The current economic situation has created challenges for many, but we are also seeing wine businesses that have grown. These businesses are forging ahead in two specific areas: managing brands with more discipline and looking to innovate in their sales channels.
The wine industry is particularly challenged - with a scarcity of verifiable data and a ton of anecdotal information, making it hard to predict the future. We triangulate on several data points, just like a navigation system, yet sometimes end up a mile away from our destination. Industry innovators, those who understand how to manage risk and problem solve, even when they miss their destination, usually end up in a better position than their competition.
As such I would like to share a couple of inspiring stories about business leaders who are pushing the envelope and an industry that is hugely in transition.
'Managing with more brand discipline’ examples: Anecdotally, we are noticing that several well-established, luxury Napa and Sonoma brands - with track records of wine quality and relationships in their distribution channels, are getting more traction this last quarter than lesser known brands. A well-established, north cost winery owner recently commented: ‘3-5 years ago when new industry arrivists were the sweethearts of market influencers, we were being punished for being a brand. We were not getting as much attention. Now we are benefiting from the fall out of these very high-priced newcomers.’
Keys to this owner’s success has been more persistent messaging reinforcing their existing brand equity as a multi generation family with a long term commitment to wine quality, and their relentless pursuit of time-honored relationships with key customers in all sales channels. This same winery is also gunning ahead with some of the innovations discussed below.
Nielsen scan data supports this trend and reveals that highly-differentiated and ‘authentically-local brands’ are getting more traction than those that aren’t. These winery success stories are all about leadership commitment and focus on fundamentals.
'Innovating in the sales channel’ examples: Most wineries are seeing declining-to-flat luxury wine sales. I am struck by a recent trend leveraging outbound, trained telephone sale teams and innovative Customer Relationship Management (CRM) tools applied to generating growth in luxury wine sales. Although some wineries are attempting to do this internally, several professional firms are sprinting into this space faster and better. One in particular, Provino out of Santa Rosa, stands out by sheer track record and performance (18 months of demonstrated $50,000/month sales for many of their brands in their portfolio). Check them out: www.provinowines.com.
You may have heard about a client of ours: TastingRoom Inc. (TR, Inc.) and their 50ml bottle sample kit technology. Consider that many of these same wineries I refer to above are also early adopters of this exciting new sales channel innovation that is enabling wineries to expand reach with customers that want to taste their wines before buying them. Here is a fun article in LA Times covering one of TR, Inc.’s winery partners: Wine-tasting rooms go mobile: New sample-size bottles allow people to try new vintages without traveling to wineries. Check them out: www.tastingroom.com. And bookmark them for mid May when TR, Inc. launches another major innovation.
My observations also turn to a recent report by non-industry press – concerning Napa area vineyard defaults and an industry in transition. We believe this to be a trend that is more than mortgage-related and includes distressed sales and heavily leveraged transactions occurring on record (publically) and off record (privately). We also suppose that more than 18 wine-related properties, and possibly closer to one hundred, will be impacted by this trend before this industry and economic phase is over –across the U.S. Wine Industry (which includes California, Oregon, Washington, New York, etal - not only Napa).
Personally, I feel our industry leaders can get stronger at ‘plotting’ a future position and at managing risk: challenging traditional thinking, executing better and innovating more.
As wine industry advisors, for the last 6 years we have helped our clients push the envelope and grow financially viable businesses. Our goal is to provide accurate information and useful insights that help business leaders identify and seize opportunities for growth. |
