Three Biggest Challenges Facing Small Wineries Today?

I think the real story in the Willamette Valley (and other small regions nationally) is that 75% of wineries produce fewer than 5,000 cases annually. It’s micro-production by any measure. They have survived because of so-called “Premiumization” and the recent fascination with their AVAs. What will happen when the next economic downturn occurs, as the distribution consolidation continues, and/or as vineyard and winery acquisitions accelerate (which they are doing now)? Are there business parallels between what is happening in Willamette Valley and other burgeoning industries such as craft beer or high tech? Is large destined to win? How will small craft producers survive and thrive in the long run?

Distribution

Distribution is one of the most challenging business problems small-production wineries face. Consider that just 20 years ago there were roughly 2,500 wineries and 3,000 distributors. The odds of having your wines represented by distributors were very high due to the demand for excellent wines. Distributors worked hard to help build winery brands. That is not the case today. There are more than 9,000 wineries in the U.S., and with the consolidation of the largest distributors, I estimate only 700 distribution companies remain. And for economic reasons, they focus on large family or corporate winery groups, high profit margins and depletions. The small winery simply cannot compete. Ironically, market research and industry studies show that today’s consumers want to try and purchase more from small craft brands (as opposed to the well-established brands that used to be consumers’ preference), but cannot find them available in the marketplace.

Additionally, I was reminded of the purchasing power of retailers that act as wholesalers. I made a trip to Costco recently and discovered cut-rate pricing for Willamette Valley Pinot Noirs on display for Oregon Wine Month. Would you believe $10.99 for Willamette Valley label wines? Concurrently, there are active initiatives to control labeling and varietal percentages to enhance the Willamette Valley brand and presumably our price points. I can’t make sense of this discounted pricing in the long run, despite the recent large yield vintages.

Competition

While there are still many small winery operations starting up these days, there are many others that are better equipped for this hyper-competitive environment. I believe we are living in a wine bubble that is destined to pop for economic, political or other unforeseen reasons. Starting a winery today requires significant funding and marketing wherewithal to stand out in today’s crowded, competitive market. We not only have too many wineries in small regions like Willamette Valley, we’re seeing many more from all over the world that bring serious investment dollars and business savvy to bear. Many smaller wineries aren’t so well prepared.

I am also starting to see high quality and reasonably priced $20-$30 Pinot Noir – which I believe is sustainable for most small wineries – and should act as a good hedge against eventual restrained consumer spending, as well as to supply national wholesale markets.

Brand Building

Why do this? Because top of mind awareness is the only way to ensure consumers will buy wine from you when they are ready. The adage goes something like this – Repetition breeds familiarity; Familiarity breeds trust; and Trust leads to Sales. It’s the justification for advertising and media relations programs.

While getting media coverage is still essential for businesses, it is increasingly challenging due to the proliferation of wineries and dearth of established writers with ongoing columns. In other words, the days of being “discovered” and handed a strong fan base due to media coverage have passed.

Writers are not paid enough to research and discover, nor do they have time to do so. Wine brands that stand out in today’s world tend to get ongoing media coverage for three reasons: (1) They are already popular, often written about, and quick and easy for writers to review; and/or (2) They are easily found in the marketplace due to distribution; and 3) They spend advertising dollars with a media outlet. Many print and online publications rely on a pay-to-play system to survive in a post-Internet world. This leaves many small-production wineries out of the equation, and mostly for financial reasons.

Another aspect of branding is controlling your winery profiles on social media. I like to think of social media as Consumer PR. Have you claimed your profiles on all the relevant sites? I mean not only the obvious ones – Facebook, Twitter, Instagram, but also the travel itinerary, wine country mapping, wine rating and mobile app sites. Monitor, post and engage consistently.

Strategies

My feeling is that a balanced approach of direct-to-consumer marketing (direct sales in tasting room/club members and eCommerce), ongoing brand building (using media coverage in your marketing), and specialized targeted distribution options (online brokers, targeted states) are required to ensure success. Unless you have been established for a long period of time (5 years or more), a reasonable goal is 20-30% wholesale and 70% direct sales.

Small do-it-all-yourself wineries are finally hiring marketing staff – DTC or Hospitality Managers – either from within the wine business or outside – experienced hospitality professionals (hotel and restaurant staff come to mind) are excellent hires. They understand the importance of the customer service experience and can quickly acquire sufficient wine knowledge. And they have direct experience with seated tastings, proven to generate higher sales per visitor. Give them a mobile POS and cut them loose.

