Wine Direct

Observations on the New York SLA Marketplace Ruling

Tue, 16 Apr 2013 07:52:00 -0700

Answers…Questions
The declaratory ruling issued by the New York State Liquor Authority (SLA) this week in response to a request by ShipCompliant for approval of their Marketplace Platform has seemingly spawned as many new questions as it has answered. I have read and re-read both the ShipCompliant petition and the SLA ruling, as well as watching the entire (all 3½ hours of it!) SLA Board Meeting where a discussion about the petition ensued. Having done so, I have a few observations about the current and future standing of marketplaces in New York and beyond.

As those of you interested in the future of internet wine marketing know, marketplaces are a growing opportunity for licensed wine suppliers to reach significant new audiences by tapping into the existing customer base of established lifestyle retailers and media companies. They are a recent development and still in their infancy as a marketing model. As such, the rules surrounding them are also evolving, as the model and the technology enabling it is often ahead of the regulatory curve.

California has been the leader in crafting guidelines for the operation of marketplaces by unlicensed third party marketers, issuing an influential advisory in late 2011 that has served as the regulatory framework for the development of marketplace programs. The SLA’s ruling will surely join it to play an important role in how those regulations develop. The initial industry reaction to the ruling appears to be one of no small amount of alarm, and I have read comments suggesting such marketplaces will be shut down. I believe such comments are an over-reaction in light of the limited scope of what the SLA has done:

Limited Application. First and foremost, the SLA’s ruling is in response to a single marketplace program, rather than all marketplace programs, although it certainly provides insight into the SLA’s thinking.

Producer Direct Excluded. Second, the SLA expressly excluded Producer Direct marketplace models, wherein a producer ships directly to a New York consumer under the authority of a New York direct shipper license. Instead, it focused exclusively on the 3-tier model, considerably more complex involving multiple license holders instead of just one.

Disconnect Between Practice and Design. Finally, the SLA’s determination was in large part fueled by the fact the Marketplace Platform was not operated as had been represented in the petition, and this disconnect between actual practice and design was an underlying consideration for much of the ruling’s language.

What do we know?
What is clear is under current New York law it is not permissible to operate a marketplace wherein the licensed seller is passive in the process, meaning they have little control over decision-making and assume little risk of loss. This control extends to the licensed seller being responsible for performing usual retail functions such as product selection, pricing, control of funds, and the amount of profit they will reap. Also, any unlicensed third party compensation cannot constitute a substantial portion of the proceeds of the sale. Finally, flat fee compensation models to the license holder are disfavored as an indicator of seller passivity resulting in illegal availing of the seller’s license privileges.

What don’t we know?
What is less clear is the extent to which the SLA intends to enforce the guidance offered by its own Office of Counsel regarding license holder use of third party marketing services. Counsel opinion allows advertisement on a third party marketer’s website, but not order taking on the site, and requires a flat fee compensation schedule to the marketer not contingent on the number of sales or the amount sold. While stating license holders can take comfort in relying upon the opinion, meaning they do not risk violations by staying within them, the SLA also expressly did not formally adopt them. I take this to mean that not following them will not necessarily constitute a violation.

The Big Picture
While the ruling leaves cloudy the details of how Producer Direct marketplaces will operate in New York in the future, I do not believe this model is in danger. It is a simpler model, with many of the key indicators of availing found in the 3-tier model either absent or more directly in the control of the licensed seller. Furthermore, the SLA made clear both in its ruling and at the Board Meeting that it is cognizant of, and even receptive to, the changing technology of the internet. That they excluded the Producer Direct model from the Ruling and intend to hold public meetings to explore issues surrounding marketplaces is further evidence of their intention to accommodate the future of marketplace models, but to do so in a manner that comports with New York’s alcoholic beverage laws. From that standpoint, this ruling is a positive statement and recognition that such effective marketing solutions have a future in the Empire State and elsewhere.

How to Sell More Direct to Consumer

Tue, 05 Mar 2013 07:00:00 -0700

Direct to Consumer business is growing. Below are my slides from the 2013 Insight Conference in Ontario on how to sell more wine direct to consumer. (This presentation is Direct to Consumer at a very basic level).

Insight 2013 Presentation from Andrew Kamphuis

Happy New Year! Time to Re-evaluate Your DTC Strategy

Thu, 27 Dec 2012 09:11:00 -0700

The growing DTC market
Most wine industry folks know there has been a continuous increase in per capita consumption over the last decade. They are also likely aware that direct-to-consumer (DTC) shipments of wine have grown as well, although they may not know by just how much. DTC shipments topped $222 million for the month of October 2012, a 13% increase over the same period in 2011 (Wines & Vines Wine Industry Metrics, November 15, 2012). They increased again in November 2012, posting a jump to $224 million, a 12% increase over the same period in 2011. Overall, the last 12-month period has seen a 9% rise from $1,327 in November 2011 to $1,442 in November 2012. (Wines & Vine Wine Industry Metrics, December 14, 2012).

