Will there be a Silicon Valley Bank DTC Report this year? It's looking doubtful.

Without greater participation this last week, there will be no SVB Direct to Consumer Report produced this year.

It's always difficult to get survey participants. This year the effort had a higher degree of difficulty because the bank failed. I'm sure you heard that news. 

Three weeks later though, we were purchased by First Citizens Bank, and we are today operating as Silicon Valley Bank, a division of First Citizens Bank. 

During that dark period when we were being run by the FDIC, we literally had hundreds of people encouraging us to find a way to continue producing the gratis information we've done for more than 20 years. Because of that encouragement, with the ownership question behind, we decided to produce the Direct to Consumer survey and report, a month later than usual. It was the industry encouragement that was the deciding factor. 

The SVB 2023 Direct to Consumer Wine Survey is Open!

For those following closely, you will notice that I've changed the headline slide back from Rob McMillan on Wine, to the prior blog title of, SVB on Wine.

For most, hopefully it's obvious why I've done that. But for those who haven't followed the rollercoaster, SVB was taken over by the FDIC on March 10th. That was the end of the old SVB. 

But after a couple failed auctions, most of the legacy bank's assets were sold to First Citizens Bank, who decided to run the acquired bank as a division, and retain the name of Silicon Valley Bank. So we died and have been reborn! 

Where Is the DTC business headed?

 

The answer to the blog title is the point of the Annual SVB Direct to Consumer Videocast, which is taking place this coming Wednesday, June 15th. 

You can sign up to receive the SVB DtC Report, receive a link to the live presentation, and a post-conference link to the videocast replay ----> [HERE.] 

Internet Sales are dramatically higher, but how do we know?

 

Selling Wine in a Pandemic

What an insane past few years! But doesn't it feel wonderful to be moving into spring and at the same time into the endemic phase of this crisis? With fewer mask mandates now, maybe we'll be able to smell the spring flowers! But before we linger too long on the warmer days ahead, we still have some work to do. So let me take you back to the start of this crisis in 2020 when the COVID case numbers began picking up. 

At that point in time, I wrote a piece called Selling Wine in a Pandemic which is one the most-read pieces I've posted. I wrote it on March 15th, 2020 - a date that is etched in my mind and probably yours if you live in California. 

If you don't recall, that was the date Governor Newsom first issued the shelter-in-place orders and closed tasting rooms, restaurants and bars. I finished writing that blog on March 15th in the morning, but by late afternoon, I had to go back and update it when news of the lock-downs came out. 

The 2021 DTC Videocast Brings Clarity to a Changed Consumer

The Report

Fifteen hundred people signed up to watch the 2021 Silicon Valley Bank Annual Direct to Consumer Videocast held on May 25th, where we released the newly formatted and constructed benchmarks and metrics from the March 2021 DTC survey. 

I'd say the broadcast went well, outside of my worst nightmare coming true when my internet died in the opening and I had to switch wireless connections. No matter. I survived one more Zoom surprise. 

Discover 2021 Consumer Trends by Participating in the Annual Direct to Consumer Survey

    Let's Never have Another Year like 2020

I opened the 2021 SVB State of the Industry Report with this line: "2020 will go down as the year in which we answered the heretofore rhetorical question, what else can go wrong? 

We are all glad 2020 is over. We are all grateful vaccinations are signaling an end to what we've endured this past year, and almost uniformly across America, there is renewed optimism that 2021 will be better as we move into spring.

The Annual SVB Direct to Consumer Survey is Open

Improving and evolving your direct sales strategies, marketing, and sales will be the difference between success and struggling in the coming decade as the industry's consumer target evolves under our feet as, anti-alcohol groups push their agenda and competition from beer, spirits, and foreign wine intensify. We defend ourselves by using data and evolving or approach.

For instance, how does your tasting fee compare to your region? Are you enticing consumers or scaring them away with that? Are your tasting rooms sales growing like others in your area? What are the splits between club sales and tasting room sales and are they in-line with comps. There are so many other questions that deserve attention.

