“Could you solve your customers biggest problem doubling your margins in the process?”
Solving your clients biggest problem
What is the biggest problem your clients face when drinking sparkling wines? When they want just one glass after a tough days work or while enjoying a leisurely lunch?
We all know that the bubbles don’t last and that the cork doesn’t fit back into the bottle as it has expanded after opening. Will your client open the bottle and throw the rest away? This is what happens to 624 million bottles of all types of wine per year within the UK alone!
The good news is that according to the Wine and Spirit Trade Association (WSTA), UK Champagne, non-Champagne and sparkling wine sales hit a record number in 2018. The combined sales of sparkling wines topped out at 311 million bottles within 12 months, creating an industry worth £1.5 billion and more than doubling national expenditure since 2013.
Would you believe however that according to an online study produced by Laithwaite’s Wine, 24% of customers waste sparkling wine because they opened more than they could drink and 30% of them were unable to close the wine in some way. That is over half of the consumer population!
Great business practice
‘Why worry?’, you may say.
Well, it would be great for businesses practice to turn customers into fans by helping them solve this extremely vexing problem of preserving their sparkling wines. They will love you for it and not only will this strengthen your customer relations, it could potentially double your margins as customers buy more sparkling wine.
What if your clients’ problem becomes your problem?
Frustrated consumers are not happy throwing away their leftover wines and with governments now actively promoting ‘responsible drinking and responsible waste management’, we will most likely see a decline in those upwardly trending sales figures as more consumers reject waste. More ‘green’ consumers will decide not to open that expensive bottle as they won’t drink it all at one time, cannot reseal the open bottle and they do not want it to go flat and be wasted.
Of course, there are many very popular wives tales about keeping open sparkling wines fresh including putting a silver spoon or a piece of bread inside the open neck of the bottle. Others say to use a vacuum pump on the bottle, which instead of preserving the fizz – pulls out all the remaining air in the bottle which is responsible for creating the bubbles in the first place! These are exactly what they say they are, wives tales and none of these methods have proven to be effective.
Consumers simply do not know how to keep the fizz in their bubbles and they are unsure about how long a sparkling wine can be consumed after opening. In the Laithwaite’s study, 31% thought that the longest amount of time a sparkling wine could be left open was one to five hours!
Helping your clients to help you
Helping your clients to help you – Turn five hours in to five days.
So could you solve your customers biggest problem doubling your margins in the process? Does this sound too good to be true? What if at Avina Wine Accessories we have the answer to this problem?
We manufacture and produce a premium quality and ergonomically designed Champagne and Sparkling Wine Stopper that can preserve any sparkling wine for up to 5 days! With the stopper, that one glass of sparkling wine at lunch or after work becomes more of a reality instead of a wish.
The current cost of our Champagne and Sparkling Wine Stopper to you is £5.39 with a RRP of £12.99 (inc.VAT) – so for every product that you sell, you get a 100% margin.
Once your client has purchased the stopper, they are much more likely to purchase and to drink more sparkling wine knowing that they can happily preserve the contents for much longer than before. They will not hesitate to open that chilled bottle sitting in the fridge.
So that means that when your profit on a particular sparkling wine is also double its cost price, your revenue will double too! The result is increased sales and margin for you and less wastage for the customer. A win-win situation for you, for a greener planet and your happy, satisfied client.
Not only do the stoppers function well but they also look great. All Avina products come with a lifetime guarantee which means that your customer only has to make this purchase once while they keep coming back to you for more sparkling wine.
We would love for you to take a look and try out our product. Request your free sample of the Champagne and Sparkling Wine Stopper below.
How do you make a small fortune? Start with a large fortune and then open a winery. Yes, it’s an old joke, however it’s one that could very well apply to you or someone you know if you’re reading this. The wine business is a tricky one, but also a highly rewarding and interesting one.
Proof of this is the impressive amount of studies that have been done on the economics and consumer behaviour surrounding wine and wine making. Over the years we have dissected many industry specific case studies to try and keep up with the fast pace of changes that we are faced with today.
In this article we have compiled five of our favorite studies of 2018 that we believe could benefit other wine industry professionals.
2018 Silicon Valley Bank Wine Report
While this is more of a report rather than a study we would not dare keep this from you. Written by Rob McMillan, EVP and founder of Silicon Valley Bank’s Wine Division, this is probably the most authoritative annual report that does a great job of giving us a clear picture of current conditions, while providing a unique forecast based on micro- and macroeconomic and behavioral trends.