Consider creating a staff position to manage your wine club, and choreograph the sales path with your staff. Why? Loyalty programs might be the saving grace for small producers. Revenue is recurring and mostly predictable. Members refer friends when treated well and their business is appreciated. Get a handle on this important aspect of your direct sales program while wine clubs are still viable.

Doing outreach and getting media exposure will continue to build awareness of your brand and unique market position to support these goals. Using third-party expert opinions (feature articles, wine reviews and scores) in your content marketing will help you to stay top of mind with your customers.

CARL GIAVANTI is a Winery Publicist with a DTC Marketing background, going on his 10th year of winery consulting. Carl has been involved in business marketing and public relations for over 25 years – originally in technology, digital marketing and project management, and now as a winery media relations consultant. Clients are or have been in Napa Valley, Willamette Valley, and the Columbia Gorge. (www.CarlGiavantiConsulting.com/Media).

Does Social Media Help Me Sell Wine?

The Ultimate Question. The Ultimate Answer?

Engaging in social media is like having your own PR department. I like to call it Consumer PR. You are initiating a conversation about your winery and presenting your brand to the public. For small wineries this can be a little scary due to perceived loss of control. Traditional media approaches like press releases, media outreach, advertising, and submitting wines for review are very important, but for small wineries the potential new audience reach and the economics around social media are compelling.

One of my long time clients recently said “Social Media is a waste of time.” This is puzzling to me because this is one way many people like to communicate. Interestingly, this specific winery has more social followers and gets more engagement than most other wineries. I believe that proving social media helps sell wine is the real issue. Before social media, could a winery prove that advertising, media coverage, events and festivals, or printed materials helped sell wine? Does anything other than hand selling wine help sell wine? The answer is yes and no, and proof requires vision, commitment, patience and an earnest effort to track and analyze the results of your marketing efforts. The reality is that the path to purchase is more complicated than ever and interconnected with other marketing efforts.

Brand Impressions

Brand image is incremental. Marketing professionals have long said that it takes between 7 – 13 touches to get a new customer commitment to purchase. With social media, wineries can achieve those touches and targeted impressions much faster than with traditional media approaches. Remember that the nature of social media is social, and that winery promotions typically should be a mix of informational (80%) and promotional (20%). In other words, establish your credibility before “The Ask.” Writing educational articles for your website about relevant wine topics and responding to all queries and comments is a great way to do this.

Engaging Consumers

Your DTC strategy is predicated on having a unique message – See my article What is your Voice? With social media, it’s easy to take an image based approach. Use Instagram and Facebook. Tag people, other wineries, wine industry businesses and associations to spread your message. Use photo captions and hashtags to focus on those customers who engage with brands online to expand the conversation. These customers spend more on average and have identified wine as an “Interest.” This makes targeting the conversation much easier. Twitter now allows images without character count, and using category hashtags like #wine #pinotnoir #winery #tastingroom help Twitter users search and find your posts.

Amplifying your message

Most people won’t act unless you ask them to. Include one (no more than two) call-to-action in every post, and include a link to your website or shopping cart, or dedicated landing page. You should always ask for likes, follows, comments, shares, tags, or check-ins to prompt readers to engage and help extend the reach of your message and ultimately build your base. Additionally, and unfortunately, most of your social media posts won’t be seen unless you advertise on social media, so having a modest monthly budget for this is imperative.

Consumer PR

Wineries understand the 3-Tier system. Here’s an analogy. “Social Influencers” are the distributors of impressions and a channel to new followers and potential buyers. Influencers can be print or online writers with a strong social presence and lots of followers – photo journalists; wine, food or travel bloggers; videographers or podcasters. They can also be consumers or brand ambassadors with strong wine interests and lots of followers. You can develop and nurture relationships with these influencers on a casual organic or paid basis, but it is certainly another way to amplify your message and indirectly sell wine by using social media.

The Ultimate Excuse

The ultimate excuse I hear from small wineries is – We’re just a small winery. We don’t have the staff or capacity to spend lots of time on social media, tracking and analytics, or marketing in general.

The Ultimate Response

The ultimate response is that you really don’t have any choice, and we already know the reasons – too many wineries, too few viable distribution options, limited access to on-premise and off premise outlets, and too much big money moving into your market with the wherewithal to promote their brands. And trust me; social media is just one of the tools in their arsenal. Does Social Media really help sell wine? Probably not directly, but if you stay top of mind, you will sell wine when people are ready to buy, otherwise you may easily be forgotten.

Does Media Coverage Help Me Sell Wine?

The Ultimate Question. The Ultimate Answer?

The only question more difficult than this one for a publicist is “Show me exactly how much wine I sold as a result of the media coverage you obtained for us”.

