REthink Wine Blog

In determining your Sales and Marketing strategy, there are many reasons to take a fresh look at the Direct-to-Trade channel. Regardless of your goals, your size, your current distribution or your brand’s standing, winery sales and marketing managers should always strive to exercise more control over how, where and to whom their wines are sold.

When you sell a pallet of wine at FOB, you rarely get a chance to know where each of the cases ends up. What percentage goes into on- and off-premise accounts? Are your wines being sold at MSRP or significantly under-priced? How can count on repeat purchases from trade accounts? With Direct-to-Consumer sales, a great benefit of selling direct is getting the opportunity to better understand the identity and needs of the end-buyer. The same rationale applies to trade sales.

When your pallet is sold at FOB, you can lose sight of where you wines is going – kind of like bowling blind (see above). Your ball is ready to fly, but you can’t control where it goes. If you are lucky and your distributor rocks, you will get a strike, but you might not even see it… and how can you be sure you will get a strike next time? Selling Direct-to-Trade gives you full visibility into your trade sales, enabling you to better control them.

Control is Owning the Relationship
We all know that the wine industry is a relationship-driven business. When you are selling Direct-To-Trade, you take control of the relationship and are no longer dependent on someone else to forge and foster those vital connections. When a restaurant purchases a lot of your wine, by knowing the buyer directly, you will have a much better chance of getting a repeat sales or of pushing your new label to them. Sure, it’s more work, but it will pay off in the long run.

Control Who Buys Your Wine
When selling direct, you own the relationship - you can say “Yes!”.. or “No!”. If you do not want your brand to be on display in certain stores, you can make sure it is not. If you think your brand should only be available in fine restaurants, by selling direct, you can make sure this happens. If a retailer drastically under-prices your wines, you can elect not to sell to them anymore. When you do not own the customer, this is much harder.

By enabling wineries to sell Direct-to-Trade, Inertia aims to give them access to new markets but also to give their more freedom and control over their business. In providing cost-efficient ways to better monitor and control the down-stream sale of wine to trade accounts, Inertia is adding another weapon to a National Sales Manager’s arsenal as well as giving more power and knowledge to Brand Managers.
Take control of your destiny and don’t bowl blind!

Did you know that search engine spiders may only crawl your site every month or so? Sometimes it’s even longer! If you want to make your products “searchable” come holiday season, it pays to start thinking about it now. Determine when your first promotions are scheduled and count back, you’ll need to update both product descriptions and keywords way before the holiday shoppers hit your store. When updating your information, make product descriptions relevant to holiday buying. Add enticing verbiage to your teaser and descriptions. “Staff favorite”, “Great gift idea”, and “Ships in a separate box” help the buyer picture your wine as a gift. An appealing description that is optimized for search can make the difference between a sale and a missed opportunity.

Are you planning to do corporate gifting? Determining what product(s) you’ll offer, your decorative packaging, and gift pricing are all factors to start thinking about early. But, coming up with your gift presentation is only half the battle. You also need to consider your targets: companies you already have relationships with, a purchased target list, your own DTC customers that own/operate businesses, etc. How are you reaching out to them? A nice printed piece, a personal visit? Companies often look for corporate gifting options far before the holiday arrives, so have your prep done early and be ready to sell, sell, sell.

What is planning?  According to Wikipedia; “Planning in organizations and public policy is both the organizational process of creating and maintaining a plan; and the psychological process of thinking about the activities required to create a desired future on some scale.  As such, it is a fundamental property of intelligent behavior.”

So what is an example of “intelligent behavior” in the wine industry?  As a group, we are pretty good at production planning.  We know roughly what our yield per acre for a certain vineyard will be, we know how many acres are planted, hence we know how many tons of grapes we will have to make wine with.  From this we can calculate number of barrels needed, glass, capsules, corks, etc. 

Where we tend to have less accuracy is in planning how to sell this splendid wine we made.  Wineries that have been in business for awhile, and have steady production have a good idea of how much wine their club will need, what kind of sales they can expect at their tasting room,how much their distributors will take, and so on.  Newer or growing wine brands have less historic information to go on. 