In the 2018 report, Mr. McMillan says that “successful wineries 10 years from now will be those that adapted to a different consumer with different values – a customer who uses the internet in new and interactive ways, is frugal and has less discretionary income than their generational predecessors.”
The report that takes author Rob McMillan 4 months to make each year, provides the reader with more than enough evidence about the current state of the wine industry and what is influencing existing or emerging trends.
Percentage of growth for wineries in US
Closing with bold, yet data backed forecasts this report is proving to be a go to source for many of our business decisions and a must read for any wine professional.
Sonoma School of Business and Economics: Wine Business Case Research Journal
While this one is technically not a study but a journal full of studies, we doubt our readers would mind us sharing this one. At Sonoma School of Business and Economics, several contributors have kept a journal of wine studies.
Their description reads: “Welcome to the Wine Business Case Research Journal. Our mission is to provide exceptional decision-focused case studies involving real people and real events in the global wine business context. We will publish multimedia cases as well as cases in traditional document format. These cases are grounded in field research to illustrate the complex challenges that wine businesses contend with today.”
The WBCRJ is published by the Wine Business Institute at Sonoma State University. The Journal is dedicated to enhancing case research and publishing exceptional teaching cases in an electronic format. A unique feature of this journal is to provide an industry digest of each issue’s cases for dissemination, thereby informing global wine researchers and industry practitioners about cutting-edge challenges and possible exemplary solutions.
Making a connection: tasting rooms and brand loyalty
Branding in the wine industry has been one of our main focus points from a business perspective which is why it should be no surprise to find more that one study on the subject in this top 5 list. This study by Joanna Fountain, Nicola Fish, and Steve Charters the researchers look at the value of the winery tasting room as an avenue for relationship building with consumers and its effects on brand loyalty.
As to its findings, Emeraldinsight states: “Establishing brand loyalty through a winery tasting room experience requires more than just good wine or good service quality, it requires an experience which is personalised and which establishes an emotional connection between the visitor and the winery, their product and winery staff. Generally smaller wineries are making this emotional connection more effectively than larger wineries.
By contrast, staff at small and larger wineries alike were making little effort to establish concrete links to instil brand loyalty with the wine tourist post‐visit by encouraging repeat visitation or promoting their mailing lists or even eliciting wine sales.”
While the study is by no means as thorough as the aforementioned SVB Wine Report, due to the relatively small number of consumers the researchers focused on, it is definitely an interesting read.
Globalization And The Emergence Of New Business Models In The Wine Industry
Dating back to 2005 this study is slightly older than the others, but this is where some of its strengths lie. As a reader we are in the unique opportunity to look at these predictions with the information and insights the writer was lacking at the time, and see how they have played out over time.
The abstract from the study by Richard M. Castaldi and his team from San Francisco State Universityreads: “The forces of globalization have dramatically altered the international competitive landscape of the wine industry. This paper identifies and analyzes four new business models that have emerged among major industry competitors as wineries strive to create sustainable sources of competitive advantage.”
Business models according to Castaldi
In the study Mr. Castaldi identified four different business models back in 2005. These models are classified as “Largest Player”, “Lone Ranger”, “Wine Groups”, and “Diversified Conglomerate”. Each business model has attributes that can help create competitive advantages, according to Castaldi.
For example, both the Largest Player and Wine Groups business models use economies of scale in innovation, production and marketing as sources of competitive advantage.
Take some time to revisit the past by reading this interesting study on wine industry business models.
Boozing or branding? Measuring the effects of free wine tastings at wine shops
While at first the catchy title caught our attention, the methodology of this study was interesting enough for us to read through this one. By reading out scanner data from wine clubs after hosting a free wine tasting, researcher Larry Lockshin focused on both the sales effects of free wine tastings and the effects on attitudes towards future purchases four weeks after the tastings.
This is a case study that has been put together well with interesting findings: “Scanner data shows a 400 per cent increase in sales of the wines tasted on the day of tasting, and a small but significant effect on sales during the four weeks afterwards.
Only about 33 per cent of the attendees purchase; the other two‐thirds are boozing.”
The importance of the tasting room has recently once more been underlined, this time by the 2019 SVB Wine Report showing that 42% of the average wineries total revenue come from tasting room sales. So what are some strategies to improve revenue?
