Twenty-five winery owners and winemakers took time from pouring their wonderful Zinfandels at the recent ZAP (Zinfandel Advocates & Producers) event in San Francisco to answer some state-of-the-industry questions.
MARKETING DYNAMICS TODAYThe first question was “What, in your opinion, are the key issues and concerns that relate to marketing of your wines today?” The summary answers are 1) the economy and its impact on wine sales, particularly on high priced wines 2) the importance of social networking in getting the message out, and its particular importance for smaller wineries that do a lot of direct-to-consumer sales; 3) the recent excise taxes proposed by many states, including California); 4) the need to unify shipping regulations for ease in doing internet sales; and 5) the concerns about media overload and penetration of message to consumers, as well as the need to educate the public about wine. Regardless of the list of concerns, however, the overall feeling is upbeat. “It’s all about keeping customer’s happy. There will be ups and downs economically, but we will all be okay.”
1) The economy and its impact on wine sales, particularly on high priced wines• “The state of the economy is a worry. Price point has really become a factor. In the $20-30/bottle range, consumers are not afraid to buy … but they are buying one bottle or two, not a case.”
• “The economy is a major marketing issue. We are a premium wine, so it is a tougher sell for us.”
• “Today’s issue: price point. But this is a cyclical kind of thing, and we as an industry should not be reactive to it; we should just keep on marketing.”
• “Everybody is kind of bogged down right now. There is a lot of wine in the pipeline and new orders from distributors and broker are not pouring in.”
• “Consumers want good quality wines for less money. It is important to have wines that give consumers great value at a reasonable price. The under-$20 price point is ideal, but even there, you must give consumer a good quality product.”
• “Price point. I suggest that it makes sense to keep wines at a certain price point right now. Under $30 for premium wines. Under $25 for mid level. Under $15 for moderate-priced and locally produced wines. Under $10 will fly off the shelf!”
• “We must be aggressive about moving inventory by cutting prices. I see a range of price cuts ahead in the 20% category.”
• “The distribution side of the business is affected a lot by the economy. There is a big backlog of inventory right now, and restaurant/on-premise sales are ‘way down. This means it is really important to keep our Direct To Consumer efforts going strong.”
2) The importance of social networking in getting the message out, and its particular importance for smaller wineries that do a lot of direct-to-consumer sales• “We need to learn how to use bloggers to get the word out for new wineries in particular.”
• “I worry about how to get our name out when we are such a small producer. Maybe social networking is the answer.”
• “Since we just released our first wines a few months ago, we are trying to break into the market. We are taking the time to learn how to use Facebook and Twitter for marketing.”
• “We sell primarily out of our tasting room and on-line, and using social networking should help us.”
• “Internet marketing has a big role. People want instant communication. There is no other consumer item that is as competitive as wine, and we need to use the internet to our advantage.”
3) The recent excise taxes proposed by many states, including California)• “The tax in California amounts to a 640% excise tax. That will make it really hard to market my wines. My wine is comparable in taste to an Argentinian Malbec, and even after the taxes are applied to those wines, they’ll still be around $7 a bottle. I can’t compete.”
4) The need to unify shipping regulations for ease in doing internet sales• “It is just too complex. We need to unify and ease shipping and licensing conditions across the whole United States.”
5) The concerns about media overload and penetration of message to consumers, as well as the need to educate the public about wine.• “I am concerned about message retention by consumers. It is hard to reach them about the uniqueness of our wines, for consumers to keep that in mind when they are so bombarded by the media.”
• “We can’t let up on our efforts to educate the public. There is still a huge population base that doesn’t understand the value of wine in their lives and on their everyday tables.”
WINE PACKAGING DYNAMICS TODAYThe second question was, “What , in your opinion, are the key issues and concerns that relate to the packaging of your wines today?” The summary answers are: 1) Cork: cleanliness, TCA, costs and availability; 2) Bottle weight; 3) Labels; 4) Other closures.
1) Cork: cleanliness, TCA, costs and availability • Every answer in this category of concern was pretty much the same. (But your author knows for a fact that the cork industry has done a lot on the cleanliness and TCA issue; see a great review at
http://www.jancisrobinson.com/articles/20080212_2.html )
• On the issue of cost and availability, four of the respondents cited these concerns.
2) Bottle weight• “There’s been a trend in wine packaging for the past few years to use heavier bottles as evidence that a wine is a premium wine. There’s really no need to do that. In fact, what’s happening now is a REVERSE in the trend – everyone wants lighter bottles.”
• “Bottle weight and landfill issues are related.”
• “Green green green. The call for lighter weight bottles is part of that movement in our industry.”
• “We need to look hard at the economics. Maybe we should buy glass locally instead of from India or China.”
3) Labels• “Eye appeal is vital.” “It’s important to have a label that catches the consumer’s eye on the shelf”
• “A winery should want its labels to match its personality.”
• “There is definitely a need for eye-popping labels, and this is crucial with the millennial generation of buyers”
• “Hey, we need larger fonts on wine bottles! Consumers need to be able to read the labels”
• Label information: there is a growing need to give consumers brief info about the wine in 20 words or less.”
• “Critter labels. Thank goodness they are disappearing.” “Critter labels are stupid”. (I swear I didn’t prompt these responses! But your author agrees, see my blogpost of September 20, 2008:
winebiznews.blogspot.com/2008/09/critter-wines-and-critter-shorts.html )
4) Other closures • “Closures are a way you can differentiate your product”
• “We need a lot more choices in closures than we now have. And those closures need to both deliver the aesthetics and yet protect the quality of the wine.”
• “Screw caps. There seems to be public acceptance of these closures in the under-$20 segment.”
WINE PACKAGING CHANGES ALREADY PLANNEDThe last question was “What changes do you see ahead in wine packaging in the next 1 to 2 years, both for your own wine, and for the industry as a whole?” The summary answers are 1) Better label design is necessary; 2) Green packaging issues will lead to, among other things, lighter-weight bottles; 3) Use of screw cap and/or synthetic cork will rise; and 4) Other non-glass packaging formats are being considered
1) Better label design is necessary • “We are going to improve our label design”
• “We need to update our label, make it more appealing to younger consumers.”
2) Green packaging issues will lead to, among other things, lighter-weight bottles• “Lighter bottles will reduce the cost of shipping”
• “We are hearing a lot about the carbon footprint of heavy glass bottles, something that takes less energy to create.”
• “Does it really matter to consumers what the bottle looks like? We need to think about bottle thickness changes, tapers that lightweight, and so on.”
3) Use of screw cap and/or synthetic cork will rise• Screw caps – we’d use them more if they could go on a variety of bottles, but we’d never use them for red wines.”
• “We are going to go to screw cap on our white wines, and will use synthetic cork on our reds.”
4) Other non-glass packaging formats are being considered• “We need to move to “greener” packaging, where there is less waste.”
• “Paper packaging has a chance now with the carbon footprint thing; I see some bag-in-box here at ZAP and I see it in the stores.”
Thanks to the winery folks who took time to answer these questions. Those of us who attended the Unified Wine & Grape Symposium in Sacramento in late January 2009 heard about these issues from a variety of experts. But from the horses’ mouths, so to speak – these interviews provide a reality check.