What’s your DTC strategy?
These are tremendous increases, reflecting the impact of Granholm and as importantly, the influence of the internet and social media on the DTC sales and marketing channel. With this dramatic growth occurring all around us, when was the last time you looked at your DTC licensing strategy? Often, decisions about where to ship are made ad hoc, driven by customer requests rather than an analysis of costs and potential gains a considered DTC licensing strategy demands.

Many states, although certainly not all, require renewal of licenses in January or have licensing periods that mirror the calendar year regardless of when the license application is filed. This makes the New Year the perfect time to review your DTC program, its goals, and any prospective changes. When performing this review, stop and ask yourself, “Why am I not shipping to every state that will let me?” Often, wineries will just assume that shipping “everywhere” is too expensive, too hard, or just plain old too much work. If for no other reason than simple due diligence, that approach should be reconsidered and an objective look taken at what is required to ship to as many states as possible.

Anywhere, everywhere…legally, of course!
Many wineries might be surprised with the feasibility of taking the “anywhere, everywhere” approach to DTC. Rather than approaching the DTC strategic analysis from a “least to most” perspective, starting with a few states and selectively increasing them as demands from customers increase; instead take the opposite approach and start with all legal states and adjust down from there, if necessary.

Some may think the “anywhere, everywhere” approach is foolhardy, as the perception is some states offer such low prospects for any type of volume sufficient to justify the cost, but that is not necessarily the case. Cost of entry should not intimidate a winery without first exploring the “anywhere, everywhere” strategy. When compared with the cost of accessing traditional distribution channels, it’s actually a pretty good value.

Best states for the “Anywhere, Everywhere” winery: 38 total
Any and every state allowing online DTC shipments
Total cost = approximately $7,908
Market size = 88% of U.S. consumption

Don’t let the complexity of filling out the applications overwhelm you. Most states ask for the same type of information on your winery. Once you’ve collected it for one state, it will be readily available for all of the others. And report filing is not as burdensome as some suggest, as many states now permit annual filing for wineries whose sales volume to the state is low. If you’re filing monthly, it means you’re selling a lot of wine. A nice problem to have!

Why would I want to do that?
If viewed objectively, an “all-in” strategy may not be a bad idea. Casting a wide net catches more fish; more consumers equal more potential buyers. There is less competition from wineries unwilling to access small consumption states, making your wine more desirable to consumers in those states. Finally, and probably most importantly to the bottom line, many third party marketplace operators require participating wineries to be available in a minimum number of states. The more states available, the more desirable your winery becomes to such marketplaces. And the more wine you’ll sell!

You Can Now Send a Gift of Wine through Facebook Gifts

Tue, 11 Dec 2012 08:29:00 -0700

Last night, Facebook introduced wine as part of its recently launched Gifts program. This is something we’ve been watching closely and as a fulfillment partner for wine, we’re very excited to see the program launch. I’ve placed a few gift orders over the past month or two and have to say that I love the user experience.

First, they offer an opportunity to send a gift in the moment, either when you see a birthday reminder or when you visit a friend’s timeline. Gifts can be given privately or publicly, but it’s the public feature that fascinates me. If I send a gift of Robert Mondavi Cabernet Sauvignon, that gift will display on my timeline as well as on the timeline of my gift recipient. The gift is also linked to the Robert Mondavi Winery Facebook page.

The user experience is great because Facebook was able to remove some of the barriers that typically make gift giving difficult. No more digging around for a shipping address. Facebook asks the recipient to enter the address, which is particularly useful for wine gifts, which require an adult signature. The recipient gets an instant preview of the gift, so they know when to expect its arrival and can be home to sign.

Wine is a perfect addition to the Facebook gift lineup, and not surprisingly it was given a category of its own. We’ll be watching enthusiastically as the program is ramped up. Any of our customers who are interested in learning more about the program are encouraged to contact either myself or Andrew Kamphuis for details.

Mobile Ecommerce and the Wine Industry

Sun, 09 Dec 2012 08:23:00 -0700

Mobile Ecommerce is growing. Below are the slides from my talk at the Napa Valley Vintner's Mobile Seminar with statistics showing what is happening in mobile on our ecommerce platform.

Winter is a great time to come to your Consumer Direct Experience senses

Tue, 27 Nov 2012 15:07:00 -0700

The vines are becoming dormant, but your visitor experiences should still be vibrant. The quieter winter months of December through February are often the best time to reevaluate your customer sensory touch points and to make improvements where needed or possible.