In this article we will dive deeper in to 3 proven strategies to directly impact your tasting room bottom line. Make sure you scroll down to the end, because we’ve saved the best for last (hint: it’s 3 more bonus tips.)
This blog is a 20-minute read. Don’t have 20 minutes? Dowload the article + the 3 bonus tips as a PDF and read it later.
Sales training
The first and probably most obvious tactic to take your tasting room sales game to the next level is by going through a sales training or enrolling your staff in a training.
Sales is a learnable skill and these days there are countless options out there to get the right training. Even if you happen to be in a remote location, plenty of crafty trainers have now moved their resources online for anyone to access. This leaves you with absolutely no excuses to skip on upgrading your sales pitch.
When deciding on picking a trainer there are a few key factors to keep in mind. One expert on this is Lindsay Kana who is the director of Sales&Marketing at VingDirect.
Since joining the Ving Team, she has worked closely with family wineries to help them increase their DTC Sales. Her favorite project is VingDirect’s very own Direct to Consumer Assessment! She earned a Bachelor’s degree in 2006 from Texas State University and she lives near Austin, Texas with her husband, two daughters, and a yorkie-poo.
Lindsay Kana says:
“Look for someone who has experience with training groups, and has created and delivered trainings for the wine industry. You want someone who is enthusiastic, knowledgeable, and has experience with delivering education in a fun, meaningful way. It’s important that your staff connects with them and finds value in their content and teaching style.
I believe it’s also important to find someone who works for a company that is established and has provided value to the wine industry. If the trainer is providing online training, it’s important that they are familiar with all of the digital tools and education platforms and technology that exist today. Research, and find the best fit for your winery and staff…and remember education should be ongoing and FUN!”
VingDirect services include wine club assessment and improvement, mystery tasting programs, DTC Assessments, and online and in person sales training. Visit VingDirect here to learn more about the opportunities for you.
After you’ve made a decision on the trainer you’re going with, the next step is deciding what channel works best for your situation. Do you frequently hire new people? Then perhaps it might make sense to pay for an online course that you can access whenever you want, rather than on-site training.
Online training
We have indexed some of the best options available for online DTC wine sales training to save you from the trouble of going through the process yourself:
On-site training arguably has a few advantages over online training in that it’s more personal and tailored-fit to your specific situation. To get the most out of your sales training make sure you prepare beforehand. In the end these trainings are a big investment, and this investment is being made for a reason.
A good trainer will help you prepare, probably by sending you a questionnaire, but there is some homework you can start with right now that will help you and your team get the most out of the opportunity.Get your mindset right
Some more experienced employees might look at sales training as the cost of working in a retail environment, but this isn’t the right approach. Make sure everyone that will participate acknowledges they don’t have all the answers. Everyone, regardless of amount of experience of number of sales, can learn something new.
A growth mindset is essential for getting the most out of anything, including sales training.
Get people excited. As a leader it’s your responsibility to get your team engaged in the activities you are undertaking as a team, so make sure you are taking on an active role in the process leading up to the event as well as during.
This ties in to the next point, which is giving it your all. Don’t just show up to show your face, but actively participate and lead by example. Ask questions, answer them, and don’t be afraid to speak up when things are not clear.
Lastly minimize distractions by informing everyone when you’ll be joining the training and set your status to ‘do not disturb’.
Don’t be afraid to step out of your comfort zone. You might be used to interacting with customers all day or chatting about the weather with colleagues but going everyone has a comfort zone and going through a group activity is likely to test yours.
Make an effort to step out of your comfort zone by collaborating with others you might otherwise not engage with too often, and don’t be afraid to talk about your personal challenges in your daily activities at work.
Preparations beforehand
If not already provided for you, try and get an outline of the session and the topics that will be touched on by the trainer. That way you can work out some questions beforehand or do some research.
Set goals. This is as important in a sales training as it is in general life or managing your tasting room. What are you hoping to learn from this session? What is the biggest struggle you are facing most often?
Make sure to also focus on that last part. In the end it’s always most profitable to fix smaller issues that come up daily than it is to try and tackle a big or unique sales obstacle that only comes up once every 2 or 3 years.
Know and understand your customer. Take some time to put down key characteristics of your main customer. What are common objections for not buying your products? Is it price? Or are there other factors in play?
The more you know about your customer the better you will be able to understand them, which will help you ask better questions to your sales trainer as well as ultimately sell more.
