WIne Trends | Benchmark Consulting

What’s the best advice you ever got?

July 12, 2017July 12, 2017

We get advice all the time. From people that we know, we respect and those we don’t know and we don’t necessarily respect….but we learn from regardless. Here is a collection of advice from a group of people from all walks of life…. May something resonate with you!

1. Don’t lose sight.

“‘People who used to run car companies were really into cars. People who ran hotel chains loved hospitality. Now, everything is run by accountants, and you feel it as a consumer.‘ This slightly grumpy rant from one of my mentors, the famed mad man Martin Puris, inspires me to stay focused on the purity and passion of a business pursuit.” –Andrew Deitchman, co-founder of The New Stand

2. You get only what you settle for.

“The best business advice I ever got came from my dear old Dad. It’s quite simple and immeasurably powerful. It goes like this: ‘You, and only you, should set the value of your talents, ideas, services, and/or product. Don’t ever expect anyone to pay or give you more than they have to.’ As an entrepreneur, you have to get used to the fact that, quite often, you’ll be faced with an offer that seems less than the value of your talent, ideas, services, or product. That’s business. You are the sole arbiter of what you, your ideas, services, or product is worth. Therefore, what you get is what you are willing to settle for. You have to fight for what you feel you’re worth. Not that settling is necessarily a bad thing, but where you end up is what you settle for. Sage advice.” –Neil Powell, fine artist and co-founder of Mugnacious

3. Be clear and transparent.

“I learned many things while working for Steve Jobs in the ’90s, including what not to do. While Steve was arguably the greatest marketer of our generation and gave some of the most inspirational speeches of our time, he wasn’t the best communicator when it came to individuals. Steve didn’t set defined expectations for me or other employees: he simply knew it when he saw it. Watching him operate made me recognize the importance of clarity and transparency with my team, and how imperative it is to set expectations and effectively communicate with them. The more transparent I am about where I want to take the company, the clearer my team is about how to get there. Making sure everyone is on board before you make business decisions will help ensure you won’t alienate people (sometimes your best ones) in the process.” –James Green, serial entrepreneur and CEO of technology company Magnetic

4. Forget “having it all.”

“These days, there’s an ongoing debate about whether women can ‘have it all,’ and I’ve often been asked that question. I’m a person who likes to give 100 percent to everything I do. I want to be the best at my job and as a mother. But I realize I can only give 100 percent in the moment. If I’m at work, am I giving 100 percent to my kids? No. If I’m at home, am I giving 100 percent to my work? No. It’s a balancing act, but worthwhile as long as we don’t kid ourselves that we’re superwomen.” –from the book Getting Real by Gretchen Carlson, host of The Real Story with Gretchen Carlson on Fox News, used by permission

5. Don’t get caught in analysis paralysis.

“Work is never going to be as slow as it is today. The pace of business in general — and start-ups specifically — will only quicken in 2016. So, we have to make a lot of important decisions quickly. I got some great advice early in life, which was: ‘Sometimes you won’t know the right decision, so you have to make the decision right.’ In other words, when you lack perfect information and time, you have to be thoughtful about your process, be diligent in your analysis, then make the decision quickly. After that, it’s all about execution and putting all your energy into making it work.” –Don Smithmier, founder and CEO of The Big Know

6. Listening is very different from hearing.

“The best piece of advice ever imparted to me comes from my mom, who is fond of saying ‘What you say matters less than what people hear and understand.’ As a teacher, she was a brilliant listener, and she used what she heard to build a bridge between what she needed to teach and how the student needed to learn. From that, she taught me to focus my efforts on helping people understand rather than on what I wanted to tell them. She taught me how to hear, and it is the single most important skill in my professional success.” –Courtney Buechert, founder and CEO of creative marketing agency Eleven, Inc.

