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Why would anybody buy your wine? Give three compelling reasons a stranger would pay hard-earned money for what you've made.

Dec 27 10

Wine marketing issues as we work our way out of the recession

by DAH

Noted in the Napa Valley Register, December 24, 2010 …

The On Wine column by Dan Berger contained several interesting (if not surprising) observations about the state of the wine business, as we work out way out of economic recession.

First, regarding pricing …

(The) only price cuts of which I have heard are based on discounting. No one, apparently, wants to drop their front-line (suggested retail) price … I phoned three executives with good-sized wineries and asked if they had cut their front-line prices for even one wine. All said no. “No, we haven’t,” said one. “The only thing we did do was to adjust the tasting-room pricing on all of our wines to spark sales … But once you discount the front-line price, trying to get it back up again if, well, you have to claw your way back to the original, and that could take years.” Discounting can also have a similar effect, “but it’s a little easier regaining your old price point.”

An even better rule of thumb, in my opinion, is to set your pricing where it needs to be or should be from the first release of your wine. Discount back if you have to, but never reduce your front-line price, unless you intend never to sell at the higher price, ever again. It is, indeed, very difficult to claw back up in price. If the entire market moves up, or if your wine is in great demand (and not easily replaced) you may be able to take price increases over time. But if you cut your front line price, you may never get back up.

Second, regarding “bonus packs” …

More than a decade ago, some larger wine companies dealt with an earlier recession by offering retailers 15-bottle cases (instead of the traditional 12-packs). The three men I spoke with said they hadn’t heard that strategy employed recently.

Which really surprises me, because we’re about to embark on my first 15-bottle pack in many years. It’s sort of like discounting, but it uses additional bottles (instead of fewer dollars) to create the incentive to buy. Further, it puts more wine into circulation, which, in a time of glut and downward price pressure, is a good thing. Another important feature of the 15-bottle pack: it creates some excitement, some different energy, within the sales channels for that wine. “For a limited time only, the Adobe Red (and White) 15-bottle packs!”

Third, the most lingering issue, major retail discounting …

All said, however, that the current recession has hurt the wine business harder that most of the similar flat spots the industry has faced in past decades. As a result, they all said, wine prices at most retail shops should be about 30 percent lower than suggested retail prices.

Brand building is difficult when prices are low. Differentiation is difficult in wine in any market, with so many competitors making variations of “fermented grape juice.” Discounting is wonderful for the wine consumer, but it cuts margins for producers, wholesalers and retailers, which makes it more difficult for the small companies to stay afloat. We’ll continue with some shake-out at all levels of the industry for another couple of years.

DAH is David Anthony Hance

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Dec 8 10

Packaging That Works … and endorses our new direction for Buried Cane

by DAH

I have frequent discussions about whether or not I “like” particular wine labels and wine packages. I never express “like” about wine labels (or about much else, to be honest). Why not? Two related reasons:

1. If I express “I like it” about anything, it feels to me like a personal endorsement. That’s an investment of self. I’m generally unwilling to make that investment, because I believe my “like” is some sort of personal assurance that the thing under consideration is the “right” choice, and will “work.”

2. It’s much more important to me that something “work” than that I “like” it. Certainly, there are occasions when the discussion is really about my personal preference (where to go out to eat, what book I’d like to read, what music I’d like to listen to … personal, not professional). Most of the time, however, when I’m asked if I “like” something I’m actually involved in a larger discussion about how to sell something, or how to sell more of something. That’s a discussion about what will “work” best, not what I “like.”

This morning I read a blog post by wine label designer Paula Sugarman (not someone I’ve ever done business with, as it happens). You really should read that post HERE.

Ms. Sugarman was visiting a Washington retailer, looking at wine packages. A store employee guided her to wines that did sell, and wines that didn’t sell. Wine packages that “work” versus those that don’t.

The discussion itself, in this blog post, is quite interesting. From a more selfish viewpoint, the wines and wine packages that “work” in this Washington retailer are among those we considered in our redesign of Buried Cane.

Good third party endorsement of our chosen design direction. It is better aligned with what “works.”

DAH is David Anthony Hance

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Dec 2 10

Differentiate or Die (well, maybe not die, but prepare not to thrive)

by DAH

A permanent tension in wine marketing (most all marketing, really) is the constant challenges to both differentiate (from competitors) and be the same (as competitors).

Differentiation is essential because without it you look the same to your customers as do your competitors, leaving no compelling reason for anyone to buy from you. In reality, there’s always differentiation … you’re different in some way, certainly. But you need to be different in some way that matters to your customers.