Shortcut for those looking for the links: Survey Questions  Take the Survey Now ... otherwise, let me convince you a little more.

Annual SVB/WBM Direct Consumer Sales Videocast

      Lots of Shades and Few Patterns

When I wrote the business plan for Silicon Valley Bank's entrance to the wine industry in 1992, I did so largely from a researchers perspective, as I had only modest prior industry experience, and by the time I authored the plan, the industry had completely changed.

I discovered in the process that there were conflicting industry opinions from many of the experts and little research available to support those opinions. The research that was being done was being created by researchers in Chicago and New York; far from wine country. There was almost almost zero street-level intelligence, with the exception of the work done by Motto Kryla and Fisher and Gomberg, Fredrikson & Associates.

As an analyst back then, deciphering the wine business was like trying to see patterns in the lead picture: Plenty of pop and thousands of brands, all trying to find their way in a crowded landscape. Every winery's nozzle was aimed in different directions - region, varietal, wine style, consumer, path to market, consumer segment - because strategy was too often supported by guess work.

That induced me to research and produce my own information for our customers - and the wine community as a whole. The upcoming videocast: Insights for Successful Consumer Wine sales is one such example. --> [signup here] <-- 

      What's the Greatest Risk Today?

The wine business is far more complex than people think. It's a maze of complexities with different models, varying paths to the consumer, pressure from federal, local, and state regulations, a lack of good information, controlling power in a small numbers of hands and changing consumer demand. Oftentime decisions are made with the love of the product in mind, versus a business decision being made with financial returns in mind.

Perhaps the greatest risk we should all be most worried about is our tendency to continue on on a path that's successful. If it works, we keep riding the trend as far as we can, until the strategy fails. In an industry that takes 5 years to get a fully mature yield, shouldn't we be making decisions with a view to meeting the future instead of reacting to the present? Where will things be in 5 years? I guarantee the industry 5 years from now will look very different than it does right now, so the strategies that are starting to wobble today, will be on life support five years from today.

With that in mind and the new SVB DtC Survey now complete, there are many things we'd like to bring out and discuss, including current insights from the survey as well as marketing solutions to consider. This is a time where we need people to grasp the issues, and participate in the evolution of the business and consumer. Getting out ahead of this evolution is where you will find opportunity for growth. 

      Understanding is the Beginning of Change

What are some of the changes we are seeing in this year's survey?

There are more tasting rooms being opened today versus wineries, as a result of the shift to direct to consumer sales, but since 2013, there are fewer of both being opened.

Tasting fees which have been increasing for years are now leveling off; a sign that tasting fees have reached the point where they may be discouraging good/new customers.

After years of seeing increases in by-appointment tastings, the percentage of pure by-appointment has dropped in favor of a mixed model, accepting both walk-in and those with appointments, with respondents suggesting the mix of tastings is also going more of a blend of formal and casual, reflecting consumers with split preferences - some preferring casual and others formal.

  Live Direct to Consumer Videocast

I hope that's enough of a teaser to get you to sign up for the annual SVB/Wine Business Monthly Live Videocast, where we will offer more dialogue on many new findings, along with a lively discussion of solutions and strategy.

In addition to myself and Cyril Penn, included as new guests this year are Tammy Boatright; a person with more than 20 years in direct marketing and winery management and Lisa Kislak with decades of experience in white table cloth restaurants applying data to drive marketing decisions.

Please [register] for this year's live telecast which will take place May 22nd at 9:30 Pacific Time. Joining live gets you into the chat room where you can ask questions of the panel, and discuss with wine people from across the globe. 

Even if you can't make this time, registering will get you the link to the videocast replay when that's available.

This year's panel will include:

        Tammy Boatright - President, VingDirect

        Lisa Kislak - Chief Marketing Officer of Crimson Wine Group

        Cyril Penn, Editor in Chief, Wine Business Monthly.

