Saturday, March 31, 2012

Wine Sales in 2012

People have just gone through the Great Recession (are still going through?). It wasn't quite as bad as the Great Depression, but I think some of the same trends are going to apply. When you think about people who lived through the Great Depression, they are very frugal people, and they don't tend to spend their money. This tendency came about because they had to scrimp and save every penny they could. Jobs were not readily available (like today), and you never knew when your next paycheck was going to be coming in.

Fast forward to today. We had unprecedented growth and spending power available to us prior to 2007. Not many people thought that what we were experiencing was a bubble, and that it would all come crashing down. We all thought that the growth and prosperity we were experiencing was just the new normal. Then the bubble burst, and the spending ability we took for granted disappeared, and we had to re-examine what we spent money on. What has happened is similar to what happened during the Great Depression. People have gotten much more careful with their spending, and they are expecting the greatest value they can get out of every dollar.

So how does this factor into the world of wine? There are two ways to provide value to wine customers, the product in the bottle and the service you provide. Obviously, the product in the bottle has to be good to great. Wines across the board are getting better and better, and if a winery is not keeping up with quality, they will be left in the dust. Also providing a good Quality Price Ratio (QPR) can help provide value, but not every wine needs to be a great QPR wine. As long as the product in the bottle is good to great, and is priced appropriately (not many people can pay $200 for a bottle of wine), then you're providing the value you can with the product.

The other way to provide value to customers is through service. This includes not just normal customer service (returning phone calls and emails, processing orders quickly, etc), but also includes things like newsletters and social media. Customers want to know what is going on "behind the scenes" in the wineries they like. They want to share in the story and understand all that goes into each bottle of wine. This is where many wineries have an opportunity to provide value to customers but miss the mark. Not every customer contact (or "touch") needs to be about selling. Customers are bombarded with offers and sales all the time, so it begins to become a bit of a blur. By providing value through communication, wineries can build a very loyal following, which will then increase both their number of customers and dollars spent per customer.

I get that this isn't easy, especially for smaller wineries, but it is absolutely critical, even if the ROI is hard to capture. You can't depend on getting a great score from a critic to drive sales, because there are 20 other wineries next to you getting those same scores. A big score means less now than it did 10 years ago. Customers are now more digitally connected than ever, so wineries need to tap into this. Posting bits of information about what is happening at the winery on Facebook or Twitter only takes a few minutes, but over time a winery can gain a significant following by doing so. Sending out quarterly newsletters will provide some of that same value. Creating a mailing list and keeping them up to date on what is happening around the winery is critical to creating a following. Doing these things will also keep your brand in front of the customer, so when they decide to buy wine, your brand will be one of the first they think of.

Wine sales in 2012 is all about providing value. If you're not providing significant value, then the customers will go elsewhere. There is a lot of good wine in the market today, so the key is to find a way to stand out. Providing superior value for a customer's dollar is the best way to do that.