look out for the latest and greatest idea; that’s where Paul comes into the equation. Paul would frequent ZuZu while selling a concept that seemed quite intriguing. I didn’t quite know what that idea was, but through his enthusiasm and energy, I knew it had to be great! One day I approached him and asked, “What is it that you’ve got up your sleeve?” I soon found out that he was trying to initiate a program that would make it possible for restaurants and retailers to buy wine directly from a winery’s website. I thought to myself, that’s pretty novel, far-fetched, but pretty novel, and left it at that.

A few of weeks later, Paul came in with a couple of big wigs. I could tell that they were because of his interest in buying a bottle rather than a few glasses. I came back to the table with a great Spanish Garnacha from the Priorat Region in Spain. I began my spiel with “they’ve only produced three-hundred cases of this wine, and it’s quite difficult to get a hold of…” I had found that specifying the rarity of its distribution as a good selling secret, and that’s when it hit me! The wine I was selling to them was in small production, of exceptional quality, (as many small production wines are) and rarely found consumers in restaurants because of distribution issues. I put two and two together (I said I was a business major not a math major) and soon found myself working in Paul’s camp with Inertia Beverage Group, putting together the concept and process of Direct-to-Trade. This includes selling wine to restaurants and retailers through their web-sites because they could not get distribution in many states.

Eighteen months later, you would not believe the obstacles we have faced and overcome in this short amount of time! We now have ten states aboard and countless wineries. The idea of Direct-to-Trade is innovative, ahead of its time and is now providing wine lovers in Florida with incredible Napa Valley wines they previously did not have access to.

Care to hear more details? Check back in two weeks!