I was on the phone with a longtime client recently, and received a question I didn’t expect – Does media coverage help us sell wine? – It’s a difficult and broad discussion, and there are so many ways to respond, so instead I deferred and asked “Maybe you can be more specific”?

Let me give this a shot. Generally speaking I would say yes, although it’s difficult to quantify. But I think the question could more appropriately be – Does media coverage encourage consumers to buy wine from us eventually? – as I don’t think there is an instant and direct correlation (with the possible exception of 94+ point scores in Spectator and a few other high end publications) between media hits and selling wine. The reason for this is that people buy from brands they trust and have experienced. Short of that, consumers rely on 3rd party expert opinions to justify their purchases and loyalty. Readers respect writer’s opinions, much as they trust selected wine shop’s palates to guide their purchases.

Media coverage is one aspect of a comprehensive marketing program, and if you aren’t getting media endorsements – articles, reviews, scores – about your winery and wines, it creates an additional barrier to entry for consumers as they have too much choice and information to sort through these days. So yes, media coverage helps new customers discover your brand and wines, which should eventually lead to sales. The point is staying top of mind, and when the time is right and someone is ready to buy you should reap the harvest (couldn’t resist that analogy).

Andy Perdue of Great Northwest Wine says “ I ask wineries featured in my Seattle Times column what kind of consumer feedback they got, and it ranges from a few calls and sales to the phone ringing off the hook, and a ton of sales and wine club signups. I also get feedback from wine shop owners mentioning upticks in sales when the column comes out. And if I review a wine that is difficult to find or happens to be sold out, I hear about it from the consumer.” Andy’s partner Eric Degerman adds that “Wineries can do themselves a favor by quoting and linking back to reviews of wines. Sharing on social media is important. And promoting a post for $20 will often get a lot of good reactions from consumers.”

Tracking the impact of an article via website analytics is worth the effort but tricky. You can correlate spikes of traffic within 7-10 days of an article or magazine review, but it is anecdotal at best. How many readers signed up for your email list after reading an article or review? What about Social Media follows and engagement? You can track these pre-sales actions, but you can’t track sales as easily. However, you now can market directly to those new subscribers, resultant from the media coverage, and hopefully eventually sell them wine. It is an ongoing process and requires vision and patience.

Online articles about your brand are directly track-able when linked back to the winery’s site. If you place a related ad, you can use promo codes for readers of those publications. You know exactly how many visitors came from that coverage because of the unique link or code, and if they purchased.

There are other potential results of media coverage to consider – What about retail store purchases? The wine shop or restaurant customer sees your winery on the list, and recognizes the brand, somehow. Maybe they don’t know from where or why but feel comfortable making a purchase because of some previous media impression. So no, media coverage doesn’t typically directly sell wine, but it greases the skids and removes barriers to enable new customer to find you and purchase your products.

That’s all fine and good and understood, but here is an even tougher question from said client – How do we get the writer’s audience to take action, i.e. to buy our wines? Should the writer be promoting wines that they like to their readers?

This brings us into the cutting edge realm of “Influencer Marketing” which is a hybrid of earned media and advertising, and includes both “they” (the writers) and “we” (the winery) promoting action. Where we want to be extremely careful is not to be perceived as collaborating with writers on advertorials like certain wine travel magazines offer, because people are savvy to that, and professional writers and reviewers lose credibility. There are writers for hire that are more focused on billings than investigative journalism that you can approach to promote your brand.

So how do we get THEIR readers to take action? – It is not the writers’ job to sell your wine as this is conflict of interest for any objective journalist. It is your job to leverage their content in your marketing.  See my article on using media coverage in your content marketing.

One way to leverage articles and reviews is to advertise on their site, place a banner ad or pay for a review. Take a look at Catherine Fallis’ Planet Grape website as an example – upper right hand corner are banner ads. Consumers will hopefully click, which could lead to sales. There are many other ways to pay-to-play with wine reviewers such as The Sommelier Company who will review your wines for a fee. I don’t believe the paid nature influences the actual score, although this always depends on the integrity of the reviewer or publication.

Another example are video reviewers who are paid to review wines, and will say nice and positive things, and post the video on YouTube and their social sites exposing your brand to their followers. I am also actively talking to other influencers in the wine, food and travel industries, and other outlets about doing the same. I think this is a better, superior option to simply running static print ads, and should be part of an overall advertising budget. Vetting the source, type of consumers and marketing program is a must before dedicating advertising dollars to any project.

In the end, no winery can afford not to do all the things that generate sales – either directly or indirectly – including marketing, PR and paid advertising (including Influencer marketing). It’s just too competitive out there and consumers have too much choice.