Sight: Curb appeal is your guests’ first impression and sets anticipation and expectations for their visit to your winery. Intentionally drive by your entrance from both directions and take pictures for future reference. Is your entrance way inviting? Is the landscaping attractive and well kept or do you need new plantings or weeds removed? Are your signs or buildings in need of an upgrade, touch up or complete makeover? Walk your guest spaces with the staff, asking them to note anything that could be fixed, improved or changed to better enhance the appearance both inside and out. Don’t forget the bathrooms – they need ambiance as well. A daily and weekly checklist can be helpful to make sure any issues are addressed on a timely basis.

Sound: Do you have an identified range of music that best supports your overall winery identity? There are great resources for music options on line, such as Pandora . Is your staff well trained on the importance of immediate eye-contact and greetings for arriving guests? It may be time to refresh, update and add to the winery story to help the team stay engaged and enthusiastic when presenting your wines.

Smell: Sometimes the aromas of a working winery attached to the tasting room can be great – such as fermentation, and sometimes not so much. Does your tasting room have a ventilation system that can address those times or if a guest whose perfume has filled the room? Sometimes it means turning on fans and opening doors, but making sure the guest’s olfactory experience is pleasant is important for the full enjoyment of wine.

Touch: If you are only providing the ‘belly up to the bar’ tasting, it is probably time to reinvent your customer experience. Many wineries have learned that ‘less is more’, and seated tastings with more direct time with winery hosts can dramatically improve sales. Do you have an area that can be devoted for reserved seated tastings? Your goal is to engage with and delight your guests so that they become customers and wine club members. Making them feel welcomed, unrushed and special builds long term brand loyalty and referrals.

Taste: Does your tasting room staff ask guests what wines they like most before launching into a pre-set tasting sequence that starts with a dry white? That can be a turnoff for potential buyers who only like full-bodied red wines. Work with your team to develop questions and options for guests to assure they enjoy their tasting experience.

Just like our human senses can dull to habitual sights and sounds, changing the decorations, displays and other elements of your guest experiences on a regular basis will inspire your team and improve sales for your bottom line, and that makes good sense!

Taking Control in the Unlicensed Marketplace

Fri, 16 Nov 2012 08:00:00 -0700

The Marketplace
A wonderful blog post by Sheri Hebbeln on the WineDirect website this week discussed new marketing models for wine dramatically impacting the wine industry in the coming years. One particularly exciting model is the marketplace, wherein a collection of wineries offer their products under the banner of a well-known and respected third party marketer. The marketer can be a licensed wine retailer and operate under their own license or, it can be unlicensed, providing a platform for the licensed winery to market and sell the wine under their own licenses.

Amazon is probably the most prominent current example of an unlicensed marketer, but there are many others, with more on the way. Unlicensed marketers can be publishers of magazines, large retailers offering lifestyle products appealing to a demographic with similar traits to the wine industry, or some other media or online business. The key is the marketer has an established customer base that trusts their brand. By coming together in a marketplace under the banner of the marketer, participating wineries can access this loyal customer base, ultimately introducing a whole new group of prospective customers to the winery.

You Scared Me at “Unlicensed”
Marketplaces are a great concept and a winning proposition for everyone involved – winery, marketer and consumer. Still, confusion surrounding marketplaces continues, particularly those operated by unlicensed marketers. Since unlicensed marketplaces require the privileges offered by the winery's license, many wineries are naturally concerned that they meet regulatory approval. Years of uncertainty and conflicting messages from regulators has frightened some wineries considering working with an unlicensed marketer. That’s unfortunate, as the rules for working with an unlicensed marketer are now clearer than ever. It's a simple matter of knowing the rules and where the regulators draw the lines.

You Hold the Controls!
The underlying consideration for every unlicensed marketplace program is really quite simple: control. A license holder is the only party authorized to buy and sell wine to a consumer, so the licensed winery must control the offer and sale of the wine. The winery holds the controls, so long as they are willing to use them. Once this is understood, determining when an unlicensed marketing program strays into illegitimate territory becomes much easier. But what does control mean? Here are some guiding principles:

Product offer and price: the winery owns the product, therefore, only the winery can determine which of its products to offer in the marketplace and the price at which that product will be sold to the consumer.

Offer acceptance: a basic of contract law is offer and acceptance - the consumer makes an offer to purchase the wine, the winery makes the decision to accept or reject that offer. No sale is final without it and since only a license holder is authorized to make the sale, only the licensed winery can accept the offer.