So what I would like to do here is suggest a methodology for building a sales plan for your wine.  First step is obvious, how much wine do I have to sell.  Next, look at your predictable outlets.  How much did I sell to the trade last year?  Is there any reason why that number will change?  To get an accurate feel for this, you need to review on a market by market basis, your historical results. 
How much wine did I sell direct to trade.  How much did I sell through three tier. When looking at three tier, be specific. What did we sell in Ohio?  Was the number of cases consistent with the previous year?  Is there a reason that number might change this year?  Some reasons for a fluctuation might be change in a distributor, your distributor taken on a new, competitive brand, or change in your sales personnel. Maybe the distributor gained or lost a key chain placement, late in the year which will greatly impact this year.

Once you understand what you can reasonably expect from trade sales, you need to look at direct to consumer. (Certainly you could look at direct to consumer first, and trade next) In looking at direct look at your clubs, your tasting room, and your e-comm.  What did the last two yearslook like, by channel.  Based on the trends, what should it look like this year? Am I gaining club members, or losing? Is my shopping cart business growing?  Is tasting room traffic down or up?

If I add my expectations for trade and direct to consumer do I have enough wine, too much, not enough? If not enough, what should I do? Maybe raise prices, maybe pull out of a under performing market, maybe cut back distributor allocations?  If I need more sales, what I do?  Actually, there are more strategies for growing sales then I could possibly list here, and there has been plenty already written about strategies to grow your business.

Anyway,the point of this blog post is to highlight the importance of a plan.  Like my first boss use to tell me, “if you don’t plan where you are going, you will never get there”.   

You may have heard this already: Inertia is pioneering the enablement of wine producers to reach trade buyers directly, in an easy, efficient and fully compliant online fashion. As we ramp up our efforts to empower more wineries to sell more wine Direct-To-Trade, I want to take a closer look at the big-picture question of why direct trade sales must inexorably grow.

By now, the message is clear: the American system of wine economics is rapidly mutating. Not only have consumer habits made wine a much more popular consumer good and increased demand and supply, ongoing regulatory changes have made the marketing and distribution of wine a much more creative and competitive sport.

Innovation arises when things stop working. In our industry, innovation needs to answer many a winery’s dilemma: “I can’t find a distributor who’ll carry my wine; how can I get it to market?”. Whatever the answer may be, it also needs to answer the challenges facing wine buyers: “How can I buy this rare gem if none of my distributors carry it?”

The situation is familiar:
> There are more and more wine products hitting the market (both foreign and domestic).
> There are fewer and fewer distributors as they rapidly consolidate.
> Warehouses are full of inventory that is slow to move.
> Margins are rapidly being eroded by rising fuel costs.
> Traditional distribution systems have less incentive to build brands.

The American 3-tier system has been tremendously successful and continues to be. Yet it is currently not capable of efficiently absorbing all the new-comers to the market. A small number of brands represents a huge portion of what is actually consumed today and it is the 3-tier system that makes this possible. But how can smaller, high-end, boutique brands catch the attention of giants? How can a 10,000-case winery, making stellar wine (though not yet blessed with a sacred 94point rating), possibly catch the attention of large, bottom-line focused, distributors? Fortunately, many still do for the benefit of the consumer; but not all.

As Angela remarked in her recent post: there is distribution and then there is effective distribution. This is my central argument: going direct is about filling the gaps of the 3-tier system. Wine producers need to ask of their distributor: “are you the most effective way to get my wine to market?”. Most often, the answer is a resounding “Yes!” , but in certain situations or for certain brands, the 3-tier system will not work. Here is a short list of situations many wineries will recognize:

> I have a restaurant in Florida who wants my wine, but I can’t get a distributor to carry me because it’s not enough volume.
> My distributor in New-York does not service up-state, how can I get my wine to a buyer in Rochester?
> I have a retailer who really wants my Syrah, but my distributor only carries my Cabernet and Merlot.

