Saturday, December 20, 2014

Santa Karma is Sending You Money in 2015

Putin Claus
This is a wonderful time of year to be a banker in the wine business, or more specifically, a wonderful time to be me! ...... holiday parties, presents, my office filling with client vino keeping me in a jolly mood, and then my birthday  - which falls on Christmas Eve just in case that slipped your mind this year?
 
The birthday part was a mixed blessing growing up in a family of six kids, and that cost me years of therapy. But I'm better now. I've learned to be thankful for all things, and this year in particular I'm getting my birthday AND Christmas wish; about $2 trillion in stimulus from World Despots.

Saturday, October 18, 2014

Will Bottle Prices Increase in 2015?

 
The Annual Wine Conditions Survey will close this Friday. Thus far over 300 of your fellow wineries have participated from across the entire West Coast and Nation. It takes 12 minutes to complete and helps us all understand industry dynamics better. Participants are the ones who will most benefit for small time invested, as they are the only ones who will get the complete results and added analysis.
 
Please join your fellow wineries and participate in the survey before the close Friday [LINK].

Saturday, October 11, 2014

2015 Grape Purchases and 2014 Yields

 
 
I always love this time of year. Harvest is winding down for many and past mid-point for everyone. Fermentation is moving through the normal process with wine makers trying to control the pace as if they were trying to steer a stage coach careening down a hill. The smell of grape must littering the fields starts to intertwine with the smell of burning wood stoves as the temps start to cool toward the end of the month.
 
But the thing I like the most about this time of year is starting to work on the Annual State of the Industry Report and that always starts with the Annual Wine Conditions Survey which is now officially open [Link To Wine Conditions Survey]

Saturday, October 4, 2014

What is Important to Research for 2015?

 
I'd like to get your thoughts and comments on something.
 
As most know, each year I author the SVB State of the Wine Industry Report that is released in early January. Prior to writing the report, we run a survey of the wine industry that is supported by all the major AVA Associations in the country. The survey takes 5-10 minutes to respond, is open for two weeks. This year the survey starts October 8th.... that's this coming Wednesday already! 
 
For that small investment of time, participants receive the complete output along with custom charts and analysis that will help you prepare for 2015. Not even our clients receive that content if they don't participate in the survey.
 
If you would like to participate in this as well as the Annual Tasting Room survey we run in the spring, you can email me at rmcmillan@svb.com and I will add you to the invite list.

Sunday, September 28, 2014

Should You Enforce Your Wine Club Contract?

 
On occasion I get suggestions about something on which to blog. I really appreciate the ideas and use them when I can. This past week I got an email from a follower who suggested I post on their experience with a disgruntled wine club member. The review they got in YELP is a good place to start:
"The wine club is a total scam! I only wanted the wines that weren't in stores so I was told I had to join their club. I didn't want to but I got a discount on the wine. Once I got my first shipment which had all the wines I wanted, I just cancelled the club. Then the as*****s charged my credit card without even telling me! I was like, WTF? and was told by some bitchy tasting room person that I signed a contract that said I had to give back the discounts if I didn't take both shipments! Like who reads contracts? And just because I quit their winery, they didn't send me concert tickets they said they would."

ACME Winery


For the second week in a row I'm asked to anonymize the winery. So we officially have a trend keeping the semi-innocent anonymous to protect the wicked. But in this case, there are some things I can tell you about this winery to give you a flavor of their business model and their side of the situation:
  • They are 100% direct to consumer - nothing is sold wholesale
  • They sell less than 7,000 cases
  • Their average wine sells for $60 per bottle up to almost $400 per bottle
  • Half of their wines are completely allocated and in very high demand - selling for double the retail room price on the secondary market.
  • Their wine club contract requires a one-year commitment and if cancelled in the first year, the discounts have to be repaid to the winery. That part reminds me a little but like the old CD clubs.
  • They include concert tickets for new wine club sign ups but in this case the shipment was made and the customer quit before tickets could be sent.
 

Business Would Be Fine Except for the Employees and Customers

 
So how do you handle a consumer like this who games your wine club agreement? My response is to change your system.

Over the years I've talked to numerous wineries who tried to sell a wine in lower demand in exchange for a consumer getting their hands on an allocated or high scoring wine that was in high demand.

