Dark times, bright ideas

The wine industry faces a new normal. Sommeliers and winery owners came up with strategies to do business in a world with no restaurant guests and no winery visitors. Roger Morris talked to people in the industry.

Sommeliers and wineries found new business strategies in the pandemic / Credit: Adobe Stock
Sommeliers and wineries found new business strategies in the pandemic / Credit: Adobe Stock

f there is still truth in the old adage, “When life gives you lemons, make lemonade,” then the year of living with Covid-19 saw life raining lemons on the wine trade and many businesses and individuals creating their own brands of lemonade.    

As they look beyond the Covid-19 pandemic, businesses and individuals from wineries to importers to sommeliers envision a future that relies on data mining and analytics, the embracing of virtual events and virtual communications, increased efforts for direct to consumer sales and, for some, a backward integration of careers.

Nowhere were the negative effects of the coronavirus lockdowns felt more keenly than at restaurants and, to a lesser extent, small wineries heavily dependent on restaurant or tasting room sales. In the United States alone, more than 100,000 restaurants permanently closed last year or will need additional funding to re-open – about 17 percent of total restaurants operating pre-Covid.

Hundreds of thousands of restaurant workers lost jobs – some temporarily, others permanently – and many strapped owners determined sommeliers were nice but not critical to business. At the same time, small wineries also struggled, but, unlike restaurants, they were used to the cyclical nature of harvests and inventory management and were less likely to go bankrupt. But the experiences of the past year told wineries they could do business better and that out-of-work sommeliers might be part of the answer.

From gatekeeper to winery worker

Traditionally, wineries had known on-the-floor sommeliers as customers and gate keepers to restaurant wine lists and occasionally employed them as paid ambassadors or spokespersons. They were often treated as visiting royalty. The new Covid reality changed all that and wineries have begun to view out-of-work sommeliers as well-educated, well-trained employees to run their tasting rooms, DTC programs or even assist in winemaking.

Jennifer Hendrickson had worked 25 years as a “floor” sommelier, most recently at the Yellowstone Club in Montana, when she was hired as director of hospitality for Oregon’s Domaine Serene, which has extensive wine and food offerings both at its winery and at its three remote venues or lounges around the state. “Now, seven or eight of our hospitality team have sommelier experiences, and we actually look at ourselves as a team of sommeliers,” Hendrickson says. “We’ve given them the opportunity to see the wine business in a different light,” one more family friendly with mostly daytime hours. 

“We hired three sommeliers this year during harvest,” says Kelby Russell, winemaker at Red Newt Winery in New York’s Finger Lakes region, one of whom stayed on to work in the winery. “And we’ve learned a ton from them about the larger wine business.”

Getting to know your customers

In addition to skills brought by sommeliers, wineries also discovered during the pandemic they needed another kind of expertise – analytics. Zoom and other online tasting and education formats not only kept wineries in touch with customers normally seen in tasting rooms, if at all, and the far-thinking ones saw DTC opportunities they had never before realized.

At a Silicon Valley Bank wine industry seminar in early 2020, consultant Paul Leary, already looking beyond the pandemic, told winegrowers “the worst thing we can do is to go back to our old ways” once the worst of the pandemic was over. Rather than worrying about bringing customers back to tasting rooms, he reminded wineries that because of online tastings and seminars, “You now have the opportunity to go directly into the customers’ dining rooms.”

Taking that a step further, Paul Mabray, CEO of the analytics firm, Pix.com, recently advised, “The investment in a CRM [consumer relations management] analyst will pay dividends in customer understanding – psychographics, buying behaviors and more – improving better measured campaign performance and building data sets for experimental design for new efforts. The ROI of understanding your customers starts with understanding the data.”

One Napa Valley winery – ultra-premium Far Niente – has hired personnel from outside the wine industry trained in analytics, and data collected led the winery to pay attention to corporate customers in online events. “It’s been a sweet surprise in pivoting away from the tasting room,” says Vida DeLong, Far Niente’s analytics-trained vice president for DTC sales. “We’ve been able to segment our offers as well as learn how customers want to be contacted – text, phone, emails. We like to say we’ve become ‘data curious.’”

