REthink Wine Blog

These are my principles.  If you don’t like them, I have others.   Groucho Marx

As we’re all very much aware, shifting market trends have made it a tough time for wine sales.  Eric Asimov summed it up in a recent article for the New York Times when he stated “Cash may be trickling, but anxiety is gushing forth.”  And while uncertain economic times may make it tempting to pull back on marketing spend or concentrate resources on the latest and greatest trend, it’s worth remembering that huge benefits can often be gained by focusing on the basics.   The essence of marketing is to understand the needs of your customers and develop a plan for meeting those needs.  With that in mind, I believe that all marketing efforts should fall into one of four buckets:  1) Building Equity, 2) Generating Demand, 3) Garnering Loyalty, or 4) Enhancing Channel Sales and Profitability.  By compartmentalizing in this way, all promotional tactics are focused on specific goals and objectives, allowing you to more easily measure results and plan for the future.

Build Equity:  Put simply the focus here is on acquiring new customers.    This includes all efforts to gently guide potential customers through the relationship cycle: from awareness, to contemplation, to preference for your wines (and your brand) and finally to loyalty and word of mouth.  Several tactics fit into this bucket, including but not limited to the following:

• Focus on direct marketing and list building strategies.  Maintain and stick with a promotional calendar.
• Reach out to both traditional media and the wine blogging community.
• Social Networking is a great way to attract new customers of every age (most notably younger generations), to add a human touch, and to build good will.  Whether developing a Facebook page, joining the conversation in Twitter or utilizing YouTube, you will need a strategy for both participating in and monitoring conversations. 
• If you’re feeling adventuresome, consider developing an online video.  Video can be used for many purposes:  winemaker interviews, culinary productions, or telling your story in general.  It can add a whole new dimension to your marketing effort.
• Build traffic to your website using SEM and SEO.  SEM is an often overlooked method of paid advertising which if approached correctly can be very powerful both in building brands and in generating demand.  Use it to build awareness for your winery, as well as for short term promotional efforts.  Focus on niche keywords, your winemaker, your winery and other terms which are important to your brand.

Generate Demand:    This involves the use of promotional methods to generate sales and increase the average spend per customer.

• Focus on the tasting room:  invite people to events, sponsor other local events and work with neighboring wineries if feasible.  Capture information that will allow you to approach these visitors in the future:  incentivize them to sign up for your newsletter or mailing list, and always encourage wine club participation.
• Recognize that tourists are looking closer to home and reach out to locals.  For California wineries, this might mean anyone within a three hour radius.
• Build upon your eCommerce strategy.  Remember the adage that “Content is King” and revisit your web site.  Make sure that content is up to date and product images and descriptions are clean and well thought out.  Also be sure that your site is frequently updated, with news, events and other happenings.  Don’t allow it to get stale or give the appearance of nothing more than an online “brochure”.
• Consider different techniques for increasing average order value:  offer product bundles, case discounts, or shipping incentives on volume orders.

Engender Loyalty:  The use of creative methods to increase the lifetime value of customers and club members

• Attack email campaigns and club promotion strategies with renewed vigor (use geographic and other forms of segmentation to ensure promotions are focused).
• Examine ways in which you can add value to club memberships.  Acknowledge milestones such as birthdays, anniversaries, club longevity.  Offer “members only” events, tours, and tastings.  Include re-order materials with your club shipments.
• Focus on current club members and solicit updated credit card information when necessary.
• Revisit your customer service policies and customer relationship management strategy and ensure club members are treated accordingly.  In turn, this will allow you to rely on your customers to help with marketing - happy customers and the word of mouth they generate can be very positive.  And remember that social media is not just about acquiring new customers; it is also a great tool for generating customer satisfaction and loyalty.
• Be sure to utilize relevant metrics so that you always understand the value of your customers.