One of the most powerful lessons you could learn from a sales training is to know which issues your customers are facing, and how to solve them.
During the training
Relevance is critical. Therefore, make learning situational, real-world based. By making things practical you take out any guesswork your sales reps might have on how to apply this in their daily activities. This means having the training done in your actual tasting room rather than any other room.
By doing this you will not only making the teachings more actionable, but the attendees will also feel more at ease and should be better able to come up with relevant questions.
A relevant sales training should give a “just in time, just for me” feeling.
Focus on the ‘why’ in addition to the ‘what’. While it’s great to learn more about the tried and tested sales techniques that will work for your particular situation, knowing the ‘why’ behind these sales techniques will help you and your staff gain a deeper understanding of the factors driving a tasting room its success and failure.
This way you get more value out of your training as employees will be able to adjust the techniques to specific challenges and situations that come up rather than trying to learn a new trick for each challenge.
Don’t feel stupid saying ‘I don’t know’. This ties back to the mindset part and leading by example. Not even the most experienced tasting room manager has all the answers, and by acknowledging this you create an environment where people feel free to talk about their individual challenges.
Just keep the end goal in mind and try and get there by all means necessary. Even if it means having to sacrifice yourself a little.
After the training
Now that the hardest part is over it’s time to make sure you’re getting the most bang for your buck and your staff feels like they got the most out of this opportunity.
This is the time to bring out the wine, if you hadn’t already done so, and toast to a successful training. But also make sure not to forget the following steps.
Leverage technology
If your trainer allows it make sure to record the training. Some trainers will be hesitant to allow this but you could sell it to them (pun intended) as a great opportunity for them as well to create authentic social media or promotion content for their business.
Make clear to them you will only use the recordings for internal training purposes and most trainers should have no objections to this.
Recording the training is important because research suggests that 79% of what is learned, regardless of quality or delivery, is forgotten within days and weeks. Having a knowledge base for your staff to refer back to will help tremendously in increasing the value of your investment.
Moreover, any future hires that are coming in to the company can now be trained on-site without any additional investment necessary besides their time.
Internal Communications
Often overlooked, but ever-important. Whenever you’re trying to change something, make sure everyone in your organization know about what you’re trying to accomplish.
Even if your entire team was present at the training event it will still help to send out the main takeaways from the training and the goals set together. Additional benefit is that this is an easy way to keep everyone accountable and to check up on progress made.
What will help in keeping everyone engaged and involved is to clearly write down the (revenue) goals that were set, the steps and tactics agreed on to get there, and the daily tasks that come with this. Then turn this list in to a checklist that can be placed in a visible spot in the tasting room, out of sight of customers of course.
Now while in the end the responsibility for carrying these checks out should always be with the tasting room manager, delegating this to more junior staff is a proven way to increase involvement and to stimulate growth.
It’s a great way to show your most trusted employees how important they are and how you’re not afraid to give them responsibilities, while at the same time keeping the team accountable.
Need some inspiration? Why not use our example list?
The retail area of a tasting room is by many seen as the easiest way to improve revenue and sales.
What’s best about these areas is the fact that if customers have had a great experience, they can go out on their own and pick items to add to their purchase. This provides wineries with an easy revenue stream which can really add to the bottom line. So how do you make the most of this opportunity?
There are some obvious points that every tasting room manager will know of but that we do need to touch on, but we will also look at more advanced tactics to increase the effectiveness of your retail area.
Replenishment
How are you taking care of replenishment? Are there procedures in place? While there probably are, how do you check up on this? Because you can have the fanciest POS that will allow you to print out your sales and replenish sold items, but what happens when you’re away?
It’s important to make sure each employee follows up with their replenishment duties even when things are busy and hectic. To make sure this happens it can help to have a list in place that employees need to sign after they have replenished the retail area.
Here’s an example for what such a list could look like. Want to use it? Download it below.
quick tip: does writing things down take too long? Take pictures of empty spaces instead to speed things up
Items that are in the storage area will never get sold unless customers specifically ask for them, so make sure employees understand the importance of keeping the shelves filled throughout the day and especially during the busy moments.
One way of organizing this is to write down who will take care of replenishment at which point during the day and making sure the person responsible will sign that list once the task is completed.
Presentation
Visual presentation is (almost) everything in retail. Attention to detail is vital – from cleanliness to unique and relevant product offerings that compliment your brand’s story. Dust or disorganization are big turn offs for anyone as it’s a clear sign of disinterest and a lack of passion.
