Unprepared to Compete

Posted on Saturday 5 July 2008

Great new post over at Steve Heimoff’s blog. In it Steve addresses what appears to be a lack of consumer interest in California Syrah. Money quote is below:

There are signs the industry is concerned about a Syrah slump and is gearing up to do something about it. In May, Gallo sponsored a Syrah Symposium in Santa Ynez…

At one of the Symposium seminars, I was struck when several of the panelist-winemakers blamed the wine media for Syrah’s failure to win hearts, minds and wallets. “You guys have to do a better job of educating consumers,” one said.

Before I launch into a rant at the folly of blaming anyone - critics, distributors, consumers, God or the weather - for a lack of consumer interest in a variety, let me just say that Steve Heimoff’s blog has been consistently excellent since it launched just a few short weeks ago. Steve updates often, and with compelling content. Be sure to check him out.

So, back to the blame game. Here’s a question for wine producers: Who’s in charge of making sure your wine sells?

If you answer anyone other than “Me” I think a serious re-examination of your business is in order.

Wine Critics

Wine writers shouldn’t be relied upon to advocate for any one region or variety, even though they sometimes do. We’re fortunate as an industry to have talented individuals who are passionately driven to write about wine. But relying on the wine media as a core part of your business model is simply folly. Wine writers write for their audience, not to further the marketing goals of a winery or wine region.

The same goes for wine scores. There are so many other avenues to pursue right now in wine marketing it is simply lazy to rely solely on the tried and true: points and medals. If and when the scores and accolades come, bully for you.

But even if they don’t, many long lasting luxury wine brands have been built without top scores. They did it with savvy marketing, ridiculously great customer service, and good wine in styles that consumers desire.

Bottom line: If your business model includes “make a 94 point wine and sell out,” you’re short both imagination and good sense.

Distributors

The story is similar with distributors. It can be fantastic to have a distribution partner with connections, leverage and years of relationships with buyers out there moving your wine for you and building your brand.

But what are the chances that you’ll enter the industry tomorrow and fall right into such an arrangement? Yeah, good luck with that. For the vast majority of brands, you can’t rely on distributors to build your brand for you, especially if you are small or have a variety that isn’t in fashion at the moment.

Another reason why distributors are often a bad deal is the following paradox: If your brand is strong enough to attract the interest and support of a distributor (which means there is pull demand from the market) you should be looking at turning that brand strength into direct sales and moving to the self-distribution model.

Furthermore, the last thing the sales reps at the distributors want to do is launch a new brand. Believe me. It reeks of effort, and many reps are distinctly uncurious about little known wines and wine regions. They want to move product, make commissions, get recognized and get promoted. They don’t give a whit about your brand, and why should they?

Oh yeah, and the margins suck too.

Consumers

There is only one group you can rely on to help you sell wine, and unless you have direct contact with them, you’ll never be able to actually influence them.

Delighted customers are the only asset you can reliably lean on to help you market and sell your wine. If consumers aren’t recommending your wine, it means you aren’t delighting them. You aren’t exceeding their expectations at every opportunity.

It’s a very tough proposition, delighting customers and consistently exceeding their expectations so that they’ll talk about and recommend your wine. But it’s a tough business, and it’s glamourous enough that everyone wants to be in it.

It seems to me that being exceptional is the minimum threshold to even consider entering such a capital intensive, high risk industry. Which is why comments like the ones reported by Steve strike me as so utterly misguided.

Are these people just totally unprepared to compete?


8 Comments for 'Unprepared to Compete'

  1.  
    July 5, 2008 | 3:17 pm
     

    Josh,
    Thanks for the post. You’re right on with this. Wineries (especially small CA Syrah focused ones) need to do a better job educating consumers about what makes this varietal so facincating. No one, not the critics, not a distributor sales rep, is going to be able to tell your story better than you. And when you do ideed delight customers, that’s when the magic of direct happens. While 2008 was only the second “Syrah Symposium”, I know that they are increasing the number and variety of wineries next year. Larger players need (desparately) both critics and trade to move boxes, which may have something to do with that winemaker assigning blame to critics who’ve neglected to educate consumers about CA Syrah. Who am I going to rely on? Myself, my customers and my wine. Jay

  2.  
    July 6, 2008 | 4:23 am
     

    Nicely put. I will probably read this again and again to remind me of what priorities should me. Good luck Josh.
    Jim Ball

  3.  
    July 7, 2008 | 9:06 am
     

    Josh:

    I love Commentary like this.

    It’s always struck me as odd that wineries (or anyone for that matter) would rely on anyone else to tell their own story to the world.

    To me this is sort of like outsourcing to someone else interviewing for a job for yourself, or asking another person to propose marriage to someone you love on your behalf.

    You can outsource a lot of things (mowing the grass, for instance) but NOT responsibility for your interface with the world.

    You gotta own The Message.

    (I thought your comments on the distributors was especially on point.)

    Thanks for the reminder.

    Richard

  4.  
    Steve Heimoff
    July 15, 2008 | 7:21 am
     

    Josh, thanks for your kind words about my blog. You’re right on with everthing else, too. So many people get into the wine business with little or no business plan or idea of how to make it happen. It never fails to blow my mind.

  5.  
    July 15, 2008 | 10:40 am
     

    I believe that Syrah now is about where Zinfandel was in 1990– Facing a major identitiy crisis due to the broad array of geographical areas the vine thrives in and the wide divergence in styles and price-point. It is going to take constant education and a concerted movement by a whole number of growers who love the varietal to get people to turn to Syrah like they do to Cab, Pinot, and Zin.

    Edumacate!

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