Transparency: is it clear to the consumer from whom they are purchasing the wine? In a crowded marketplace, with licensed and unlicensed players, it is essential the consumer know from whom they are buying. The marketplace website and sales receipts should clearly indicate the winery is the seller of record to the consumer.

Funds management: the winery is the owner of the wine and the only party authorized to sell it, so any payment received from the consumer must be in the control of the winery. Admittedly, this can be something of a complex area involving questions regarding –

- who processes the credit card payment;

- where the money is deposited once the credit card is settled; and

- how each of the parties to the transaction ultimately get paid.

The short answer is the unlicensed marketer may collect and process the payment information from the consumer on behalf of the winery however, all of the funds received must be deposited to an account held in the winery’s name and, the winery must provide the instructions for who gets paid and how much. Any funds remaining after the parties, and all taxes, have been paid belong to the winery. Those terms can be worked out in advance in the marketplace agreement between the winery and the marketer.

Fulfillment: delivery of the product is another hallmark of a sales transaction. Only the winery can make decisions on fulfilling the order from the consumer. Shipments will flow from the winery's designated fulfillment warehouse on instructions from the winery.

Operate with Confidence, Take Control
Even a high-level look at these principles makes clear the common theme of control by the licensed winery runs throughout the offer and sale of the wine in the marketplace. There is plenty of nuance in how these guidelines operate and it is a good business practice to have competent legal counsel with knowledge of marketplace models review any marketplace agreement before signing, just as you would any other important legal document affecting your license. Nonetheless, marketplaces will become more and more prevalent as an effective way to market your wines. Any winery wishing to increase DTC sales and enhance brand awareness would do well to learn more about marketplaces so they can participate in this growing sales channel successfully and with confidence. Take control!

Marketplaces and the Shifting Landscape for Online Wine Sales

Mon, 12 Nov 2012 08:30:00 -0700

What’s your strategy for growth in DTC over the next five years?

Over the past year, and particularly in the fourth quarter, quite a few new channels have become available to wineries, providing exposure and an opportunity to drive new customers back to your brand. This is a real positive for our industry. It’s the evidence we’ve been waiting for that people are finally becoming accustomed to shopping for wine online. Ecommerce is still a tiny piece of the total wine market (I’ve seen estimates ranging anywhere from 1% to 3.5%), but that will soon change. These new channels will help to increase DTC’s share of the pie.

The good news and I think the motivation for some of these new wine entrants is twofold: 1) the California ABC’s industry advisory issued in October of 2011, and 2) the fact that many existing online wine brands have experienced healthy growth over the past few years (Wine.com, K&L, and J.J. Buckley for example).

Benefits of selling through these new channels

The benefits are numerous, but include factors such as:

New Customer Acquisition and Sales Opportunities
With new doors opening comes opportunity - the opportunity to get wine into the hands (or should I say mouths) of more and more people every day.

Presentation and Content Dissemination
Many of these new channels offer the opportunity to provide rich content and information about your winery, your winemaker, and your wines. As an example, Amazon Wine provides extensive product content, with an equally impressive set of filters.

Consumer Insight
The new customers and sales resulting from these additional channels provides access to aggregate data which will help in decision making, forecasting, merchandising, and marketing. Imagine what you can do with a new cross-channel view into demographics, purchase histories, and even customer reviews.

The time is now to strategize and prepare

How will you go about establishing a profitable presence in these new high growth marketing channels? You will need to organize your Direct-to-Consumer business in a way that ensures successful execution amid a rapidly changing landscape for wine online. Who will be responsible for management and how will feedback and insights be made available to the rest of your staff? To drive profitable growth of your DTC business, you’ll need to ensure a superior experience for your customers across the board.

Evaluating different channels and ensuring they fit within your overall DTC strategy

The opportunities today are numerous and include new marketplaces, third party wine clubs, flash sites, social commerce platforms, shopping engines, and online retailers. With limited resources, it will be increasingly important to carefully evaluate and select new partners with several criteria in mind.

The Regulatory Model

Do sales flow through your license (i.e. the Amazon model) or through the online marketer (i.e. the Wine.com model)?
Who controls the sale? If the third party is unlicensed do you have an opportunity to approve or reject the sale?
Who controls pricing? If the third party is not licensed, retail pricing should be controlled by the licensee.
How is fulfillment handled?

Economics

What is the cost of shipping to the consumer (or alternatively, what is the landed cost of your wine?) This is important because as we all know, shipping incentives help drive volume.
If shipping incentives are used, are you responsible for the cost of those incentives? If yes, you will need to factor those costs into your financial model.
What are the associated fees? Are there any hidden fees you will need to factor in?
What are the partner’s discount policies? Are your wines sold at or near full SRP or are you being asked to heavily discount?
What is the partner’s marketing plan? In light of that marketing and/or customer service contribution would you consider their marketing fees to be “reasonable”?