All these recognizable barriers to sell are about one thing: Access
- State access: getting to certain states
- Geographic access: reaching all areas of a state
- Product access: getting all your products in a state
- Buyer Access:making your products easily accessible to all potential buyers

So how can innovation help solve some of these issues? A minority of producers is currently selling directly to trade, but technology hasn’t been fully leveraged yet and the scope of current direct trade sales is still geographically narrow. While I will not go in the details of our ‘secret sauce’, Inertia’s DTT program enables bonded wineries to transact sales to these 12 states:

Arizona
California
Connecticut
District of Columbia
Florida
Illinois
Ohio
Oregon
New-York
Vermont
Washington
Wyoming

As Corey commented, these sates represents a huge swath of American wine consumption. If any one of the above states, or portions thereof, have been closed-off to you, or if your distribution in any of those states isn’t as effiective as it should be, then you should take a hard analytical look at the opportunities and implications of DTT.

Inertia’s DTT program will allow wineries to transact sales from trade buyers in any of the above states (or a sub-set for 17/20s and importers). Inertia’s DTT program allows you to pick what you want to sell, where you want to sell it and whom you wish to sell it to, in a fully-streamlined way, all on-line. DTT also implies minimal over-head that frees up staff resources (that would otherwise be spent on order management, invoicing, collections, etc.) to do what is most important: selling.

Access is the first and most obvious reason for going Direct. This is why DTT can be an incremental distribution channel, supplementing the 3-tier system if and where it is not efficient.

Upcoming posts will shed more light on the other two compelling reasons for going Direct-to-Trade: Control and Sales.
Stay tuned.

Recently, I was asking a luxury brand winery about their distribution in key states. The winery pulled up their order history with a various distributors and noticed the impressive dollar amount that was sold in a key market place we were inquiring about.  The winery replied; I have great distribution.  With a closer look, the owner noticed that the distributor had not taken their allocation this year. After I left, he phoned the distributor and learned that only a small percentage had actually been sold of the PREVIOUS allocation. In fact, the distributor went into detail about the economy, they needed sample bottles and extra enticements to help push the wine and possible discounts applied. 

The next phone call I received from the owner, was “let’s talk about your direct to trade program.” The particular state is a top wine consumtion state and the owner learned that he was only in very few locations and not in the ”on premise” locations he had been promised. There is a difference between distribution and effective distribution and it’s time wineries pose the questions and take more control. I am not suggesting that all distributors are not effective; however, at the very least, wineries need to examine the options that are now available.

The North Bay Business Journal had this article yesterday and it spoke well to my recent experience and Inertia’s direct to trade offering; here is a portion of the article to share:

Napa-based Inertia, which has developed a system for automating order handling and regulatory compliance through the three-tier system, now is more actively promoting its program for direct-to-trade shipping, commonly called self-distribution, to a dozen U.S. markets with seven pending, according to Kristi Taaffe, vice president of marketing.

Previously, Inertia offered wineries that use its REThink system for direct-to-consumer shipping the ability to ship wine directly to trade accounts that place orders online, starting with New York in December 2006. Later, the company invited certain wineries to participate.

Now, Inertia has bolstered its salesforce to promote automated self-distribution.

Currently, Inertia offers direct-to-trade shipments to Arizona, California, Connecticut, the District of Columbia, Florida, Illinois, New York, Ohio, Oregon, Vermont, Washington and Wyoming.

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.

Everyone knows that the key to building a successful online marketing initiative is building a good database. The more contacts you have in your database the better, since these are the people who will continue to receive information from you on new wines or any special promotions. The people who know and enjoy your product will repeatedly purchase your wines, and will become your best customers. These repeat buyers are the cheapest to market to, and the easiest to convert. This is why it is always important to maintain customer contact and reach out to recent buyers on a personal basis to make sure you continue to nurture that relationship.
As we ramp up our Direct-to-Trade platform, we are finding that the same mentality holds true for trade accounts. A few weeks ago, Andrea spoke about the importance of building and segmenting your trade database on the REthink blog. By harvesting business cards from your tasting room staff or reviewing depletion lists to see what accounts have purchased in the past you are slowly building a list of reliable trade accounts that have tasted or purchased your wine. You should segment these by type of account, level of relationship, and what wines they purchased.
By using your DTT channel to sell wines direct to these accounts; you are enabling your winery to better build these direct relationships with the trade, which is what will allow you to have the personal touch you have with all of your consumers. So what are the first steps to make sure your trade accounts become repeat buyers?

