Practical Winery
65 Mitchell Blvd, San Rafael, CA 94903
phone: 415-453-9700 ext 102
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Winter 2011
In the early 1980s as National Sales Manager for J. Lohr Winery (San Jose, CA), I saw our Chenin Blanc sales drop from 30,000 cases per year to zero, and our Riesling sales from 25,000 cases to 5,000 cases, in about 18 months.
My brother returned from a trip back East and said, “There is this new hot wine, Sundial Chardonnay. Also, Glen Ellen Private Reserve Chardonnay is selling really well.” The attitude of many wineries at the time was, “We will not sell our Chardonnay for those prices.”
One of our wineries in The Wine Trust refused until it was too late to even make a Chardonnay. They had a “house wine” brand that was doing quite well selling Cabernet Sauvignon and Sauvignon Blanc. We begged to swap the Sauvignon Blanc for Chardonnay, but they would not do it. It came back to hurt them.
Fortunately, by understanding the trend, at J. Lohr I created new wines and managed the rest of our portfolio from 44,000 cases annually to just under one-half million cases annually when I left in 1993.
The market swings on a dime. I sold a program to the Hyatt Hotels in the 1980s. We were selling 10-1 white to red wine. White wine was the new “cocktail,” although wine consumption was declining steadily. The two-martini lunch was out; health and fitness was in. Neo-prohibitionists were having some influence on the public; as was Mothers Against Drunk Driving. The drunk driving threshold dropped from 1.0 to 0.08.
During my plane trips at that time, if the person sitting next to me asked, “What do you do for a living?” and I replied, “I am in the wine business,” the reaction would be “Uh, Stewardess, can I move to another seat please?” Many of my colleagues were leaving the business to open up yogurt parlors so they did not feel like drug dealers.
Then, suddenly, 60 Minutes broadcast a story on the French Paradox. In one year, we went from selling 10-1 White to Red to a 1:1 ratio. Consumption started increasing. Now, if I
am on a flight and mention I am in the wine business, the passenger next to me is delighted, and launches into some wine experience.
Wine consumption is now at historic high levels in the U.S. Everyone wants a piece of this market. Because of that I believe our greatest challenge is and will be global competition. On top of that there is no guarantee consumption is going to continue increasing. We could be one major broadcast away from a link between alcohol and some form of cancer, which could lead to a very different market reality.
“I believe our greatest challenge is and will be global competition.”
How can growers and wineries prepare for the future? My first counsel would be, “Do not plant a bunch of Muscat,” not unless you can hang 25 tons/acre because the market reality is that the major players have already sucked the profit out of that grape. If it has not already happened, Moscato will go the way of other trends, such as the flange top.
When Robert Mondavi introduced the flange top and bee cap, I thought then and still think that it was a brilliant innovation — not too far out of the box, but different and distinctive. In about 1.5 years, before I could even re-tool at J. Lohr to capitalize on their success, that bottle and look had been relegated to low-end wines under $8 to $10 per bottle retail.
If I had to guess, and of course I do, I would plant Grenache. I like this grape a lot. It has a classic organoleptic profile, and you can make white, red, or rosé wine out of it. Because it is viewed as a classic Rhône varietal, it can exist at all price spectrums.
Small estate wineries that specialize in lesser known varieties better have a very well-honed Direct To Consumer (DTC) program. The dilemma for a larger winery is that the products you need for general distribution are the polar opposite of the products you need for DTC sales — particularly wine clubs and tasting room sales.
DTC programs and tasting rooms require a wide variety of items. Consumers want to try new things. Most important, you want to offer items in your tasting room that cannot be cross-shopped at Costco.
Distributors want narrow focus — a single variety per brand is best. With thousands of items in their portfolio, they can only focus on so many brands. Also, we face the very real dilemma of the six-bottle bag that the sales reps carry their samples in. If we get one wine in the bag it is a success; two is nirvana.
“Distributors want narrow focus — a single variety per brand is best.”
Mobile marketing
The new media has brought us a way to get around the distribution dilemma: mobile marketing. However, if the Millennials are into all the new technology, social media, etc., and they are no longer your primary target, what is the point of using these methods for marketing? Good question.
My older son, 28, is a computer guru who initially joined MySpace, then Facebook, and has always been on the leading edge of the technology. However, he recently told me he has closed his Facebook account, as have all his friends. When I asked him what they have replaced Facebook with, he answered, “Nothing, I guess … well, I guess the phone … if I want to talk to my friends, I just call them … or text them.”
Puzzled, I contacted my friend Andrew “Boz” Bozworth, Senior Analyst at Facebook — User #7 or something like that. He replied: “I am a little shaky on my definitions of exactly where one generation ends and another begins, but Boomers are certainly big business on Facebook. While they are not using it quite as much as younger demographics yet, it is getting pretty close … The Boomers are also the fastest growing segment and, in general, activity follows growth so I think you are on the right track with your message.”
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