Customer Acquisition

Do you have an opportunity to interact with the audience in any way - through email, online forums, or social media, for example?
Has the marketer built an audience of repeat buyers or are they simply bargain hunters?
How extensive is your access to customer data? With unlicensed marketing partners, you need access to information for compliance reporting. This in turn provides valuable insight into purchasing patterns. Some but not all partners will go a step further and allow you to market to that customer, whether through collateral inserts, direct mail, or even through use of the email address.
How great is the marketer’s reach in terms of online visitors, subscribers, or buyers?
Has the partner figured out logistics? Do they offer consolidated shipping or are purchases from separate brands shipped in separate packages (requiring the customer to be home to sign for each?)

Brand Enhancing

Does the marketing partner complement your brand? What are their customer or user demographics?
Who handles customer care and what are your observations about the customer experience?
Will your wines be placed in the company of complimentary brands or does the partner offer a lot of private label wine?
How is your brand represented on the site or within the offering?

Resources Required

Are there opportunities to leverage the eCommerce, order management and fulfillment processes you have in place today? Can you easily synch inventory, orders, and tracking information for easy management within your existing processes?

I’m excited by the new opportunities available to wineries. Expanding your online reach offers a chance to create a meaningful relationship with customers and allow them to more easily learn about your products, whether through your website or through that of a partner. The Internet is front and center in the battle for consumer mindshare and its power of influence is tremendous.

Seven Business Practices to Prepare for 2013

Tue, 02 Oct 2012 08:00:00 -0700

I’ve worked with major wine corporations, medium sized privately held companies and tiny, family owned wineries, and while there are many differences between the case volumes sold and the sales channels (distributors, trade and consumers) they ALL share the same need for business practices that guide their respective teams each year. We have now officially entered OND – the fourth and typically most important selling period for the calendar year. There’s not much, if anything, that can be put in place now to change the course of the business trends through the end of the year.

However, now is the time to begin putting in place these SEVEN Business Practices to prepare for 2013:

An annual sales plan with clearly defined objectives – volume by wine type by channel mapped out with weekly, monthly and quarterly goals. Everyone in the company should be cognizant of the sales plan. Update the numbers in January once the OND results are in.
A three to five year production forecast with planned release and vintage transition dates. This is essential information when partnering with major accounts for long term placement programs as well as for wine club selections since these smaller amounts can often be overlooked if not projected properly. Whether you grow your own, purchase fruit or bulk wine, you should be securing your future supply options.
An accessible, online Inventory and depletion management system that captures not only winery inventory but all warehouse and distributor inventories, and a person that stays on top of vintages so that transitions are balanced through all channels including consumer direct sales.
Update your winery story, give it a fresh voice. Make it a sincerely crafted, emotionally compelling and authentic story about your wine, the people and vineyards behind it, with some entertaining anecdotes about real enjoyment occasions. It should be scripted for winery staff and include soft-selling scenarios and tips to help staff gently and comfortably ask for the order. Engage your team to get real examples of successful sales pitches and anecdotes about how customers have enjoyed the wines. For example "Jill received her engagement ring in a glass of our Sauvignon Blanc."
Put in place a schedule of regular website updates, that includes access to new fact sheets, accolades, bios, recipes, food pairing tips, blogs, vineyard and winemaking videos. Today it is essential to keep content fresh and accessible from all platforms – smart phones and tablets. Here’s a short list from www.dummies.com on establishing a website update schedule.
A company-wide calendar that ties to release dates, major winery, industry and consumer events. A fully integrated calendar that is updated in real time can save critical time for sales people setting up trade visits as well as pointing visitors to events at the winery and near their homes. Fortunately, there are now calendar systems available to plug into websites that allow public and private views.
Branded collateral pieces such as a simple, pocket-sized wine label cards that offer wine list descriptions, food pairing suggestions and the basic winemaking details and statistics – these are great for sales people to use with distributors, restaurants and retailers, as well as for winery visitors and to hand out at tastings.

Schedule time now with the appropriate teams and departments to assign the responsibilities and due dates for these key practices so they are in place by January 1st.

Privatization – Oregon Goes Its Own Way

Thu, 20 Sep 2012 22:34:00 -0700

An interesting series of articles recently ran in the online edition of the Oregonian newspaper, www.Oregonlive.com, discussing how the issue of privatization has caught life in Oregon after the recent transition to private sales of distilled spirits in Washington state.

Of particular interest to me are the reader comments that follow the articles, as they give more insight into the concerns, attitudes, and deeply held moral and economic philosophies of the general public driving the debate as the political battle moves forward. Despite the divergent motivations on which the parties’ positions hinge, in part arising from the historical context surrounding the regulation alcohol after Prohibition, I see some common ground in an area fraught with contention.