“Our winemaker is taller than their winemaker.”

That’s a difference, but unless we’re playing inter-winery basketball, it doesn’t seem like it matters.

On the other hand, you need to be somehow the same as your competitors (familiar seeming to customer), otherwise you’ll make no sense to your mutual target customers. I use this comparison to make the point when talking about wine positioning (which is, at root, this differentiation/sameness balance):

“Highest-elevation Napa Cabernet Sauvignon.”

There are lots of Napa Cabernet Sauvignon wines, but that is a prestige wine category. Often, wines grown at higher elevations are perceived to be higher in quality. Therefore, this simple positioning phrase both differentiates (higher elevation) and comforts with familiarity/sameness (Napa Cabernet Sauvignon).

“The only river-bottom grown Alturas Arneis.”

Also differentiated, but not in a way that particularly suggests desirability. And there’s no familiarity/sameness. Even if the wine is fantastic, it will be difficult to gain traction, because nobody will know what to do with it. Without sameness, it doesn’t fit into the world of what most people know about wine.

I was just reading an article about Andis Winery (Amador County). See that article HERE.

My quick read (and view, since the article includes photos) revealed that the Andis Winery was architecturally unusual and striking in their neighborhood, that they were using a concrete egg-shaped tank, and that they were serving wine from kegs, and selling refillable bottles.

I also learned that the owners live half the year in Hawaii, and work in real estate and investment banking. And that they currently produce and sell Sauvignon Blanc, Zinfandel, Barbera, Grenache, Petite Sirah, Cabernet Sauvignon, a port-style Petite Sirah dessert wine and a proprietary blend of Rhône and Portuguese varietals called “Painted Fields.” And the owner is quoted (in the article) as saying, “We want to start slowly and see what the public likes and wants, then possibly change our varietal lineup as we progress.”

Now Andis Winery could be making fantastic wines, and they are probably marvelous people. But here are my personal take-aways from this “we’re open” announcement: Andis Winery sounds like it was really expensive to build and outfit, but the owners sound like they have boatloads of money. They’re doing a lot of interesting sounding things that don’t seem to have anything in particular to do with the wines they make. And they’ll probably change what they make if it doesn’t sell.

None of my take-aways are exactly “bad” but they do suggest differentiation for the sake of differentiation, without any particular wine-world familiarity/sameness (OK, they are currently making familiar varietals).

Either their business focus or their communications need to change, I think, in order for them to have the balance between differentiation and familiarity/sameness that’s necessary for success.

DAH is David Anthony Hance

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Nov 29 10

Winemakers Who Sell Wine: The Necessity Of Wearing More Than One Hat

by DAH

“Tolosa Winery announced that Winemaker Larry Brooks, will now assume the added role of Sales and Brand Manager.” Read the announcement HERE.

Wine sales managers and sales representatives are usually eager to use winemakers and winery proprietors to support sales efforts. Bringing these celebrities … the people “behind the wines” into retail and restaurant accounts helps add substance to a sales presentation.

Often, having a “celebrity” (winemaker, proprietor) is the key to getting an appointment, or a longer tasting appointment, with a wine buyer who otherwise might not particularly want to hear a sales person’s pitch again (or ever … there really is no shortage of wine in the world, and it isn’t as if retail and restaurant wine buyers are super-excited to hear about most new vintage releases and special promotions).

Few winemakers, however, got into winemaking because they love to make sales calls. It’s also a rare winery proprietor who invested in a winery because they wanted to get out and sell some wine. A winemaker or proprietor who is both skilled in sales, and interested/willing to make account calls on a regular basis is rather uncommon in the wine business, except in the case of tiny start-ups where the winemaker-owner pretty much does everything.

Yet the desire and need for sales skill and interest from winemakers and proprietors will never go away. Yes, it is essential that wines be well-made and wineries be well-managed and financed. But those things don’t matter unless wine is sold (enough wine is sold).

Which is why the Tolosa Winery announcement that Larry Brooks will serve as both Winemaker AND Sales and Brand Manager is so remarkable. Mr. Brooks has been in the wine business for many years, and has served as a winery general manager, not just a winemaker. If he can successfully fill both the winemaking AND sales roles for Tolosa (an Edna Valley winery located just south of the city of San Luis Obispo, California), that winery has a uniquely beneficial situation. If Mr. Brooks can really wear both hats well, Tolosa Winery has the opportunity to gain a much different kind of attention from their wholesale distributors and key accounts.

