Saturday, May 20, 2017

Replay: SVB Direct to Consumer Survey

We had a good time on set delivering several perspectives on the SVB/WBM annual Direct to Consumer survey. For those aficionados of our surveys and telecasts, you might note a shift in the title but it's just reflective of how we've evolved the survey questions.

We used to call this survey the Tasting Room Survey but over time we started to realize tasting rooms were only part of the formula for success, so we started asking more questions about wine club metrics. Now we have several years of benchmarks from which we can determine trends in clubs and in tasting rooms.

Current State of Direct Sales

Today, the "average winery" receives almost 80% of their direct to consumer revenue from the wine club or tasting rooms as you can see in the above slides. The remainder of the direct income is from events, web sales, and phone sales largely.

It's interesting to note the regional differences. Many of the developed markets have a larger direct percentage coming from club sales versus the tasting room, yet for the emerging regions, it's reversed.

The 'Rest of the US,' British Columbia, International, Illinois, New York and Virginia depend more on their tasting rooms more than wine clubs to drive sales. That's a reflection of the current regional strategies.

Direct to Consumer in the Olden Days

Back in the 1970's the North Coast was a mixed ag region with pears, walnuts, prunes, apples, dairy, poultry and winemaking all included in the mix. Wine tourism was limited and the tasting room was in place only to introduce wine to consumers they could also find in a grocery store.

Revenue from the tasting room was a minimal part of operations and many if not most producers didn't even charge a tasting fee. Check out this video from 1972 to get a glimpse of what the Napa Valley was like: [VIDEO]


In many ways, the emerging wine regions are a little like California's North Coast region in the 1980's. That's when overall wine sales started to flag, and producers started thinking harder about selling wine out of the tasting room, developing the concept of a wine club, and attracting tourism instead of depending only on locals.

The emerging regions today in the same way, are depending on tasting fees, events, weddings, and more support from locals to hit their budgets. Many emerging regions are beginning to think more broadly about wine tourism but across all regions, direct revenue is a growing part of total wine sales now representing about 60% of total for the average winery as noted in the above chart.

Where Do We Go From Here?

My belief is the emerging regions that depend on the tasting room, will get better at wine clubs. They will improve in providing experiences and develop connections with their customers and at a point in time, will look more like the developed regions attracting their own wine tourism to improve their lot. Using the benchmarks from the survey and delivered to survey participants after the telecast, will help wineries attain those goals.

Conversion Rate of Visitors to a Wine Purchase

For the more evolved regions as I noted in the post from a couple weeks ago titled Tough Questions Wine Clubs Face, we have to both stay focused on benchmarking out of the tasting room and wine clubs, but start to evolve from that model and start learning how to take the experience to the consumer without the chokepoint of the winery.

While benchmarks like the above chart measuring success in selling a guest wine are important, we have to find other ways to attract club members and somewhere in the above video, I made the ask of all wineries to start tracking that metric.

Please start to track wine club members acquired through the tasting room versus members acquired through other means. That's going to be a question I want to focus on next year. Wouldn't it then be great to see improvement in the percentage of club members attracted away from the tasting room? Measurement is the start of evolving change.

Final note: Look for the July edition of Wine Business Monthly where Cyril Penn will author his views and conclusions from the annual survey.

Final final note: If you want to participate in our 2 annual surveys and get the benefit of the benchmarks we provide, send me an email?

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