Enhance Channel Profitability:  The pursuit of new growth opportunities and customer acquisition strategies via expansion into new and profitable sales channels

Direct to Consumer Opportunities:  As new marketplace opportunities become available, the landscape for direct to consumer sales will begin to change dramatically.  Participation in these marketplaces, whether Inertia’s new direct to consumer marketplace “CollectiveVine.com”, or via a Marketing Agent provides many benefits, namely:  1.) A captive audience and the ability to introduce your wines to an expanded customer base.   2.)  New opportunities for market research and testing without the traditional costs associated with them.  3.) Costs for participation are significantly lower than through traditional channels, resulting in better margins.  4.)  Customer acquisition: participation in winery direct programs means that customers are delivered to you for future marketing opportunities.  5.)  An opportunity to build brand equity:  today’s wine buyers are savvier and are accustomed to searching out preferred brands.  Online marketplaces provide an excellent opportunity for building awareness.
 
Direct to Trade Opportunities:  Wine REvolution, our direct to trade marketplace provides an opportunity to reach restaurant and retail buyers directly via an ecommerce platform, providing several benefits:  1) Access to new markets and trade accounts, 2) Control over your brand and 3) Increased profitability.  Make the most of your participation and aid trade partners by providing complete product data.  In short, make it easy for partners to sell your product.

Finally, as you reach out to new customers via channels which have not been available in the past, I think it’s important to remember that you are building a brand. With that in mind it is essential that you maintain a consistent customer experience across all sales outlets:  from sales collateral, product descriptions, prices, and the content and images provided to online marketplaces all the way through to the customer service experience.  Customers should know and respect your brand regardless of the touch point.

As you’ve likely heard, Inertia Beverage Group acquired the assets of New Vine on Monday, July 27th, in a public auction process. While there was a lot of media speculation and commentary leading up to the auction, I‘d like to share what we believe Inertia’s acquisition of the New Vine assets means for our clients, New Vine clients, Inertia, and the wine industry overall.

First, this acquisition means that all New Vine services will remain in place, up and running for everyone who is utilizing its logistics, fulfillment, and compliance services. In addition, there is no requirement that Inertia’s proprietary software be used in order to access the New Vine logistics, shipping and compliance services.

We are naturally very excited and feel fortunate to be able to incorporate the suite of New Vine services into Inertia’s offerings. As soon as possible we will clarify how this will be accomplished, what new programs and services this combining of assets will allow, and how we believe the combination of capabilities can positively impact the direct wine sales industry as a whole.

We are also eager to begin working with both businesses in a way which thoughtfully takes into consideration the needs and histories of both organizations’ clients.

IBG has always been a vocal supporter of the direct channel, especially on behalf of the smaller to mid-size wineries that struggle to gain market access via the traditional distribution system. Our vision is to improve the marketing and selling of wine by providing solutions at all levels of the wine industry supply chain.

This vision requires some very necessary components to ensure success, including marketplace technologies, compliance and fulfillment solutions. To date, IBG has successfully delivered on these components through our proprietary systems and industry partnerships, including the REthink Engine, the REthink Compliance tool, the WineRevolution.com Direct-to-Trade system, integrated logistics and shipping service partnerships, and many other essential tools. With the inclusion of New Vine into the IBG family of products and services, we will now be able to offer the first comprehensive and integrated set of direct sales solutions for the entire industry.

We believe we live in exciting times in the wine industry and that its best days are ahead as new sales channels, opportunities and solutions emerge for every segment of the industry. We welcome all those who are interested in learning more about Inertia’s integrated programs to contact us directly. Inertia clients may contact their Account Manager at any time, and I can always be reached at ted.jansen@inertiabev.com or directly at 707.603.2856.

In addition, Inertia is hosting several client gatherings in the next few weeks to provide an introduction to the ways in which we are leveraging our programs and partnerships to deliver new wine marketplaces for winery participation. We look forward to hosting more gatherings in the future, and providing New Vine customers and the broader wine industry with an opportunity to learn more about our programs and services.

Stay tuned – there are certainly exciting times ahead!

