Case Studies On Growing Direct to Consumer Wine Sales

Source: winesandvines.com
April 5th

A tasting room exclusive to wine club members was one of the changes made at Tolosa Winery to enhance its direct-to-consumer program and boost sales.

When it comes to improving the tasting room experience, how much is enough to lift the bottom line? According to three Central Coast executives who’ve led their teams to increased direct-to-consumer (DTC) sales, the answer lies in implementing calculated changes, some large and some small, both internally to staff and externally to the guest.

“There are a million wine brands; there are a million wine regions,” said Maeve Pesquera, senior vice president at Daou Vineyards and Winery in Paso Robles, Calif., during a panel session at the recent WiVi conference and trade show. The WiVi conference is owned and organized by Wine Business Monthly, which is part of the Wine Communications Group that includes Wines & Vines. “Every winemaker I’ve ever met is super passionate about what they’re doing and they all have a really great story. So how does the Central Coast and our winery specifically beat through that noise and break through the fray?”

‘People at the Middle’

Pesquera comes from a background in marketing luxury, having spent 14 years with national brand Fleming’s Prime Steakhouse & Wine Bar, most recently as national director for wine and beverage, culinary strategy and innovation. She transferred her expertise in fine dining to Daou in 2016 and has managed hospitality for the winery, which produces 25,000-35,000 cases annually, ever since. “To me, the crux is our people,” Pesquera said. “For us at Daou, we put the people at the middle of our equation always. That starts with internal associates first and radiates out to our customers after.”

Pesquera said she has created a principles and beliefs document to define success for the company, and by which performance is measured. “We’re looking for people who are emotionally intelligent, who are kind and gracious, who have a giving heart – giving for the sake of giving. We can teach them how to sell wine and tell our brand story.”

As such, she said Daou develops many people from within and has, in the last six months, promoted three associates to manager level.

That document, however, is a living one, and therefore subject to regular change. “The marketplace has evolved,” she said. “We have to take out all our brand assets, literally and figuratively, about every six months, and ask ‘Are they relevant?'”

Emulate Successful Retailers

“Most of us have been to an Apple retail store,” said panelist Tim Snider, president at Fess Parker Winery, which produces 65,000 cases annually in Santa Barbara County. “Are they stocking the shelves and hoping for the best? No. When you go in, it’s about interaction, learning, and discovery, with people on hand to guide the experience. There’s a sense of community and excitement. What we’ve done at Fess Parker and what I think can work across the board is to bring those concepts to the consumer now.”

Snider, who’s been with family-owned and operated Fess Parker for almost 20 years, discussed how the company has evolved its tasting room experience since opening 30 years ago. “We do have a traditional bar, and we’ll pour wine and staff will educate. But as we’ve added new spaces, experiences and opportunities, the majority of our guests are gravitating to these other experiences.”

The similarity to successful retailers like Apple, he says, is a focus on education, discovery and learning.

One such space, Snider said, is the tasting room for sister brand, Epiphany Cellars, where the bar has been augmented by “a whole new tasting room format that’s seated, interactive, and education-based.”

And in another sister space for Addendum Wines, seated tastings are the only option.

“They’re focused on education, discovery, and learning. They’re fun, interactive, exciting, and they’ve done very, very well.” His comments echoed results from the Wine Business Monthly and Silicon Valley Bank 2017 DTC survey in which conversion rates (i.e. tasting-to-purchasing) and average order values increased in direct correlation to the intimacy of the guest experience.

The emphasis on education extends first and foremost to staff, Snider said, citing the introductory certification of eight tasting room attendants with the Court of Master Sommeliers, as well as several others at levels 1 and 2. “If our staff can speak intelligently about Puligny-Montrachet in the context of Chardonnay in the Sta. Rita Hills as well, they’ll be better equipped to deliver a learning experience for our guests.”

Ramping up the Luxury to Make the Sale

Unlike her fellow panelists, general manager of Tolosa Winery in San Luis Obispo, June McIvor, described the DtC revolution of her company, rather than its evolution.

Before August 2015, she explained, Tolosa sold “some pretty good wines” in several varieties between $15 and $45. “The winery was a really fun place to visit, with a modern tasting room, great hospitality. The lawn was a great place to throw down a beach blanket for an afternoon with kids, dog and a bottle of wine. Our pickup parties were the place to be with music and food. We were voted number-one tasting room [in the area]. So why did we change?”

McIvor went on to detail how one of the winery’s founders experimented with DtC at another project in Napa Valley to great success, and chose to, likewise, launch a multimillion-dollar revamp of Tolosa, which produces 17,000 cases annually. “It turned out that most of our strengths were not strengths for the DtC model,” McIvor said. “We had too many varietals, we were trying to be all things to all people.”

Working with a marketing consultant, Tolosa’s first step to increase in DtC sales consisted of clarifying the brand assets; through that exercise, said McIvor, Tolosa’s team discovered that it aspired to be a luxury brand, focused on Chardonnay and, especially, Pinot Noir. To that end, McIvor’s team removed extraneous varietals, then added SKUs of single-vineyard wines and a new flagship Pinot Noir, “all at significantly higher price points.”

Secondly, they looked at all the different DtC revenue channels, including on-property sales, events, wine clubs, digital and inside sales. “We wanted to turn a great hospitality experience into a great hospitality and wine-buying experience,” she said, and started by increasing staff pay and setting slightly higher yet attainable sales goals for the team. She also moved many part-time staff toward full-time, and staffed up during busier times to ensure no guest was left underserved.

Next, McIvor’s team enhanced the productivity of the winery’s spaces, starting with the lawn, which is now no longer a lawn but a tasting space with tables and chairs. “It’s really about controlling the experience for guests,” said McIvor who, like Snider, has experimented with seated tastings to great success. “They’re greeted at the door and led to a spot and it ends forty-five minutes later with a wine sale.”

Other changes to Tolosa’s DtC strategy include the launch of a futures program (which enables near-immediate capitalization on new vintages); phone sale check-ins for repeat buyers; a tasting space exclusive to wine club members; upscale events that end with dessert strategically placed beside the cash register; in-home tastings (in which sales expectations are set at $20,000 to $40,000 each); and a new elite wine club solely for single vineyard and flagship wines set at $2,500 for a member’s inaugural year. “Our staff was terrified to start selling this but success breeds success,” McIvor said. “You sell a couple and it becomes exciting. Our team is now totally jazzed.”

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