Historical Context
I’ll spare you the history lesson on the 21st Amendment. You already know that stuff. Suffice it to say, coming out of Prohibition and the real and imagined “evils” of drink that led to it, most states’ laws regulating alcohol were designed to place restraints, of varying restrictiveness, on the production, sale and distribution of the product. The manner and degree covered a broad range based on local customs, morals, political will, and as reaction to the public health impact alcohol had on local society while legal. The common thread, and the core of the 21st Amendment, was that the type of regulatory system chosen, whether control or licensed, should be decided at the state and local level based on the desired goals of the local populace.

Uniquely Oregon
Oregon is rightfully proud of its widely-recognized fine wine reputation and its increasingly successful craft brewery and distillery industries. When reading through the reader comments nearly all agree, either explicitly or implicitly, that how to deal with privatization requires is a distinctly Oregon solution. It is of little consequence that the privatized market of California to the south, and transition model of Washington to the north, offered distinctly different approaches to modifying the Oregon control system to bring it into the 21st century. This is a local issue requiring a local response and Oregonians are not interested in emulating the open California model or repeating the perceived mistakes made by Washington. The articles and comments make clear Oregonian’s view their system as distinguishable from their neighbors. Simply forcing either model onto the Oregon system will not properly address the unique needs of Oregon.

An example of the unique nature of the issue is the status of workers at state-controlled liquor stores. It was a primary concern in Washington but seems less so in Oregon due to a significant difference that could dramatically impact the ultimate resolution. Unlike Washington, Oregon retail liquor stores are privately owned by “state agents”, who operate within narrowly defined rules and purchase spirits directly from the state distribution system. While Oregon Liquor Control Commission (OLCC) employees are state workers, retail store employees are not, and are not represented by the public employees’ union or participate in the state pension system. In Washington, a large state employee constituency was highly impacted by the result of privatization and mobilized to fight it. In Oregon, privatization could potentially affect Oregon liquor store employees, but does not directly impact the state payroll and pension systems. The result is a diminished employee opposition to privatization in Oregon and the decision-making process will occur in an environment much different than Washington’s.

Archaic, but Effective?
There is also common ground in acknowledging the 80 year old laws governing alcohol are archaic. Even supporters of the status quo admit times have changed since the end of Prohibition. Both agree that it’s time to review and modernize the law.

Where the sides come apart is whether the laws are still effective, and the answer for each depends on what the laws are designed to address. Control supporters argue the laws have, and still do, effectively address issues of criminal infiltration, ameliorated or fraudulent product, public health and drunkenness, and taxation. Privatization advocates claim such issues, once of importance, are no longer a serious problem. They argue the laws are based on outdated moral codes, impinge on individual freedom and, particularly regarding taxation, could be better addressed by loosening the restrictions and creating market efficiencies. They seek broader and deeper reform, directed not just at the laws themselves, but the fundamental purpose and mission of the OLCC.

Control supporters aren’t looking for a full-scale reform of the system, preferring a measured review of each regulation and reforming those clearly out-of-date. Of note they point to a test program wherein select grocers currently selling only beer & wine could also sell distilled spirits in a segregated area of the store. Privatization advocates will likely argue the program doesn’t go far enough, as grocers are still required to purchase the spirits from the state-controlled distribution system.

Interesting Viewing
In a world of complex issues of great import, alcoholic beverage regulations are pretty inconsequential. Still, Oregon will be interesting to watch. Whether imbiber or teetotaler, access to and use of alcohol touches on personal social perspectives beyond the mere issues themselves. They are contentious because they reflect on deeply held views on moral, social and economic philosophy. As with all things, change is inevitable. That both sides recognize this basic truth is the primary common ground necessary for a resolution of the competing ideologies. Somewhere in between, they will likely find the answer that is the best fit for Oregon.

Is your Tasting Room toast?

Thu, 13 Sep 2012 22:31:00 -0700

Guest post by Geni Whitehouse

I’m not suggesting that your tasting room is a complete failure or even that there is anything wrong with what you are doing. I bet it is quite lovely. But I am also willing to bet there is room for improvement.

That’s where toast comes in. The process of making toast is a great way to learn about the idea of continuous improvement and Kaizen principles which you can easily apply to your winery. Our firm uses the Toast Video to train winery staff in these concepts. It captures the steps involved in one man’s attempt to create toast for his wife. (You can imagine how it turns out.) The video walks you through the sequence of steps done in an inefficient way, then shows how the same process looks with a few minor adjustments. It is impossible to watch the video without learning something (and working up a craving for buttered toast.) The video is amazing in its simplicity.