Over the last year, and particularly the last few months, Facebook Fan Pages have quickly risen in popularity. In fact, several of our winery clients have asked about putting Facebook Fan Pages on their websites.  Since Facebook provides an icon and code, the task is as simple as copying and pasting directly into the content editor or kicker on your website.  John from Olson Ogden Wines did this successfully on his own last week and is using his Facebook Fan Page to announce news and communicate promotions, events, pairing, etc.  Take a peek!

Some tips that make an effective Facebook Fan Page are listed below and were taken from several articles on the web including one written by Spencer Spellman.

• Make your fan page pop.  Many fan pages fail because they don’t grab the user’s attention.  Successful fan pages have at least some html or flash that is graphically appealing to users.

• Offer incentives.  Make your fan page a resource for people and they will return.  You might create regular promotions on your products and use the fan page to answer questions from your fans.

• Run contests for fans as they help build a loyal audience.  Some contest ideas might be to invite your customers to send in pictures of them enjoying your wine or food pairing ideas.

• Leverage your resources.  Your customers and friends may be using Facebook and be unaware that you have a fan page.  Use your website, email, instant messaging, printed material and other social networking sites to drive people to your fan page.  Rather than competing, consider collaborating with your neighboring wineries.  A group of Silverado Trail wineries joined together  to create a multi-branded product offering which they advertise to their expanded list of customers. In another example, Ackerman Family Vineyard described how they collaborate with other select wineries to host a Winemaker’s Dinner event  in which each winery represents a specific varietal to pair with one of the dinner courses. Combined efforts can oftentimes make a bigger impact than trying to do it all on your own.

• Interact and have fun with your fans which can help spread and promote your fan page virally. A fan page is a fun way to show your corporate personality.  For brands that want fan pages to have added value but don’t want to become a resource portal; consider offering consumers a reason to join by including Facebook only promotion codes.  There’s no way to make sure the promotion code is given to only Facebook fans, however you can require an email be sent to you and email back a promotion code.  If you are networking at an event and hand out take-aways that promote your Facebook page, the potential to reach new fans is exponential to the number of friends each of these new fans has on their list.

Creating a Facebook Fan Page is simple, though it will take some time, dedication and planning. Remember to build good content which is easily accessible, and let people know about it. While you may not have a huge following immediately, over time your community will begin to grow.

2 weeks ago I attended my third WITS (Wine Industry Technology Symposium). Though I have yet to earn my badge of ‘seasoned industry veteran’, I feel able to reflect on the impressive in-roads technology has made in the wine industry. Only now am I able to catch a glimpse of the huge transformative effect information technology can have on the industry.

On display at WITS was a lot of cool technology, all with great potential. Yet there was little evidence of truly transformative technology – the kind that radically changes an industry and captures the attention of non-wine folk.

It’s no secret that the wine industry lags far behind others when it comes to living the great economic revolutions information technology is capable of unleashing. IT has completely changed the game in so many other industries, yet for most wine industry vets, that change still remains elusive.

“Technology does not drive change — it enables change”

New technology has already greatly changed the way wine brands are marketed and the traditional function of wine marketing has been revolutionized. For brand building and consumer engagement as key functions of the wine industry, technology has indeed enabled change.

When it comes to the sales function, new technology has revolutionized the way direct sales are conducted. Yet it is worth noting that while the direct sales channel and online sales have risen greatly in the past few years, it still remains a marginal portion of all the wine that is sold in the US. Whereas new technology has already altered the wine marketing function, it has yet to enable dramatic change for the wine sales function.

Contrary to what I once believed, “direct” is no clear salvation, or at least not in the next decade. It will be a long while before the US wine market will ever resemble a free market – there is no realistic mid-term alternative to the 3-tier system, not with what’s currently preoccupying state legislatures…

The “Wine 2.0” movement and the emerging ecosphere of wine marketing agents still face an uphill battle to change the way the industry operates outside of the direct channel. Even as direct sales grow with the astute combination of cool technology and clever marketing, this trend does not yet really change ‘business as usual’ for most of the industry.