Some years ago I was involved in the hiring of John Clews (currently VP of vineyard and winery operations for Napa Valley’s Clos du Val) for a now-defunct Lake County winery. Mr. Clews, in addition to his winemaking training, had an English accent, an international background, and a previous career as an accountant. The interview panel (which included consulting winemaker Jed Steele, who was busy running his own small winery after leaving Kendall-Jackson) agreed that Mr. Clews’ interesting background (and accent) trumped the more extensive winemaking resumes of other candidates (who were less interesting personalities, and who were without any particular business background).

That hiring experience stuck with me, and I was reminded of it when I read Tolosa Winery’s announcement regarding Mr. Brooks.

While it’s important to make good wine, it’s not really enough.

DAH is David Anthony Hance

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Nov 24 10

Fifteen Bottle Packs

by DAH

In wine marketing and sales we’re always looking for a new wrinkle. Sometimes the new wrinkle is an old wrinkle that used to work, and may work again, and now seems sort of fresh.

Yesterday I got a request to price the creation of fifteen bottle packs. Certainly a deja vu experience.

A standard nine liter wine case holds twelve 750ml bottles, aligned with four rows of three bottles. A fifteen bottle pack adds a fifth row of three bottles, resulting in a longer case.

Sidenote: I’ve tried talking wineries into sixteen bottle cubes, four rows of four bottles, for years, to no avail. I just like the symmetry of the cube, and the nice even twelve liter content for the box.

Fifteen bottle packs are really only of interest to large and growing “commercial” wines (retail price points below $20 a bottle). Because the promotion usually goes like this: For a limited time only you get 15 bottles for the price of 12. Or “three free on twelve.” The winery keeps the case price the same, but adds three bottles.

This is better than a discount for two reasons:
1. Free goods cost the winery less than a cash discount (because we have some profit margin built into our prices);
2. Fifteen bottle packs usually put more of our branded wine into circulation (rather than just the same amount of wine but at a lower price).

Fifteen bottle packs aren’t something you offer on every item every day. Usually they are used for price-point-sensitive wines that are going into broad and growing distribution. And they’re offered at specific times in order to generate seasonal excitement for a brand and product.

Back in the day (with other wineries) I used to do fifteen bottle packs for White Zinfandel, or a ten dollar Chardonnay, or maybe a value-priced Merlot. Wines that produce volume sales at retail and by-the-glass in restaurants.

And here they come again!

DAH is David Anthony Hance

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Nov 19 10

Tough Times Teach Wineries Tough Lessons – Wines & Vines

by DAH

Sharing …

Wines & Vines – Wine Industry News Headlines – Tough Times Teach Wineries Tough Lessons.

Interesting to consider, particularly in its Northwest-slant, as we work to build Middleton Family Wines.

Most of us wine industry veterans (I’m in my 30th year in the business) seldom have worked so hard to scratch out growth.

Nice to know we’re not the only ones.

DAH is David Anthony Hance

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Nov 18 10

Raising the Bar in Paso Robles: Wine Spectator’s “Wine of the Year” for 2010.

by DAH

A primary reason for my 2008 move from Mendocino County to San Luis Obispo County was the plant my career in what seemed to be California’s most exciting and fast-developing wine region. It was important, too (or course) to live closer to our Clayhouse Wines and Red Cedar Vineyard, the largest winegrowing enterprises inside Middleton Family Wines.

Paso Robles, the largest appellation in San Luis Obispo County, has grown swiftly, with 26,000 vineyard acres and an increase over the past decade from 35 to over 180 bonded wineries. When I first visited Paso Robles, on a winery consulting project in the mid-1990s, it was pretty sleepy, and those few dozen wineries didn’t seem to be making much impact in the world of wine. Things here have changed a lot.

Success in the wine business doesn’t come with just getting bigger (although sometimes it seems so). Getting bigger AND more desirable is what yields the best profit. And Paso Robles is growing in critical perception, too.

“… the quality increases each year, and the potential is as promising as any place in the New World.” (Robert Parker, The Wine Advocate)

“Paso Robles is red wine country, and while the winemakers here turn out splendid Syrah, Cabernet Sauvignons and Petite Sirahs, it is the blends that are Paso Robles’ emerging stars.” (Steve Heimoff, The Wine Enthusiast)

Add The Wine Spectator to the wine pundit chorus singing Paso’s praises. A red blend from Paso Robles, Saxum 2007 James Berry Vineyard, has just been named Wine Spectator’s “Wine of the Year” for 2010. Check out the video announcement HERE (and forgive the rather blatant teleprompter reading of James Laube, who is a taster and writer, not a presenter).