To my thinking in brand building, you really want to make wines that are in demand, and build demand for all your SKUs. Getting a consumer to take a wine they don't really want doesn't build demand for that wine. It may even have a negative impact on how your overall brand is perceived.

Think of this analogy: You find a really awesome pair of custom made Italian shoes in your size, but to get them from the manufacturer, you have to buy a second pair of shoes that are ugly and don't fit.

If you are the buyer, you give zero value to the ugly shoes that don't fit. That means for you to feel like you received fair value for the purchase, you had to feel the price you paid for the package of shoes would be fair either with or without the second pair of shoes.

To go a step further, you may feel that the second pair of shoes has negative value because you now have to go find someone who likes the style of the second pair and has the right size foot. That's going to cost time and effort. If you are making those shoes, what you really want to do is identify a consumer who values ugly shoes in that size. ( .... hope that didn't take analogy too far ... )
 

Is the Contract Legal?

 
I can totally relate to this frustrated winery owner. I didn't mention it, but they did in fact send the concert tickets to the consumer too. So they totally lived up to their side of the deal and got hammered in a review for their trouble. Was their contract legal? Could they charge back the customers credit card for the discounts?

A wine club contract can be a legally binding agreement but that's really a red herring. The practical reality is if you are talking about contract rights to a wine consumer, you are well past building your brand and off topic.

I'll probably get kicked out of the Bankers Union for saying this, but I don't think contracts matter that much. You can have a legal right to something, but in the end what really matters is how you do business, no matter what a contract says.
 
If a social media review is unfair, shake it off. You wont please everyone. Some people are just unhappy and carry a chip on their shoulder. But negative truthful reviews are an opportunity to check on how your business is done and improve. Is compensation motivating the right things? In this case, is the tasting room staff messaging the club program effectively so their are no surprises.
 

Responding To YELP Reviews

 
I feel as though the question of what to do with a negative YELP review has been discussed sufficiently in the blogosphere, but the short treatment is: 1) You can respond as a business owner to a negative review. 2) You can't have a review removed unless the post was a violation of YELP's user agreement but good luck with that. 3) You have no right to have your brand removed from YELP. 4) Don't pay a company who says they can remove negative reviews. They can't.
 
If the reviewer seems crazy, ignore it but if the reviewer sounds reasonable respond to it and show you really do care about providing good service. Interestingly though, for some unknown reason most wineries I checked this week don't respond to reviews at all. You can also encourage people to write reviews which will push the negative review from the front page at least.
 
Finally - thanks to the anonymous winery for suggesting the topic. Hopefully they will get some good thoughts from the community.
 
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What are your thoughts about wine club contracts? What advice can you offer this winery regarding their approach? Do you have any similar customer service stories to share and if so, how did you handle it"
 
Please join this site at the top right of this page for updates and new posts, sign in and offer your perspectives for the benefit of the community.
 

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Saturday, September 20, 2014

What to do When You find YOU are the Problem

The Reward of Struggle

"What is worth savoring that isn't worth toil.
Is gain satisfying without cost?
Without darkness can we explain light?
Our teacher is pain, our brother the fight.
Our effort is gain but our pride the price.
No bliss in bereavement but strength through the test.
Reward through trial: That is wisdom expressed." - Unknown author
 
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Poetry? No this isn't Deep Thoughts by Jack Handy but I have a management philosophy supported with  recent story to share that I hope inspires you in a way that might dramatically improve your business. 
 
While the Napa quake was more than a bummer for many, it produced some really interesting positive results such as creeks that started flowing in the middle of a three year drought
 
Another positive from the quake and the work I did talking to wineries to determine a damage estimate: I've now heard four separate stories about wineries who found something during the clean up - and one CEO in particular who found something he had lost for some time in the clutter and din of repetitive work. He found his well-intended efforts were to blame for the problems his winery faced.

Saturday, September 13, 2014

The Crazy Path to Get Federal Aid for Napa

 
 
I had a request from an industry friend who asked me to talk on this blog about the thought process I went through last week - agreeing to something that was crazy, and outlining my philosophy that trumped common sense. It's a little uncomfortable for me but I'll give it a try and hope you find something positive in the thoughts and updates on the process at the end.