Right now, all of us all are in survival mode, sheltering in place and holding on to see what the “new normal” looks like. The COVID-19 pandemic has already had a devastating impact on wine sales in channels such as hospitality and restaurant. Make no mistake: This crisis will have a cataclysmic effect on the U.S. Wine Industry for years to come, especially for small to mid-sized wineries.
Even before the pandemic hit, the wine industry was experiencing historic headwinds, including:
• Alternative beverage competition from non-wine alcoholic and non-alcoholic beverages
• Generational shifts impacting consumer demand, varietal choices and styles
• 3-Tier competition and consolidation narrowing distribution opportunities
• Grape oversupply due to record harvests in 2018 and 2019
Add a worldwide pandemic to the equation and there is simply no time to waste. You must take immediate action to prepare your winery for the future.
WHAT YOU CAN DO NOW
Wineries have been historically slow to adapt to trends and impacts on their businesses. Unfortunately, the rising tide of consumerism has come to a screeching halt and will demand swift actions to adapt to the new realities of producing and selling wine. Slow and steady may win the race in fables, but in the pandemic reality, the tortoise cannot win.
How long it will take to get back to “normal” is anyone’s guess. Given that each winery has its own unique circumstances, solutions must be tailored to your specific business. Here are some proactive steps you can take to successfully reinvent your winery during this critical time.
PRODUCTION/INVENTORY
Wineries faced with an oversupply of bulk and bottled wine should consider the following options as alternatives to straight-up price reductions:
Create New Wines/Blends - Look at what the younger consumer base is buying and consider sourcing some fruit to develop a variety or style of wine that is seeing increased demand. Now is a great time to buy high-quality bulk wine at bargain prices.
Adopt New Packaging - It is not a 750ml-only world today, as alternative packaging continues to gain significant traction. As you consider new formats, try obtaining advance orders or commitments from buyers to help you make sound decisions about can/box/aseptic packaging alternatives.
Strategic Branding – This is an extremely competitive channel today, one that requires financial investment and long-term commitment. Reach out to retailers (brick/mortar and online) directly that can provide a steady demand for customized or specialized wines that you make for them exclusively—even if it means relabeling existing bottled stock. I’ve worked with many businesses in this area, and have found that Lisa Ehrlich Consulting, Affinity Creative, and Intwine Marketing bring a high level of expertise in developing these types of brands.
DIGITAL MARKETING
You need to rethink—right now—how you are spending your digital marketing dollars. This area will be as critical as the production of your wine, because if you fail to adapt, your wine will continue to sit in a warehouse. There are many disciplines that are important to marketing success (website management, advertising, SEO, etc.), but the following areas will have the greatest impact:
Content Development - The same ol’ static wine messaging (written and/or visual) will be the death of many wineries. Focus on developing fresh content in video format that allows your brand to connect with a new range of consumers on both social media platforms and your website. This requires planning and some extra time, but it isn’t as daunting as you might think. Need help? I’ve worked with Wildly Simple Productions, Highway 29 Creative, and KAI2, and all three are leading the charge to help wineries develop meaningful and engaging content that will attract the right audience.
Social Media Plan - Simply posting photos of a recent club event or release party won’t cut it. You must create authentic brand content in an engaging format that tells a good story. By posting live action shots, videos and stories according to an organized plan that is aligned to your brand strategy, you have a real opportunity to increase traffic to both your website and eventually to your physical winery. This should incorporate engagement focused on brand followers and key influencers. If your winery hasn’t yet developed a social media plan, this Hootsuite article outlines the process in eight easy steps.
Email Campaigns - The fundamental elements of an email marketing campaign include personalization, segmentation, mobile-first, testing and automation. This recent OptinMonster article, How to Run a Successful Email Campaign, outlines some of these considerations. For specific tips and campaigns for wineries, see the San Francisco Chronicle story, Email Marketing For Wineries: 5 Campaigns Guaranteed To Drive ROI.
Customer Intelligence - Understanding your current and target customers to maximize sales is more vital than ever. Solid data analysis will inform your decisions as you dedicate more time, effort and money to actively engage your existing customers and target new ones. For tips, see this insightful article, Audience Analysis: Who is Your Customer?, from Emetry, a leading firm in customer insights for the wine industry.
HOSPITALITY
The hospitality business is unlikely to return to normal before 2021 and may depend on a COVID-19 vaccine, which is 12-18 months away! This area of your winery’s business will return, but you need to pivot your staff ’s efforts to a virtual hospitality model, one that can provide the biggest impact. This includes:
Virtual Customer Engagement Outreach - Repurpose tasting room staff to engage with current customers to help assure their continued patronage. Whether by telephone, email, letter or social media post, make sure your staff is connecting with each customer on a more personal, empathetic basis—not just trying to sell them wine. This is a great time to increase your connection and engagement with your customers, enhancing their loyalty to your brand.
Referral Programs - Develop a referral program that rewards current customers for directing their family and friends to purchase directly from your website or to join your wine club. Make sure it is worth it for them to provide that referral. You’ll not only make an existing customer very happy, you’ll bring in new customers who may never have otherwise visited your winery.
Virtual Tastings/Tours/Classes - Virtual tastings have become increasingly popular since this pandemic began, but they are fraught with issues:
Boring content – Talking to customers instead of engaging with them in conversation
Logistics - Do two people really want to open four bottles of (expensive) wine for a one-hour tasting session?
Connectivity complications – Technology issues getting in the way of conversation
Live tastings in your tasting room will return, but the usefulness of virtual tasting is now very clear and you’ll need execute them properly. Amber LeBeau posted an article on her SpitBucket blog—How Can We Make Virtual Wine Tastings Less Sucky?—that hits on some key best practices for virtual wine tastings.
Experience Creation - Strengthen your hospitality experience and be prepared when customers return to wine country. If your tasting room is not physically structured to maximize customer engagement or tailored for various customer types with tiered levels, now is the time to convert your existing spaces to a more engaging environment, and to develop different levels of tasting programs. This may involve a small capital investment, but it will be critical to assure your winery’s tasting room is attractive and relevant in the future.
While you are sheltering in place, take time to check out what leading wineries are doing online and see how they’ve capitalized on space and tiered tastings. Some of the best examples include Robert Young, Ram’s Gate, Raymond Vineyards, Chateau Montelena, Cade, and Archery Summit.
THE TIME TO ACT IS NOW
Whatever you do, don’t underestimate the long-term impact of this pandemic on your winery. Now is the time for you to tackle the current market challenges and develop solid strategic plans throughout your business to assure that you are addressing today’s realities and are able to survive this crisis.
Mark Evans, Triumph Advisers