I’m fortunate enough to have tasted the Saxum 2007 James Berry Vineyard (a blend of Grenache, Mourvedre, and Syrah) a couple of times … including at a public wine tasting where Justin Smith was offering samples of his hard-to-find wine to all comers (already knowing it had scored so well with so many wine writers). This, by the way, is another fine feature of Paso Robles: Most of the winemakers are rather friendly and unassuming.

Here’s how things line up in my marketing mind:
1. Paso Robles is a fast growing wine region;
2. Our Clayhouse Wines is a fast growing Paso Robles winery;
3. Red blends from Paso Robles are critically acclaimed;
4. Clayhouse Adobe Red (a red blend) is our most widely distributed and fastest growing wine.
It seems like we ought to be able to make something good out of this situation.

DAH is David Anthony Hance

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Nov 16 10

New Wine Book: Marketing Place in a Weighty Way, with lots of detail

by DAH

I just got a new wine book. “The Chateauneuf-du-Pape Wine Book” by Harry Karis (Kavino, 2009). It is almost 500 pages long, and is very very heavy.

The amount of information it contains is absolutely daunting. Sections include:
-History
-Geography
-Geology
-Climate
-In The Vineyard
-Winemaking
-Production & Market
-Directory of Winemakers
-Stories & Anecdotes
-Vintage Charts
-Wine & Food
-Visitors guide
Plus the usual forewords, introduction, instructions on how to use the book, table of contents, appendices, glossary, index, references, and source indication.

I knew I was dealing with a rather comprehensive work when I found the list of producers who DON’T make Chateauneuf-du-Pape wines any longer.

From one of the two Forewords, this one by Robert M. Parker, Jr. — “It is an honor for me to write the foreword to what I think is one of the most fascinating and profound wine books I have ever read. Harry Karis has devoted the last four years of this life to exploring, investigating, comprehending, and profiling one of the world’s greatest wines: the sun-drenched Provence appellation called Chateauneuf-du-Pape. A tour de force, his book will be the definitive work on this region for many years to come.”

I suggest that the mere existence of “tour de force” books such as this are key to making Chateauneuf-du-Pape (or any other wine region so thoroughly chronicled) a great wine region.

A few years ago, I interviewed a woman about a community educational program in which she had participated. She said, “Learning more about these things made me care more about them.”

Longer ago, I was talking to a Japanese designer, who was also a small wine importer, about a particular wine we thought might work for him. “It needs more detail,” he said. “What do you mean?” I replied, picking up the bottle, “This is a simple, elegant, package, beautifully executed.”

“Nobody knows this wine,” answered the designer/importer. “It needs more detail to communicate its specialness.”

Neither the community learning of the woman I interviewed, nor the additional detail requested by the Japanese designer/importer, changed the inherent quality of what they were observing.

But their awareness of complexity and detail was clearly related to enhanced value judgments.

At Middleton Family Wines we have begun creating “geeked” wine tasting notes. We ask the winemakers for all sorts of information, from specific dates of harvest and pounds of grapes yielded per vine, to yeast strains used in fermentation and details about oak barrels and lees contact.

Our sales team asked for this information. More information, more detail, helped them to better communicate the specialness of the wine.

The awareness of more detail made the wine “better.”

DAH is David Anthony Hance

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Nov 11 10

Marketing Terroir in Wine, THE TASTE OF PLACE, & Globalization

by DAH

There’s a very human tendency to imagine that anything that’s important NOW has always been important. For example: The concept of terroir seems eternal and immortal. How could that “sense of place” ever have been unimportant in the world of wine? It is the key to “authenticity” in wine and food, after all. Right?

I’m reading THE TASTE OF PLACE, a book by Amy B. Trubeck (2008, University of California Press). So far (I haven’t finished the book, which isn’t entirely about wine) I’ve had two rather profound AH-HA moments.

First, I’m thinking more carefully about a very interesting paradox in terroir as a practice. We prize things that are local, and we prize things that have an essential sense of place, and we have the ability (and desire) to reach around the world to bring those local tastes thousands of miles to our home and restaurant tables. How can these local urges remain consistent over enormous distances?

I had dinner at the bar at A16 in San Francisco recently. The bartender, Michael, spoke with great passion and knowledge about a little-known Italian wine (I’d asked him to recommend something unusual … it was a Damiano Ciolli Silene Cesanese Olevano Romano from Lazio, by the way, which I later found to have been a wine recommended to Matt Kramer of the Wine Spectator — read about that HERE).