Date:   May 22nd, 2019

Time:  9:30 am - 10:30 AM Pacific Time

Annual Direct to Consumer Survey Closes this Week

Every year SVB and Wine Business Monthly collaborate on a survey that maps out the changes in direct to consumer wine sales - providing benchmarks to respondents that are invaluable in day to day business, and equally important as we chart new paths and channels to sell wine.

The 2019 survey closes this week. Join the hundreds and hundreds of wineries who have already taken the survey this year [Take the Survey]

Take the above chart for instance which was a product of last year's survey. In it, we can see that for the first time, there are more tasting rooms being built than wineries. Why? Because wineries all believe they need a tasting room to sell direct. But is that true? The answer is that not all tasting rooms are necessary, but client experience is necessary even if there isn't a tasting room

After-Hours TV: The Cutting Edge of DTC Sales

It Never Ended

The annual SVB videocast was over, but the cameras kept rolling and the discussion continued through the night until the sun started peering through the studio window. Eyelids sanded away retinas with each blink while the smell of spent smokes and stale beer perfumed the room. Amazingly, it was time to shave again, but the studio audience asked for more.

The panelist's raspy voices found comfort with hot coffee, and with adrenaline driving us forward we offered up new topics such as gullet level depletions, employing wine ambassadors in your sales strategies, and the value of making social statements with your brand. But who would get the last word? Would the videocast end?

Video Replay: Secrets to Successful DtC Sales

On May 17th we presented several of the findings from the most recent Direct to Consumer survey. This year we again had good participation from the wine business community both in region and by case production. Many great observations were offered from the panelists:

Last Chance to Get 2018 DtC Metrics

The Direct-to-Consumer Wine Sales Survey closes March 23

 

Take the survey

How do you know you are performing at the top of club performance, or even above the average? What percent of revenue, relative to total revenue do your neighbor wineries produce from just the tasting room or just the club? If I asked you how many wineries pay for data capture within their comp structure in the tasting room, what would be your guess? What percent of revenue comes in through web sales in your region?

What's the reserve tasting fee in your region? How about the average tenure of a club member sorted out by average bottle price? Would it help to know the average gain in club members in your AVA last year?

What Will the Wine Business Look Like in 2028?

I've recently been thinking about the changing metrics we've had available to manage the wine business over the years. What metrics existed 30 years ago for small wineries? How was wine sold then? What was the atmosphere like? How did we get information?

With daylight savings time upon us, I also started daydreaming today while looking out at the pool and thinking about summer. That brought me back to a trip to Mexico I took 40 years ago, so Mexico met up with metrics in this post as I pondered what direct sales will look like in 2028.

In 1988 my wife won a sales contest at work that provided for an all-expenses-paid three days at the Fiesta Americana in Puerto Vallarta. I had never been to a foreign country before, except Canada and I didn't count Canada as foreign. But Mexico? Well going there would make me an official world traveler!

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.

SVB Annual DtC Benchmarks

Direct to Consumer sales now represent 60% of the average winery's revenue, but the real growth in direct sales has only taken place over the past decade, dramatically accelerating in the past 5 years. While it might seem like wineries have been doing this for a long time, it's difficult for me to say direct sales have been a professional discipline.

In 2013 I published one of my more popular posts addressing the problem the industry faced in finding good Direct to Consumer Managers. Since it was a new discipline, it wasn't possible to find experienced managers. That is starting to evolve with time, but we are still scratching and clawing our way to direct sales success, learning from each other as we go and playing a little bit of follow the leader. Some of that is good and some not so good which underscores the importance of data.

Annual DtC Survey is Open!

Today, the eleven largest wineries are moving 80% of the wine sold in America, while distributors continue to march toward complete consolidation. The other 9,000 wineries in the U.S. are left to compete with each other for the remaining 20% of case sales.

Not their Fault

I don't blame wholesalers. They have no financial incentive to take on that mass of small customers. Add to that the decline in restaurant sales, which historically have been a large part of family wine sales, and it's hardly an exaggeration to say that Direct to Consumer sales are required for the survival of small family wineries now. It's really their only viable path to market, and yet the industry itself is still barely novices in selling wine direct.