Practice with creating different types of displays that are compelling and that complete the story that you’re telling to people once they visit your location.
To put it simple: if you’re trying to sell expensive wine, don’t just throw some random wine accessories together and expect people to hand you their money.
On the contrary rather, as a neglected and low-quality retail area can turn people away from taking out their wallets and spend on your core products as well.
Perhaps most important to consider in terms of presentation is product performance. Take time to regularly review product performance to inform your merchandising decisions.
What’s important to take in mind is the various walking routes customers might take and how that affects what they’ll see first or most frequently.
Big retail companies such as Zara use their camera systems to give them a heatmap of their floor, which is an indication of walking routes people most often use. With this map in hand, their staff will then place their most popular items at the busiest points in the store.
Not only that, it will also give them ideas of which parts of the store are not well accessible and they can change their furniture arrangements accordingly.
While that is probably too big of an ask for 9.9 out of 10 tasting rooms out there it can serve as a lesson on just how important and serious this is. If you have the ability to do so, consider moving your furniture around in different setting which allow you to place your best-selling items in more visible spots.
Action point: next time you’re entering your tasting room, try seeing things from a customer point of view. Which areas are you naturally drawn to? What is the first thing you’re seeing? And how easy is it to walk around?
To tie these two together make sure you present your best-sellers in the best way possible. One way of doing so is ‘doubling’ them – displaying your best items at more than one point of the shop. Another way could be to reserve a full shelf for one type of wine but try different ways of stacking the bottles.
No one likes looking at a monotone shelf, but by lying down part of the bottles and standing up the rest you can still create a compelling display while increasing the amount of units you have on the floor for this item.
Ever been to a high-end restaurant with crappy toilets? Me neither.
The most difficult part of picking the right composition of your assortment is having products match your brand.
Rather than assembling random items, take a moment to write down what it is you want your guests to experience when they visit you. What is it you want customers to feel when it comes to your brand? Your location should breathe that message at every touchpoint, from the toilets to the products in the retail area.
Another factor to consider is seasonality. While it may be tempting to ‘pick and forget’ when it comes to your assortment, frequently rotating items to match the current seasons or holidays is a great way of increasing customer engagement and providing them with that ‘wow’ experience we’re all aiming for.
Stock management
One key component to account for is inventory-to-sales ratio. It’s an absolute waste of money to have piles of units sitting in your stockroom, while nothing is more painful than running out of your best selling items the day before an important event. That is why keeping score is important.
Most POS systems will automatically give you insights in to best selling items so make sure you make a habit out of reviewing this information at least once a week, and cross-check this with your inventory.
A good way of going about this is looking at the rotation time – how long it will take for you to sell out if you keep selling at the current pace.
Units you have in stock / Units sold per Day/Week/Months = Number of Days/Weeks/Months your current stock will last
If your rotation is too high, you might want to consider using excess stock as incentives for customers to trade up, or if you use branded tools consider giving them away to loyal customers.Product pairing
Make sure you learn which products are frequently bought together, or which products you believe go well together. If the same pairs often get bought consider displaying them together and make sure you communicate with your sales staff about the trend you’re seeing.
That way they can suggest the pair to customers they’re in contact with and it’s a great way of making them feel involved and responsible.
Focusing on Average Sale Value
What if all your customers just bought more? Yep, life could be that easy.
In 2017 the famous SVB Wine Report showed that tasting-room revenue was up countrywide despite declining visitor numbers, but what was driving that higher revenue is improved average purchases. Wineries are simply selling more per transaction and this seems to be the best strategy going forward.
Knowing which items move the needle for your business is vital in effectively using this tactic to grow your revenue. In order to effectively cross-sell you need to not only be aware of your best-sellers but also have a strategy in place for having your entire staff know about this as well.
A great way of doing so is by quizzing them before their shift starts or by giving a small presentation about which items have sold the best over the last period to keep things fresh in their mind.
Bundling your best-sellers is a great way of increasing average order value. For example, you can provide a ‘buy 3 and get a free gift’.
By incentivizing customers to trade up by giving away branded items when a certain threshold is crossed you can not only increase revenue but increase return visitors and word-of-mouth referrals as well.
Image: Example of branded sparkling wine stoppers used by Dalwood Vineyards.