I asked Michael if he had ever been to Italy. “No,” he replied. “But tasting these wines and reading about them makes them feel like I’m on a special trip. That’s the great thing about wine!”

Indeed. Tasting an oddball wine like Cesanese, learning about it, sharing it, and enjoying an imaginary journey to Lazio. Very cool.

My second Ah-Ha from THE TASTE OF PLACE was the author’s matter-of-fact discussion about the “birth” of terroir as a marketing concept in the second half of the 19th Century. That doesn’t seem that long ago, for something I had thought of as eternally abiding.

Here I will simplify and generalize rather aggressively, to keep this post under control …

Before the mid-1800s there were two kinds of cuisine. One for the very rich an noble: Fancy and extravagant and different from what everybody else in the immediate vicinity was eating and drinking. And another for everybody else in the immediate vicinity: Simple stuff the poor could grow and make where they lived.

That changed when globalization began, longer ago than one might think, but still quite recently. At a Paso Robles wine marketing meeting the other day people were talking about globalization in the wine market as if it were something that had just arrived last week.

“Globalization” began with the introduction of affordable transportation in the mid-1800s. Railroads allowed for the affordable and fairly speedy movement of goods over long distances. And a substantive middle class began to emerge. Potential customers could now be people across the continent, rather than just around the corner. This created a reason to market the special characteristics of place, to sell goods from that place to people farther away, and to attach a value to them to differentiate your place from other places.

The first wine region to do this was Bordeaux, with the 1855 official classification of its wines. The first regional wine marketing program.

Local producers found allies in the transportation industry (trains and boats, and, later, cars and airplanes). Transportation businesses wanted people to travel. Telling people there was something special to experience, and to taste, somewhere else, could inspire them to travel. Why would Michelin think it was a good idea to publish its guides unless it was hoping people would drive to experience new places (thereby needing new tires more often)?

As we struggle to identify, refine, and promote our special places, it feels funny to think that this marketing concept is only 155 years old.

DAH is David Anthony Hance

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Nov 4 10

Cadaretta consumer sales in Walla Walla … a different challenge in Walla Walla wine place marketing

by DAH

Cadaretta is a prestige, luxury winery in Walla Walla, Washington. We are partners in a small-lot winery called Artifex, so that is also the Cadaretta winery, as well as a custom-processing winery for a few other very small luxury wine producers. The winery is in an old industrial part of town, on the way to the state prison, so its location is a bit out of the way, compared with other wineries.

We have an estate vineyard, Southwind, at the southern end of the Walla Walla Valley. We’re up in the hills, next to several other high-end wine producers, sort of near the well-known Seven Hills Vineyard. We’ve got an amazing “glasshouse” gazebo above our vineyard, from which you can look out over the valley. But it’s a bit of a drive from Walla Walla proper.

We don’t have a tasting room, and, since our wines are pretty limited in production and availability, that seemed OK, because we wouldn’t want to be open much anyway (not enough wine).

But without a winery that’s exclusively our own, and with that winery located in an odd part of town, and with our vineyard difficult to access and fairly far away from the city of Walla Walla, AND without a tasting room, making enough of the right consumer connections is a bit of a challenge. We meet and taste at the winery by appointment, certainly, and we’ve made some great friends and customers that way. And we do special tasting events, at the winery and the vineyard. But we don’t get “discovery” drop-by or referral (from other wineries) business, because, in a way, we don’t have a “place.” Even thought we have a winery and an estate vineyard.

So we’re thinking about tasting rooms. Here’s what we want:
1. A place that could be open for tasting 2-3 days each week;
2. Where we could also meet visitors by appointment;
3. It would be nice to be near the winery, since we like to take people there;
4. But there’s nowhere at the winery, currently, that we could simply open up shop;
5. We have an office, but it isn’t really suitable for entertaining visitors (neither in location, nor ambiance);
6. We don’t want to spend too much money building or outfitting a space, unless we have a plan that gives us confidence we could earn that money back;
7. We would like to keep our options open, in case an opportunity presents itself (it would be great to have a tasting room near other busy wineries … which are generally not where we are, near our winery, vineyard and office);
8. The easiest thing to do would be to open in a storefront in downtown Walla Walla, as do many other wineries … but none of them seem to sell that much wine, and we understand the challenges of downtown tasting rooms (we have one for Clayhouse in Paso Robles).

So I’m here in Walla Walla, looking at vineyards and wineries, getting ready to present a plan and recommendations, to see if we can push forward with a better way to attract and secure direct sales customers for our wonderful Cadaretta wines.

DAH is David Anthony Hance

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