Challenges and Changes for Boutique Wineries – Are They Ready?
The wine industry as a whole is under siege from demographics, economics and this insidious virus, Covid-19. Small and family owned wineries are at a critical stage in their life cycle. How will they survive? What are the challenges? How should they engage their customers? These and many more questions and hopefully a few answers will be suggested. The sales channels have been shifting like an earthquake fault with the same instantaneous timing. The marketing of Direct to Customers (DTC) and club memberships has increased in order to fill the void of selling to the restaurant end market. This is by no means an encyclopedia or a road map for success, but below are a few ideas to hopefully weather the approaching storms.
For some time now many discussions have taken place regarding the transition of Baby Boomers to retirement and the Millennials, Gen-X, Gen-Y, Gen-Z etc., not taking up the “slack”. The introduction of new marketing of seltzers, craft beers, whisky and less complex beverages than wine have added to burden. Also the over production and grape glut in California, including storage issues, is reaching critical levels. Add to this the devastation of marketing channels brought about by the pandemic to small wineries, how will they recoup loss revenue and market penetration? Tasting rooms may be opening soon, but the experience will be totally revamped from the “old normal”.
First is the lack of accountability of the wineries in understanding their customers. Take for example some of the latest information that fully 55% of wineries have no dedicated person collecting data and only 27% have an employee part time in this effort! Why is this important and how does one collect it? A winery provides samples of their wines without requiring anything from the consumer. Collecting simply their name, age, key dates (birthday, anniversary), email, varietal preferences, etc., opens up a plethora of ways to marketing or co-marketing with restaurants, florists, etc.
With the data in hand, special occasions either solely or jointly marketed with a partner can provide coupons, discounts, incentives on the wines to be had at home or dining out. This data can be used for communicating with the customers not just for “special deals” but to foster and build up a relationship with their customers. Filling this void and engaging “friends of the winery” will develop a new and deeper avenue of a customer/client relationships.
Analysis of the data may provide details which the winery can leverage to increase sales. This can be loyalty programs for years as a club member, special wines for those key occasions (birth of a child, retirement, new job, birthday, etc.). Right now many have missed some significant celebration in their life. But before any program can be ignited, you must have the data. It is quid pro quo and should be a prerequisite for tasting or being a club member at any winery.
Personalization with customers is also key. Understanding what “floats their boat” is paramount in the equation. For example if a large contingent is into music, art, baseball, golf, football, etc., then provide those social outlets (when allowed to) combining your wines with those events. With tasting room traffic decreasing for some period of time, go meet your customer. Perhaps even doing wine tasting at their home with whatever the prescribed number of friends is allowed and under “social distancing” guidelines at the time.
Reinvigorating and reinvention of the tasting room is needed urgently in order to capture the meandering customer lost in the dry desert! If the customer cannot come to the tasting room or will be limited via numbers and reservations, why can’t the winery simply supple samples? Do a bottling of 187ml samples, single serving (perhaps charge new folks, free to club members) of your current offering? Enclose an order sheet with the samples and presto, you have an engagement.
The wine industry and specifically small and family owned wineries are facing an unparalleled challenge to their survival. Discounting is a bandage approach which will only erode their brand long-term. It is also a steep slope to move pricing back up in the future. Some have had to do this out of necessity for cash flow to pay for equipment or rent, but this can only go on so long. The challenge is to come up with a sure fire customer data collection process, innovative marketing (SMS messaging, small samples), creative outreach (knowing your customer) and meeting the consumer on his/her turf (including in home tastings/presentations).