The question for you is how much of what you do in the winery is like the process of making toast. Are you doing things the same way they have always been done? Maybe it is time to take a step back and consider your actions. Kaizen includes a concept of seeing with a “Keen Eye”. How would your tasting room look if you viewed it with a Keen Eye, paying attention to the hundreds of small details that make up your guest experience? What does your guest see when he goes to make a purchase? Does every detail support the image you are trying to create in that visitor’s mind?

Think about areas in your tasting room where you might eliminate waste. Where might you find activities that waste time or effort? Are there functions that need to be outsourced? Items that need to be rearranged? Forms that need to be redesigned? How easy is it for your guest to make a purchase? Get your teams together and have everyone watch the video then walk through your tasting room. You’ll be amazed at the things you notice for the first time.

The next time you start doing an activity the same way you have always done it, stop for a minute and ask yourself “Am I making toast?”

Geni Whitehouse, CPA.CITP, CSPM
Countess of Communication
Brotemarkle, Davis & Co. LLP
www.bdcocpa.com

Geni is the Countess of Communication at Brotemarkle, Davis & Co, a CPA firm focused on wineries. She is the author of “How to Make a Boring Subject Interesting: 52 ways even a nerd can be heard” and is a frequent speaker at events around the country. Together with Craig Underhill, she regularly teaches free classes for area vintners on topics related to finance and performance metrics. She is still trying to get her husband to fix her toast in the morning.

You Work in Wine….What Do You Recommend?

Thu, 30 Aug 2012 22:28:00 -0700

It never fails, I am out to dinner with family or friends and the wine menu find its way to me…“You work in wine, what do you recommend?” A friend emails wanting a suggestion for a special bottle to send as a gift. What do you do?

It comes down to personal taste, brand experience and loyalty. There are an overwhelming number of options for an excellent bottle of wine. A good customer experience and a feeling of personal touch go a long way to make a brand memorable. I recently had just such an experience with Lamborn Family Vineyards.

I was asked by friend for a gift recommendation to send as a thank you for recently hosting their family. A number of wineries came to mind. Lamborn jumped to the top. A visit to their website, a perusal of the current wines available and it was time for me to become a member. I filled out the online form and within hours I had received a personal reply from Mike Lamborn welcoming me aboard. Personal touch.

One of the lures of wine is the lifestyle associated with it: elegance, relaxation and enjoyment...just to name a few. Your interactions with your consumers can extend that experience beyond the glass.

If you ask for consumer information, acknowledge it so that they can feel connected to your brand. It may be hard to personally respond to every email but there are creative ways to write a response that can soften the feeling of receiving a form letter.
Pay attention to your consumers purchasing patterns and tailor promotions to maximize your return and their desire for your wines. If you are a Vin65 customer, their List Builder tool allows you to create dynamic segments of your list based on profile and address information, product preferences, order history, wine clubs, or other criteria.
Plan early for the holidays, especially October thru December. Prepare gift offerings and suggestions at a variety of price ranges. Remember to make them easy to find on your website.
Tell your story. Nothing connects better than humanizing a product. Post pictures of the winery, the process, the people, even the vineyard dog. Be creative. Involve your consumers.

Connect with your consumers and they will in turn connect with you not only for themselves but by inviting others to enjoy your wines as well. While not everyone may agree with my personal taste in wine, I can think of no one that does not like receiving a gift of wine and being part of the experience.

How much money are you leaving on the table?

Fri, 24 Aug 2012 22:25:00 -0700

You have metrics for everything. You know your email click-through rates; abandon cart rates, tasting room foot traffic statistics and wine club attrition rates. You probably look at this aggregate data (and more) every time someone whispers the word “budget” or asks for an explanation on recent performance trends. You speak “percentages as a second language” quite fluently. But do you know your call stats?

Assuming you are actively reaching out to your customers over the phone (which you should be doing, either internally or outsourced), you may find yourself unsure of the potential revenue your database holds as a telemarketing tool, or how to judge your performance.

Quantifying your call metrics (Show them the money!)

At first, looking at your customer list may not bring dollar signs to your eyes. But it should, and here’s why:

Let’s say (to be conservative):

You have 5,000 customer names (with phone numbers in shippable states)
Bad phone numbers: generally account for on average about 10-15% of your list (if you haven’t called it before) – this brings our “callable universe” to about 4,250 Leads
On average you can expect to be able to get in touch with at least half of your list, which would put your contact realm somewhere about 2,125 leads

If you have an employee doing the calling, they should:

Be able to make 100 calls a day
Convert at least 10% of the people they talk to
Maintain an average order volume of $350

So for one employee calling from the winery you are looking at:

42 days
2,125 contacts
213 orders
$74,375 in revenue produced (around $3,000 a day)

Naturally, technology, training, and lead management greatly increase the productivity and success of any calling project (we are accustomed to outperforming these benchmarks).

