It’s easy to make wine, it’s tougher to sell it!
Throughout the course we have heard about the challenges of working in the wine sector, specifically for smaller wineries. As part of our research interviews for our final project the quote from Tripp Donelan "It’s easy to make wine, it’s tougher to sell it!" really stood out for me.
The struggle for these small wineries is making great wine really is only one small part of the process. To generate a strong bottom line - these small wineries need to focus their time on direct to consumer sales, whilst also marketing their products to a wider market in order to get sales.
It appears that years ago, scores played a bigger factor in driving DTC sale and they have some impact - with a lot of high scoring wines at good price points. For higher price point wines we heard consistently that they need to get out on the road and do tastings/dinners, etc. This drives up costs and is time consuming for often small and understaffed teams.
Although many of these wineries do have marketing and analytics it is still a complex process to truly engage customers and know what they like and dislike. In an increasingly digital world, people are busy and often get 100s of emails a day. Fighting to get your brand noticed is hard and you can often be overlooked.
With these challenges in driving sales direct to consumer - I question what it will take to move from high touch to low touch sales for these small wineries. How can they leverage digital marketing techniques to still build an authentic and personal connection with their current customers, whilst acquiring new customers who are more open to building digital connections to brands.
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Jack - thanks for this post. The increasing dependence on the D2C channel, particularly for smaller wineries, is also one of my key learnings from the course. The D2C channel comprises only 10% of wine sales, but 20% of profit, and for most wineries, it is their fastest growing channel. Unfortunately, it appears that channel is going to be disproportionately affected by coronavirus, as tasting rooms will likely either a) have to close down given government regulations regarding gatherings of larger groups or b) will suffer significant cancellations and no-shows. According to WineDirect, Napa tasting room revenue was down 22% in March compared to February, and hotel occupancy dropped 12% the first week of March. Another article from the SF Chronicle mentions a winery that had three corporate events scheduled with ~90 visitors planned, and all three have cancelled.
ReplyDeletehttps://napavalleyregister.com/news/local/amid-declining-travel-napa-s-wine-industry-braces-for-coronavirus/article_5843bfba-9d1a-5886-a845-7d610043412d.html
https://www.sfchronicle.com/wine/article/That-Napa-Valley-winery-corporate-retreat-In-the-15124100.php
https://www.sana-commerce.com/blog/a-2019-guide-to-wine-e-commerce-digital-disruptors-d2c-sales-and-industry-innovation/#D2C