Having your brand in peoples hands and homes is a great way of staying top-of-mind. And if the quality of these tools is a good enough representation of your brand, you’ll end up being a topic of conversation at social gatherings.
Not convinced yet? Get this. Did you know that 83% of consumers say they either completely or somewhat trust recommendations from family, colleagues, and friends about products and services – making these recommendations the highest ranked source for trustworthiness. (Nielsen)
This falls perfectly into the strong trend in consumer behaviour which is more focused on experience and building a connection with a brand, rather than just comparing features such as price.
Having your business card in their homes in the form of wine accessories will enable great times to be a result of your brand.
Do you want 3 more exclusive tips to raise Tasting Room revenue in 2019? Including one highly unique tip that has transformed the way many people think about their business?
Download the Tasting Room Revenue Boost package that includes:
– 3 additional tips that are likely to help you increase tasting room revenue, even if you’re already making your sales targets.
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For as long as we have known, the only way for consumers to experience what a wine brand is all about is by visiting the tasting room. This is not by accident either.
The evolution of the concept “experience” has been defined by the wine industry itself rather than anyone else. The problem this has shaped is that all the focus on brand creation is now resting on the tasting room and wine club, severely limiting other strategic options wineries allow themselves.
The importance of the tasting room has recently once more been underlined, this time by the 2019 SVB Wine Report showing that 42% of the average wineries total revenue come from tasting room sales. But as the same report shows and states, the tasting room is cracking under the pressure.
Tasting room visitor numbers in the regions of Napa and Sonoma have trended downward for the past five years. There are many reasons for these numbers dropping, but it’s not fewer tourists. Tourism is up however wineries are failing to interest the changed consumer behaviour.
Key factor in maintaining sales growth despite declining visitor numbers has been the focus on average sale value and customer satisfaction. Retail experience and customer satisfaction have been proven to play a vital role in this.
While wine producers with long-established brands still manage to continue to perform above average, the below average performers all share the same characteristics which, according to this report, include failing to collect customer feedback, a lack of sales training, and more.
Key Influencing Factors
Miguel Gomes, assistant professor of horticultural marketing at cornell University, conducted an in-depth study showing that customer satisfaction is directly tied to increased sales (on average one more bottle per visit). Among his main focus points for tasting rooms he included retail execution and atmosphere. Notable is that these were ranked higher than tasting experience.
“Attention to the details of the tasting room experience can convert a “satisfied” customer to a “highly satisfied” customer who will buy one average one additional bottle of wine, spend an additional ten dollars, and is highly likely (92% probable) to become a repeat customer.”
The good news is these details are largely under the control of the winery, the bad news is that many are still relying on wine to sell itself or are failing to increase the amount of non-wine options available for visitors. By their unwillingness or inability to give priority to increasing average sale value these wineries are refusing to take a page out of the playbook of the successful industry giants.
This recent tasting room trend review report actually showed a -2% decrease in sales per taster with smaller wineries (between 1k-6k tasters) performing the worst.
While there definitely are US regions that are showing promising growth figures, such as for example Oregon, the undeniable shifts in consumer behaviour will be a growing concern regardless of geographic location and short-term trends.
Conclusion and Solutions
With the heavy reliance of wineries on DTC sales, and tasting rooms being the main channel for realizing this revenue, more and more tasting rooms are failing to adapt to the market trends and it’s becoming a growing problem.
The shift to online channels, lower trending visitor numbers, and failure to increase average sale per visitor are some of the key factors in play for many wineries involved.
However, as with every problem there are solutions available, most of which can be found in this article offering 6 proven tactics for improving tasting room sales.
“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.
The Value Of An Experience
Among 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 luxury 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.
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.
Improving Average Purchases
One strategy that would tick all the boxes for wineries is adding more products to their catalog. 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.
This falls perfectly in to the trend in consumer behavior 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 catalog 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.
Importance of Brand Building
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 process.
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.
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.
Interested in knowing what works best for your situation? See how we can help or get in touch!
With the ever ongoing transition in consumer buying behavior from offline channels to online ones many retailers find themselves struggling to keep up. Several reports have shown that businesses who fail to offer their customers a valuable online experience are falling behind. In the winery business, where many are relying on providing an exceptional face-to-face experience in tasting rooms, transitioning to online has proven to be too challenging for most.
“A brand is a company’s most important asset. A company can’t “own” it’s facts. If the company’s facts (speed, price, quality) are superior to the competition, any good competitor will duplicate them or improve on them.”