Large retailers and large distributors are themselves working through intense and expensive technology projects to create even more efficiencies for the “traditional” system. Believe it or not, the established wine world is not immune to new technology; it’s just not sexy new technology like facebook (think dour SAP). So the big boys integrate large solutions to sell more and better, while the “new tech” folks upstream battle it out on the web to find a way to convert buzz into sales.

If a bridge is built to seamlessly integrate all these new tools into the 3-tier system, only then can the visions of so many wine tech entrepreneurs really take flight. The brave new world of wine technology will come about when the new world of wine tech meets the old 3-tier world.

To paraphrase the great W&S article summarizing WITS (zoom in on the ‘Tech and the three tiers paragraph), I want you to imagine a world where any small winery can participate in the 3-tier EDI (Electronic Data Interchange: the process of connecting trading partners on the same systems so they can communicate seamlessly).

• I want you to imagine a world where it will actually make economic sense for the regional wine buyer of a large retailer or restaurant chain to actually pay attention to wine social networks and blogs to increase sales.
• I want you to imagine a world where wholesalers of all stripes will feel comfortable in sourcing new brands whilst following the hum of online demand and user-generated content.
• I want you to imagine a world where it will make economic sense for large distributors to care about suppliers with no deep pocket and for them to find profit in catering to niche markets. 
• I want you to imagine a world where wine suppliers of all sizes can build elements of control over the whole wine supply chain.
• I want you to imagine a world were a Kafkaesque regulatory maze and a severely oligopolous distribution system will not severely hinder entry to market for new suppliers.
• I want you to imagine a world where the long tail can actually work in wine.

Why has this bridge not been built yet? For those familiar with our industry, just ponder this concept and how it relates to 3-tier: path dependence. The barriers guarding the wine market are so complex that until those barriers are tackled effectively, all other efforts will be hobbled in their potential.

On a strictly operational level, this bridge will require a strong foundation of streamlined compliance tools and clearing models, optimized logistics and standardized dynamic product data systems. On these pillars a road will be built: it will be the multitude of plug-ins and APIs that will allow supply from any tier to connect to demand from any tier. The smooth asphalt will be an array of online tools to facilitate wine marketplaces. On that bridge you will see pedestrians, cars, semi-trailers and trains alike, easily go from one side to the other… you get the analogy: selling wine today is like trying to get around the Bay Area with no bridges.

Only once this bridge is (or bridges are) built, will the wine industry live to the full potential that is on display at WITS. The pillars supporting this bridge are still discreet, but the technology, the knowledge, the plans and the vision are in place. It’s just a matter of time.

Richard Sands, Chairman of Constellation Brands, just published a book called Reaching for the Stars (the making of Constellation Brands). I ordered a copy, but haven’t had the chance to read it yet.
However, the book did get me thinking of Marvin Sands, Richard’s father, and the founder of
Canandaigua Wine Company,(CWC) which became Constellation.  I had the good fortune to work for CWC in the early-to-mid 90’s. During that time the company grew from $70 million in sales, to over $1 billion.  In those years, Marvin was the head of the company, though Richard was running the operation.

Over the course of my career, I’ve had the opportunity to work for capable leaders, poor leaders,
and one great leader. That was Marvin.  My favorite quote on leadership, which I’m told came from
Abraham Lincoln, is “Leadership is getting people to do what you want them to do, because they want to do it“.  That was Marvin’s genius.  He made you feel important and empowered.

I started at CWC as a Product Manager, and eventually made it to V.P.  Marvin treated me the same at every level.  He would stop by my office, and ask how things were going.  He’d ask about my wife by name.  He’d ask about projects I was working on, citing the specific project.  He would ask my opinion, and make me feel like what I had to say mattered.