I think most of you inherently know this, so hopefully this article offers some points of clarification on the topic. Bottom line – Wineries will get more out of media coverage when they put more into it after it’s published. Please comment or email and let me know your thoughts.

Kudos to one of my long time client for continuing to ask the tough questions. You know who you are!

CARL GIAVANTI is Winery Publicist with a DTC Marketing background. He’s going on his 8th year of winery consulting. Carl has been involved in business marketing and public relations for over 25-years; originally in technology, digital marketing and project management, and now as a winery media relations consultant.  Clients are or have been in Napa Valley, Willamette Valley, and the Columbia Gorge.  (www.CarlGiavantiConsulting.com/Media).

 

Marketing Wine to ‘The Media’

Tom Wark’s recent blog post weighs the differences between traditional and social media: Social vs Traditional Media in Wine Marketing It is an excellent summary of the importance of taking a balanced approach to telling your story and getting your brand’s message reviewed. The Press or traditional wine journalists may be diminishing in numbers but not importance. Online writers and bloggers are increasing in numbers and gaining mind-share.

So, what’s a small production winery to do? Yes… you’ve heard it here before “Do what you can and outsource the rest”. Not to seem too preachy here, but despite the cooperative nature of the wine industry we are all competing for media attention and ultimately to capture the interest and loyalty of consumers both locally and nationally.

Pitching your story likely falls into the realm of outsourcing to professionals that understand how to qualify a writers palate preferences and story interests, know how to pitch an article and already have both traditional and online journalist contacts and developed relationships.

Winery PR and Social Media

A wine writer friend of mine Alan Goldfarb is doing a piece for WBM on the ‘Changing Landscape of PR Campaigns. He interviewed Steve Heimoff who published this article about PR strategy:  PR still vital after all these years

I agree with the premise entirely, but since I work with small production wineries and PR Campaigns are expensive, I offered Alan a different perspective:

“Engaging in social media is almost like having your own PR department. You are initiating a conversation about your winery and presenting your brand to the public, although for small wineries this can be a little scary due to perceived loss of control. Traditional media approaches like press releases, advertizing, and submitting wines for review are still important, but for small wineries the potential new audience reach and low cost of entry around social media are very compelling”.

 

Why aren’t they scanning my QR Code?

I was enamored of the novelty of QR codes for small wineries when I wrote a related post in June. I still am. However, I’m hearing that scan rates are very low and consumers aren’t getting it. Who’s to blame?

A wine savvy social media technologist I know weighed in recently stating “Wineries are at fault”! But how can this be so? Even small wineries are coming online with QR codes, recognizing the use and importance of mobile devices.

Wait a minute! What’s obvious to us in marketing isn’t always so with consumers. I see QR codes as bridging the gap between traditional (print) and new (social) media, but just placing them in a print ad is not enough. Tell your readers to “Scan This!” next to the code and offer a specific reward for doing so. Make sure your landing page is optimized for mobile devices and has an offer with a specific call to action (not just your website). Eventually consumers will realize there are rewards at the end of the QR codes!

Connecting with Consumers

I think we all know that social media is not going away. If you are currently involved in social media marketing, you are a leader and early adopter. Most small wineries in the Willamette Valley know they need to have a social media plan and a program but just can’t find the time or justify the effort. Don’t we all survive on ‘word of mouth’ marketing? Think of social media as conversational media. It is one and the same. You are sharing information about your winery, and creating a conversation where the consumers are and how they want to communicate. Here are answers to the top 3 questions I get from winemaker/owners on this topic:

1.        Will it help me sell more wine? No, it will not … directly. However, it will help drive consumers to your website or tasting room where you can transact Consumer sales

2.       What is it going to cost me? Virtually nothing but your time. It’s like having your own media department! The most important thing to remember is that it does take time … social media is not an immediate return on investment opportunity.

3.       Where will I find the time? Make the commitment, keep it simple, carve out 1 hour/day, and use social media tools like TweetDeck and HootSuite to your advantage; there are countless resources via the web. By the way, the mobile applications for these sites are very easy to use, so you don’t need to be tethered to your desktop to be engaged.

You may already have setup the basic platforms such as Facebook, Twitter, LinkedIn and a winery blog. Be sure you understand the rules, etiquette, appropriate content and frequency for using these tools. An important rule for engaging is that for every one self-mention, talk about others four times (80/20 rule).  Promote everyone else and you will benefit greatly—that’s what makes this type of engagement “social.” Have a marketing plan and be consistent. There is plenty of talent right here in the Chehalem Winemakers Association. Reach out, and get the conversation started!