Just as in any business environment those who fail to adapt are usually the ones left behind and the wine business is no exception to this. While the average number of DTC transactions is in steady decline, the more established wineries are able to raise their average order value due to their strong brand image.
In the 2018 SVB Wine Report research shows consumers are placing more value in the experience and connection with a brand rather than just comparing features such as price. However, when comparing offline and online presentation, only a small percentage of entrepreneurs in the wine industry have implemented a consistent image to consumers over multiple touch points in order to build brand recognition.
One more variable to consider for business owners is the changing landscape of the consumers they are targeting. Now representing 19 percent of the current fine wine consumption the millennials are a presence whose impact has falsely been overestimated by the wine industry. This goes to show the fine wine industry has up until now failed to activate the new generation of consumers.
As the millennial generation is approaching their prime spending era, marketing efforts should be aimed at the preferences that are unique to this new segment of consumers entering the wine market.
Factors that play a key role in this are, amongst others, the wineries online presence as well as the environmental policies of the winery. A study carried out by Sonoma State University students amongst millennials clearly showed that website quality was a significant predictor of increased trust in the winery and perceptions of the quality of the wine.
In a different study carried out by the same researchers data suggested: “consumer perceptions about product quality, consumer trust, consumer perceptions about pricing, and positive expectations for the consequences of the wineries actions undertaking the pro-environmental policies, all have strong, positive relationships with the wineries brand equity.”
Most notable point in this is how a positive feeling towards a wine brand directly impacts perceptions of product quality. This goes to show that in order to influence DTC buying behavior winemakers are best off diverting at least part of their focus to building strong, lasting relationships with their consumers.
Examples of Strong Branding Efforts
While not all wine makers seem to be ready to make a strong impact on their brand equity in 2019 there are some positive outliers to be found. One of those examples is the oldest winery in Napa Valley, Charles Krug, who is staying young in the branding department. In our recent case study done on the brand building efforts by the iconic winemaker we went deeper into what tactics work best for the Krug family.
One more winemaker that is leveraging the power of brand building and storytelling is the Granite Creek Vineyard. They are ticking many of the boxes when it comes to valuable qualities to have in 2019 and are putting them to good use.
Their brand is centered around the organic nature of their wines, something that will prove to be increasingly important going forward. However, there are many more lessons that can be learned from the Northern Arizona based winemaker that can be applied by wineries that aren’t deploying organic growing operations.
Granite Creek has established a community of wine lovers around their brand by creating their very own wine club (called the ‘Case Club’), hosting tastings, live music shows, and other events. The Case Club builds a connection to the brand, so it is a smart way to improve average customer value and build an audience of fans that can be promoted to over the long term, so it’s also an investment in a profitable future.
Combine this with special Valentines events and it is no surprise the Granite Creek fanbase has grown well into the thousands.
Dalwood Vineyard
Another winery that has been innovative with its branding efforts is Dalwood Vineyard. This UK based, award winning wine maker has found a creative way to both increase the average order value and permanently find its way into people’s homes.
In a time of transition to more digital channels, word of mouth is still the strongest form of marketing available and Dalwood know how important the personal touch is in building brand reputation.
Focus on the audience – key thing to keep in mind when investing in the story and presence of any brand is the audience you are looking to reach. While it might be tempting to build the brand entirely as you had envisioned it, you run the risk of ending up with a brand that is tailored to just your own preferences. While this could certainly make sense from a hobby perspective, it does not from a business one.
Invest in your online channels – It is now more important than ever to focus on your online channels. A strong website will directly impact the perception prospective customers have about the quality of your products and combined with a well equipped web shop this will be a safe bet for winemakers in 2019.
Provide great customer service – it is important to keep in mind that customers are expecting more from their experience with your brand which means investing in your offline touchpoints as well. Being omnipresent will keep you top of mind with your audience and will help establish your wine making business as a brand to be trusted.
In the end you don’t have to be world famous to be successful, just famous enough with the right group of people. To sum up:
Invest in your online presence by sharing your story on various channels
Have a well equipped web shop to avoid being a ‘one hit wonder’
Make an effort to keep your brand top of mind with your audience
Did you and your friends ever come up with this crazy idea after a couple of drinks? Well, you’re not alone. Fact is however (and this might surprise you): most of these ideas never get carried out. But that’s probably for the best though, isn’t it?