I have two stories about Marvin that demonstrate his knack for getting the most out of people:

One time, I was in a meeting with him, and several others, and we were debating an issue (I can’t remember the specifics).  The conversation got heated, but Marvin just listened, not speaking.  Finally, after everyone had the opportunity to state their case, Marvin spoke.  He summarized the issues, and then endorsed the position of one of the attendees.  He never said, “this is what I think we should do“, instead he said “I agree with ____________“; which of course ended the debate.

After the meeting, I asked Marvin why he stayed quiet so long.  He said he knew he would have a chance to speak when he felt it necessary, and he’d prefer to let others get credit for the answer. All leaders have an ego, they wouldn’t be in a position to lead without one.  Marvin, however, didn’t let his ego lead his actions.  He didn’t need to prove how smart he was, or to be right.  He simply wanted to get the best out of those he worked with.

The second story goes to a meeting I was not at:

It happened before I was at the company, but I’ve heard the same story from multiple sources.  In the late 80’s, CWC had introduced a wine cooler called Sun Country.  The product had a couple of good years as the category grew.  CWC then decided to make a significant push to be a market leader.  They hired Ringo Starr as their spokesperson.  This was the same year that Gallo launched Bartles & James, and Seagrams hired a young actor starring in a TV series called Blue Moon; the actor’s name was Bruce Willis, and he helped make Seagram’s the number two brand.

Sun Country fell behind the other leaders, and for the first time in it’s history, CWC lost money. Marvin called his V.P.’s to a meeting.  He started be recounting the financial details.  He then said, “In most companies, people in this room would be replaced.  I’m not going to be that kind to you. All of you are responsible to our stockholders, and all of you will turn this loss around, and return value to our owners.“  That became the rallying cry at the company, and as they say, the rest is history.

My wife has a favorite quote, “Children don’t care how much you know, until they know how much you care“.  The same can be said for employees.  When you worked for Marvin, you knew he cared about you, and cared about his company.  As an employee there, you couldn’t help but care, as well.

Email campaigns are fast and cost-efficient. However, unlike traditional methods of advertising such as print ads and direct mail, what you see is not always what they’ll get. How do you ensure that the messages you send will display correctly in your customer’s inbox? Below are five tips to help improve the success of your next email blast.

Use Alt Tags On Important Images

Many email clients disable images by default, prompting users to manually click to download images. To help prevent total loss of information, use alt tags which will display text descriptions when images are not downloaded.

Include Hyperlinks

Web users are trained to rollover images and text to access links. Within your email be sure to link all of your images and relevant text back to your website. If your email is focusing on a specific product, link to the product detail page to make it as easy as possible for customers to purchase. Also be sure to use concise language in your call-to-action links.

Avoid Rich Media and Flash

While animation can sometimes add aesthetic interest, the majority of email clients do not support flash. Animated gifs are sometimes used, but be careful because these can dramatically increase the size of your emails.

Test Your Email Across Multiple Browsers and Email Clients

To ensure your email will display consistently, create a testing environment including multiple email accounts. Listed below are a few of the more common email clients used.

	Yahoo		Gmail
	AOL		Hotmail
	Outlook		Lotus Notes
	Thunderbird		Entourage
	Mac Mail

Make sure to test across different browsers (IE, Firefox, Safari…) on both Mac and PC.

Provide A Web Page With Your Message

Take one extra step to ensure the delivery of your message by including a link to a web page including your email promotion or content. This can easily be done by making an orphan page and dropping in your images and text.

According to the Tennessee legislative webpage, Governor Phil Bredesen signed SB0166/HB 1155 into law on June 4^th, legalizing direct shipments by wineries to Tennessee consumers.  This is a pretty reasonable direct shipping bill, requiring a $300 fee and $150 annual renewal, payment of excise and sales taxes and the usual adult signature requirements.  The consumer volume limitation is no more than 9-liters per consumer in a month and 27 liters (3 standard cases) per year.  This is a big step forward for consumer direct shipping as it is another state adapting reasonable rules in conformance with successful direct to consumer shipping programs in other states, a trend seen recently in Kansas and hopefully soon, Maine.  I haven’t seen an effective date but will get out the details once I have them.  Still waiting to find out on the status of Maine, which is pending before their governor.