• Make sure all orders ship quickly and on time to trade accounts
• Include materials that are directed towards members of the trade such as shelf talkers and detailed tasting notes
• Always follow up with the account to make sure the wines arrived safely, this can be as simple as a short phone call made shortly after the wines are sent
• Note what wines accounts purchase and buying patterns for follow up efforts

All of these simple steps will help you maintain a relationship with trade accounts that will encourage them to continue to purchase your wines. And remember, repeat buyers are easy targets so the better the relationships you have with your accounts in your trade database, the more sales you will see come through your direct channel.

Establish your trade database!

Your trade database is the most critical element of a successful Direct-to-Trade program. Your first step should be to consolidate every trade account (hotel, restaurant, specialty wine shop, etc.) that you have touched, or that you want to touch, into one database. Be sure to include names, emails, phone numbers, type of account (on- or off-premise), and any relevant information (steakhouse vs. seafood). The more information that you include on each account, the easier it will be to segment your list for future marketing efforts.

A few basic sources for building your list:
- Business cards from tasting events
- Email inquiries from the trade generated by your website
- Favorite local restaurants that have purchased in the past
- List of trade attendees at various wine maker dinners

Your second step should be to distinguish between unqualified leads, warm contacts, and current or former customers. This information will help you segment your list for direct marketing efforts. In addition, be sure to differentiate between restaurants and retailers as the value proposition of direct to trade is slightly different.

Your third step should be to associate order history with customers in order to narrow-cast and present specific offers (i.e. new release of Merlot to those who purchased last vintage). Wine brokers and wholesalers’ biggest strengths live in their ‘rolodex’ and relationships – it is what allows them to deliver demand to meet the supply of producers. You can create and connect with that demand yourself, this is why your trade database should be your single greatest asset (aside from your wine), if leveraged appropriately.

More on leveraging it appropriately in Part II.

Cheers,

Inertia’s 5th Annual Direct Symposium will take place on July 11th, from 9-3:30pm at COPIA in Napa. This year, we’ve expanded our agenda to include interactive sessions on topics chosen by attendees. Last month, we released a survey on what we were hearing from our clients and industry partners as the ‘hottest’ topics in the direct industry. Topics included:

• Website Design
• Website Merchandising
• Selling Direct to Trade 
• Direct Shipping Compliance
• Allocation Program Management 
• Wine Club Management
• Wine Blogging
• Online Social Networks

We asked attendees to ‘vote’ on their topics of choice for breakout sessions at our July Symposium. The results were tallied, and we have our winners… 

• Selling Direct to Trade: Access. Control. Sales. 
• Direct Shipping Compliance: A Dynamic Marketplace. Your Options.
• Wine Blogging: Brand Building, Customer Loyalty and Sales
• Online Social Networks: Consumer- to-Consumer, Peer-to-Peer Engagement
• Website Design: Designing for Best User Experience & Greatest Sales
• Website Merchandising:  Sell More Online 

Our Symposium agenda will allow attendees to participate in two breakout sessions of their choice: One in the morning, one in the early afternoon. During each of these sessions, panelists will lead an interactive discussion with the audience around a designated topic. Based on several workshops which we led earlier in the year, we know our clients are eager to engage and look forward to some good interaction.

Because of limited space in each of our breakout sessions, we request that attendees reserve their spot in the session of their choice as soon as possible. Signups will be taken the day of the Symposium, at check in, but to ensure you get a seat in the topic of your choice, send your request through today (along with your RSVP if you haven’t already!) to rsvp@inertiabev.com.

See you in July!

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?