While wine distributors already used data collection and mining, the fact that sales and marketing personnel could no longer visit accounts in person during the pandemic caused them to expand data collection.

Winesellers Ltd., a Chicago-based importing and distribution company, had put in place in March software designed algorithms predicting customer buying behavior and ranks them into different buying categories. “Because of Covid and travel restrictions, we were pushed to see if the system could work more efficiently,” says Todd Nelson, VP of marketing.  “We are focusing on connecting with the top 18 percent of our accounts who are committed and engaged. Before, you had to take the shotgun approach in pushing brands,” he says. “Now, we can see each account’s purchasing tendencies and ask whether or not it’s worth our time and money to send someone in there.”

Winesellers now ranks accounts for its top 10 brands into three categories – “Rising,” “Consistent” and “Declining.” With information gained during the pandemic, Nelson is putting into place a post-pandemic sales incentive program to move lagging accounts to the next level.

    
Expanding sales through online tastings

The large American online retailer, Wine.com, represents one wine trade segment that profited greatly during the pandemic by delivering wine to home-bound wine consumers who, market statistics show, drank more during lockdowns than they would have normally. As a result, in 2020 Wine.com collected $329 million in revenue, a 119 percent year-over-year growth from 2019.  But Wine.com says the lockdown experience has pointed to ways to expand sales and marketing beyond the pandemic by bringing wine producers and wine consumers closer together – both virtually and in-person. During 2018 and 2019, Wine.com had experimented with live events hosted by wine personality James Suckling and others. One such event in February 2020, just as the pandemic was brewing, involved 1,200 customers.

“But a couple of days into the pandemic, we changed our focus to live streaming,” says Wine.com founder Michael Osborn. “We soon found ourselves having as many as 5,000 online guests for some events, with perhaps 4,000 of them pre-purchasing wine.”     Typically, a Wine.com event lasts 45 minutes and features three purchased wines from a given winery pre-shipped to participants. Now Osborn plans to hold as many as 72 events during 2021. “We found that 7 p.m. on the East Coast is the best time,” he says, “although that means winemakers in Europe are leading tastings at 1 a.m.”

Another Wine.com initiative, one that could have a great impact on the wine travel industry, involves leveraging the company’s data knowledge to serve as wine travel matchmaker between consumers and wineries. “We’re just now getting started because of the existing Covid travel restrictions,” Osborn says, “but we see ourselves as being a concierge to customers who want to travel.” Anticipating a pent-up demand for such consumer wine exploration, Wine.com can use its knowledge of customer purchases and their winery and regional preferences and match them with wineries selling on its platform. Osborn says it can thus creating bespoke itineraries for its key customers, beginning with wine club members.

As a way to keep it in touch with restaurants and bricks-and-mortar retailers who may be struggling financially, Winebow, a large American import company, has initiated live online business education seminars to help updating their skills during a period when they have extra time on their hands. 

“The Covid-19 shutdown brought an immediate look to innovation within the Learning Department of Winebow, which was complemented by a similar spirit within our Imports Division,” says Ron Edwards, the company’s director of education. “We started collaborations for outreach to endangered businesses in a way that was supportive and empathetic,” offering bi-weekly hospitality training webinars to engage those in the stalled restaurant trade. Attendance usually is more than 100 people per event, and Edwards says Winebow will continue the programs post-pandemic.

Similarly, the Distilled Spirits Council of the United States (DISCUS) in late January launched a business academy for teaching distillers skills beyond their craft, such as safety programs, cash-flow management and organizational structure. According to Chris Swonger, the association’s CEO, “DISCUS Academy will facilitate the transfer of knowledge from our industry’s legends and business luminaries to develop the next generation of leaders, allowing for a more diverse, inclusive and successful industry.”

In short, to use another popular analogy – dark clouds with silver linings, the past year has been one that has resulted in the wine trade looking to the future and constructing their individual “Silver Linings Playbooks.”

 

Roger Morris

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