Recently the Inertia Direct-to-Trade team hosted two events in Lake Tahoe and Sacramento to showcase just a handful of our clients who are selling direct. Wineries attended the events to pour select wines for restaurant and wine shop owners. The wineries were encouraged to promote their own brand in these select markets while also gaining a list of trade contacts to encourage future sales.

The Tahoe portion of the event was hosted at  Sunnyside Steakhouse, a popular destination for both locals and tourists to the area. On this gorgeous Tahoe spring day, the venue provided tasters not only some fabulous wines but also a spectacular view of the lake. The second half of the trip was spent in Sacramento where Inertia hosted another wine tasting at the Citizen Hotel, a newly renovated building located downtown.

Our featured portfolio varied, providing a range of selection for potential buyers who came from all around the Tahoe and the greater Sacramento area to taste the wines. Wineries that were featured came from Napa, Sonoma, the Central Coast, Willamette… all the way to Walla Walla. All of these wines have not readily available in these markets in the past, and these two events provided an entry to the market for some great boutique brands who are selling through our Direct-to-Trade program.

Inertia hopes to host more events that enable wineries to directly connect with trade accounts to our Direct to Trade wineries. We expect to see many of the wines featured at the tastings throughout establishments in the Tahoe and Sacramento area this upcoming summer.

For more on this, please check out a great review and synopsis of some of the featured wines by journalist Barbara Keck. Featured in the Tahoe Weekly, you can also read her blog post entitled “Where to Wine in Lake Tahoe” here.

No one is fooling anyone. The discounts that are flowing to wine consumers these days are many and frequent. However, if you choose to offer your mailing list members a discount, think about linking that discount to something that brings you long term benefits rather than just a quick hit: Consider offering a significant one-time discount to anyone who joins your wine club.

Consider the Wine Club, for instance, that delivers four shipments annually to members and costs $200 per shipment. That price probably includes a 20% discount on the price of the wine included in the shipments. Now consider that the average wine club member will stay in your club for at least 3-4 shipments. Even if you offer mailing list members a 50% discount on a package of 4 wines if they join the wine club, you come out ahead in the long run financially, plus you are likely to create a real evangelist for your wines—assuming you do what should do with wine club members—treat them like kings.

The benefits of accumulating new wine club members far outweighs nearly any pain that comes with momentarily or conditionally discounting your wine.

As a manager (and parent), I am a believer that the key to learning is making mistakes. That is, if you make the effort to evaluate your mistakes and then do things differently next time.

Technology companies use post-project reviews, or “post mortems” as a method to conduct this type of analysis. However, any business can benefit – if you set out to accomplish an objective within a specific period of time, you’ve got a project ripe for review. Think about barrel tasting events, winemaker dinners, in-market visits, auctions, wine club runs, etc. An effective post-mortem will help you identify:

• what went well
• what didn’t go so well
• areas where you can improve
• how to achieve that improvement

There are three primary stages to an effective post mortem:

1. Preparation
2. The Meeting
3. Follow-Up

Preparation

First, determine who will participate. At a minimum, require attendance of all the people who  performed the day-to-day activities. It can also be informative to invite everyone who was at all a part of the project, from budget planners to the executives who set company direction. Once you’ve decided on your list of participants, choose a meeting facilitator. If you have the luxury of assigning someone who was not directly involved in the project, that can help in that they are more likely to be impartial. Otherwise, just make sure to put on your impartial observer hat. You will also need a designated note-taker.

Perhaps most importantly, set your intentions, goals, and agenda for the meeting in advance and distribute them to the team. This allows the participants to prepare on their own which makes the meeting go more efficiently and helps everyone stay on track. Consider also posing questions ahead of time to spark ideas and reflection. Read the rest of this entry »