Plug in your own database numbers, how much are you missing out on?

September is California Wine Month –The Wine Institute wants you to STEAL THIS IDEA!

Wed, 22 Aug 2012 22:22:00 -0700

The Wine Institute launched California Wine Month in September 2005, and this September will be its eighth year. Last year’s 2011 California Wine Month campaign received 200 million impressions in print, online and broadcast media coverage. The theme for CWM 2012 is “California Wines Road Trip”.

The Wine Institute is encouraging wineries to leverage the promotion, and has invited the industry to STEAL THIS IDEA!

Here are some highlights on “How Wineries Can Participate in California Wine Month 2012”

Click on this link for the full tool kit.
Talk about California Wine Month and your winery’s activities on your social networks. (Twitter hashtag is #CalifWines.)
Participate in any California Wine Month programs coordinated by your regional association.
Create a special California Wine Month wine flight or food pairing at your tasting room.
Create special “only in September” immersion programs at your winery.
A day that tells the story from grapes to glass. Start in the vineyard with climate, grapes and viticulture, followed by a lunch or a picnic highlighting how our wines are a natural part of the fresh, healthy California cuisine and finishing with barrel tasting or blending exercises.
A morning with the winery chef, shopping for produce and creating the perfect wine and food lunch.
Showcase California’s fun, healthy lifestyle with yoga, Pilates or meditation on a patio overlooking the vineyard; horseback riding and wine; bicycling and wine; bocce ball and wine; hiking and wine.
Innovative Wine Tasting Experiences—iPad/iPhone app wine reviews in the tasting room.
Innovative Winery Tour Experiences—winery eco?tours; dog walks and tasting; winery sculpture garden tour and tasting; pruning/grafting demonstration; art exhibits.
Have a movie night at your winery! Pair Hollywood glamour with wine and food.
Work with local hotels to offer these special VIP programs as part of a hotel package, to encourage weekend getaways at a special price.
Create wine and food pairing seminars for local sommeliers and/or consumers to educate them on your region and wines and their versatility with many cuisines.

Wine Institute members can take advantage of the campaign that will direct consumers toward the web site by posting your events there www.discovercaliforniawines.com. For questions, contact: communications@wineinstitute.org

Evolution of Wine eCommerce – What Lies Ahead?

Thu, 09 Aug 2012 22:19:00 -0700

Change is inevitable and in the world of technology companies, it happens fast. Over a very short period of time, technology has dramatically changed the way we shop. From brick and mortar to basic eCommerce, to flash models, group buying, social commerce, and mobile; we’re buying a lot more through digital channels today than we were even a year ago. It’s true that the wine industry is still catching up to other markets but the tide is shifting rapidly, due in large part to the California ABC’s industry advisory that was issued in October of 2011.

What’s in store for wine online?

According to Forrester, the U.S. eCommerce market, which represents just 9% of total retail sales, was in excess of $200B in 2010. The value of wine eCommerce is a little more difficult to estimate. VinQuest 2011 put the total DTC market for wine at $3.4B in 2010. Given that, a very conservative estimate of 6% would place the eCommerce portion at about $200MM, leaving a whole lot of opportunity for growth.

The problem we face is that there is still a big divide between consumers, who don’t have easy access to the wealth of product available in wine country, and wineries, who haven’t quite figured out how to reach those customers. We’re still waiting for a large internet retailer or innovative new business model to permanently change the landscape for wine online, but there are plenty of companies making a direct impact today.

As customers continue to shift their buying online it’s important to understand a few realities about today’s online shopper.

Affluent consumers shop online with more frequency (JP Morgan Internet User Survey 2010).
Today’s shopper has been trained by modern business models to expect value, selection, and instant gratification. Products should be in stock and ready to ship.
Reduced shipping rates are an important motivator in online purchasing. Think Amazon Prime.
The sensory experience and sampling are important with wine, and today’s online businesses need to find a way to overcome this through excellent imagery, introductory offers, and use of sampling programs.
Product education is important to online shoppers. Wine businesses should make heavy use of editorial copy, video, and the recommendations of other customers. Content and commerce should always go hand in hand.
Referrals work. Social sharing, refer-a-friend, and discounts for successfully signing friends as members are great ways to boost customer acquisition rates.
Curation is often a way to provide value to your audience, whether through use of an “expert”, an in-house team, celebrity endorsements, or specific product criteria.

Some examples of businesses that are shaking up wine online:

Subscription Model

Flash Models

Group Buying