Did you and your friends ever come up with this crazy idea after a couple of drinks? Well, you’re not alone. Fact is however (and this might surprise you): most of these ideas never get carried out. But that’s probably for the best though, isn’t it?
In some cases, however, these ideas do come to life and in the case of Dalwood Vineyards that can be seen as a happy ending.
Here’s how they describe it:
“Dalwood Vineyard was an idea first discussed twelve or so years ago, but like many good ideas it took a while to happen. Eventually, the subject came up again over a pint or two, and this time a group of six Dalwood villagers decided to make it happen. Backed by knowledge gained from a course on vine growing at Plumpton College and a willingness to learn, we planted the first vines in Dalwood Vineyard in 2009, the first acre devoted to Seyval Blanc.”
Goals
England is gaining a strong international reputation for sparkling wines, regularly seeing off champagnes and other sparklers in competitions. Because of this, Dalwood Vineyards decided to devote their first crop to a sparkling wine.
This turned out to be the right decision, evidence of which is their 2015 Brut being awarded, two of their wines being picked as finest wines at #ukwinehourlive 2018, and being suppliers to top100 hotels in the United Kingdom.
Their success is only being topped by their ambition heading in to the future, as the Dalwood guys are looking to establish themselves as a dominant presence within the British sparkling wine market.
The Situation
Being a smaller wine maker and trying to get your foot in the door with buyers can be a daunting task. Many wineries are struggling because of this as they are failing to rack up the deals necessary to sustain themselves.
Because of their smaller size and brand awareness amongst the right people the quality of their wines sometimes gets overlooked, as buyers play it safe by going with the more established options available. Because of this diverting some resources to investing in the right professional image becomes necessary.
In order to confidently engage in sales meetings and wine-oriented events winery owners and representatives need to be equipped with the right tools to both make a good first impression, as well as a lasting one.
The Solution
By being able to use their own tailor made, branded wine accessories, Dalwood Vineyard representative Mike Husky is now able to present the brand in a new and improved way.
The ability to seal his own bottles with a branded stopper gives him more confidence presenting his brand at events. With the increased ability to present Dalwood in a professional manner Mike feels it will now be easier to be accepted at wine tastings and buyer meetings.
One of the company’s finest accomplishment for 2018 was being picked to supply the Giner Peanut, a highly decorated British hotel which is featured on several “best of” lists put together by the publishers such as The Times and The Guardian.
Additional Benefits
Their direct to consumer efforts also saw an improvement in 2018. Wine stoppers and sparkling wine stoppers make for a great incentive for customers to trade up – to increase the value of their order. With this exact tactic Dalwood Vineyards were able to improve their revenue in 2018.
By offering a free branded stopper if customers bought a full case of their decorated 2015 Brut, they did not only see an immediate result from their branding efforts, but they also were able to get their brand and logo into the hands and houses of many wine lovers around the country.
This way Dalwood also provides their most loyal members with more opportunities to refer new members. With this they have now added an ongoing customer acquisition strategy with zero effort going forward.
Keeping in mind that the 2018 Silicon Valley Bank Wine Report showed that businesses that are able to raise the average order value per customer are the ones that can increase sales and brand equity, being able to incentivize clients to make a bigger purchase by adding a branded gift is a great way to capture multiple birds with one stone.
Dalwood Vineyards are now able to leave a lasting impression in the hands of their most loyal clients, their average order value has gone up, and they are investing in long-term relationships with their customers without any effort.
Proof of this are their raving customer reviews they recently received:
“Amazing wine! I am always proud to buy from Devon and this wine is no exception. What made it so much more special was the excellent service I received from David in regard to ordering and shipping. Managing to time delivery for when he was in the area (Cambridge!) was good luck, but in general, it was just another example of a fantastic Devon company.”
It is important to keep in mind that besides serving some of the finest sparkling wine in the United Kingdom, the sparkling personalities of the Dalwood Vineyards guys do help too when it comes to customer satisfaction.
But the importance of investing in the right quality of service shouldn’t be news to any winery owner.
Results
After working with Avina, business owner Mike has been able to improve the brand equity of his winery, as well as directly impact the finances of his business.
What’s next?
What’s next for the Dalwood guys? The are very much looking forward to what 2019 has to offer for them and are feeling confident they will be able to secure many more interesting deals. They also plan on presenting themselves at several wine related events across the country.
Their Avina sparkling wine stoppers will be playing a starring role then too.
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