Why wineries need to expand their sales opportunities

Key Take-away

"In order to survive, wineries and similar businesses need to explore strategies that will allow them to raise the average direct-to-consumer order value."

We have seen regular increases in volume and price for 20 years now in the wine business, according to the SiliconValleyBank 2018 SVB Wine Report. However, sustaining routine increases may be difficult for wineries given the low-growth, low-inflation environment. Price increases will be hard to pass through, says SVB.

Not only that, there is also evidence of changes in consumer preferences. Premium wine is a luxury product and despite a measured growth of 2 percent in the American market, this sector is on an incredible trend down from the 15 percent growth reported in years before.

Amongst the reasons for this stagnating growth are more well known ones such as consumers transitioning to online and retailers failing to keep up in their digital experience. However, what one of the lesser known reasons is that the US consumer, whether young or old, is focused on experience and value.

Particularly mono-brand retailers are struggling, and no longer can the on-site experience be the defining characteristic for the luxure buyer. This in fact is a warning for wineries that depend on the tasting room as their only path to direct sales or are failing to deliver a versatile offer to their customers.

Percentage of growth for wineries in US

According to the same report selling wine directly to the consumer has been a survival requirement for some wineries. Despite the alarming state some business owners in the winery industry are in, the industry in general has been cautious with their evolution to more modern direct-to-consumer strategies.

One strategy that would tick all the boxes for wineries is adding more products to their catalogue. In 2017 SVB reported Tasting-room revenue is up despite declining visitor numbers, but what is driving that higher revenue is improved average purchases. Wineries are simply selling more per transaction and this seems to be their best bet going forward.

A next step in this approach would be adding branded, tailor made products such as wine accessories. This tactic comes with many more benefits which including a more professional presentation of the wineries brand at events and tastings which could not only lead to better positioning in the DTC market, but in the business market as well.

Charles Krug, the oldest winery in Napa Valley, USA, describes his experience with branded wine accessories by Avina as “working with Avina was a pleasure, and I'll be happy to show our corkscrews to the staff” and has positive expectations when it comes to direct to consumer sales and brand recognition.

DOWNLOAD THE FULL CASE STUDY

This falls perfectly in to the trend in consumer behaviour which is more focused on providing the market with an experience, rather than just trying to sell to them. Building a brand that people will recognize and rave about has not only become important, but essential to the survival of businesses going forward. With that in mind having a catalogue of branded products not only means being able to increase revenue, but will also have a positive impact on building a sustainable brand that does not rely solely on one unpredictable stream of income.

Some wineries and similar businesses have started experimenting with handing out branded products for promotional purposes or bundling them at cost price with other products. This is a great and innovative way of getting a brand into people's homes, while making your investment back in the proces.

One entrepreneur using this exact tactic is Mike Husky of Dalwood Vineyards. In the case study done on his success, which you can find linked below, we dive deeper in to his approach. Bundling products has not only netted him more revenue, it has also caused the Dalwood brand to grow more rapidly while making it’s initial investment back in the process.

Read the case study explaining how Dalwood Vineyards increased their overall revenue and brand recognition at minimal risk

A more risk-free approach for wineries that are looking to test the waters but that are still looking to enhance their customers digital experience and increase their customers average order value would be to set up an affiliate program. Such a program would mean a minimal investment up front without the winery ever having to touch the physical product but selling it through their own website.

Seeing how the supplier of the product would take care of all the picking and packing, including shipping the product, for many business owners and publishers in the wine sector this could be a welcome opportunity to build out their business without the usual headache involved.

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