7. Put your weirdness into your work.

“These words were spoken to me by famed voice-over and recording artist Ken Nordine. This was many years ago, and I’ve carried these words with me ever since. He recognized that we all get a little weird from time to time, but it’s how we choose to channel our weirdness that’s key. To offset my very ordinary life, I infuse every project I touch with experimental and fluid creations. It’s what’s led to my best work and most successful endeavors. With weirdness and imaginative thinking embedded in all facets of your work, you are free to spend the rest of your time enjoying the little things in life, a balance that is delicate yet so profound.” –David Slayden, founder and executive director of designer-founder accelerator BDW

8. Action creates opportunity.

“There’s a variety of advice that has had lasting impact, but this is the one that I continue to return to on a weekly basis. It’s a quote from my former CEO. This phrase remains valuable in the big and small, in the tactical and the strategic. We are in an industry that requires the creation and fostering of constant change. We have to invent new ideas, create new services and capabilities, all while increasing the quality of our craft. So while we can all spend an endless amount of time contemplating and planning, there is one force that cannot be denied. Take action, as it will surely create and open up new opportunities.” –Ed Brojerdi, CEO of KBS New York and co-founder of Spies & Assassins

9. No cohesion, no team.

“In creative industries especially, teams are central to the work. They are integral to collaborative cultures and, far more often than not, essential to innovation. What too many people fail to recognize, however, is that two or more people working together doesn’t automatically constitute a ‘team.’ These people may be partners and co-workers, but that’s not enough to effect the magic that genuine teamwork can produce. When I was running the brand-strategy practice for consultancy FutureBrand, we assembled teams to take on each assignment and were careful to include a diversity of skills and backgrounds in each. I couldn’t help but notice, though, that certain teams were far more effective than others. In a management meeting, we discussed the issue and then we each went off to gather more data. When we reconvened, the lesson became clear: No cohesion, no team. It turned out that the highest performing teams simply liked each other more. They would break for dinners. Go bowling. Share their weekend plans and recaps. They genuinely cared about one another. And that led to a level of performance that far outstripped anything that less cohesive teams could hope to achieve. I keep that lesson in mind, not just when I’m putting teams together but also when I’m hiring. However brilliant or accomplished a prospect is, I don’t want to hire that person if he or she can’t play well with others. I look for the right mix of skills and mindset, of course, but beyond that I want to know that the person will be worthy of colleagues’ trust and a positive presence within the company. If not, I’d prefer that person play on someone else’s team.” –Andrew Benett, Global CEO of Havas Worldwide and Havas Creative Group

10. See the spaces, not the trees.

“This is a snowboarding reference. It can be daunting, standing at the top of the mountain readying yourself for the trip down, and seeing all the trees in your path. But the key is to see the space between the trees. This sort of mindset, seeing the opportunity and not the obstacles, is important as you start out on your next life chapter, both personally and professionally. When you’re deep into your work or facing a personal challenge, it’s easier to see the barriers, but don’t let them stop you from pursuing the opportunity that exists around them. Remember the business of your business. Many companies get caught up in the service they provide versus what actually drives their business. For example, Twitter is a micro-blogging service. But at the end of the day, what pays the bills is selling ads and sponsored tweets on the platform. Don’t lose sight of the actual economics of your business; it’s what keeps the lights on

Careers in Wine

5 Signs You’re a “Unicorn” Employee

October 10, 2016February 26, 2020

Unicorns are hard to catch. Back in the 1500s, it was believed that only fair young maidens could gain the trust of these elusive, horned creatures.

I’m no fair maiden. Still, in my time, I’ve had the luck of getting close to many magical unicorns … in the form of “unicorn” employees. Not to be confused with unicorn companies—startups valued at $1 billion or more—“unicorn” employees, for me, are staff who possess a unique set of qualities that make them extremely rare and valuable. Like actual unicorns, they’re hard to find, but once hired, offer up enormous benefits in the workplace. To name a few, they shatter expectations, raise the bar for everyone and are simply a joy to be around. Unicorn employees can literally take your business to the next level.

Whether you’re looking to build a unicorn army, or hoping to boost your own value in the workplace, here are the five key qualities of unicorn employees:

You aren’t limited by your job title.

In the span of about 5 years, my company, Hootsuite, went from a 100-person tech startup to a 1000-person global company. Through this stage of “hyper growth,” employees who truly flourished were flexible and intellectually curious.

Earlier on in the business, this meant having the ability to wear many hats and excel at varied tasks, critical at a fast-growing startup. For example, just because somebody’s job title was “Office Administrator,” didn’t mean she would shy away from pitching in on a major marketing campaign by helping brainstorm some catchy tweets.

Later, as the company grew, unicorn employees jumped at the chance to dive deeper into specific, growing areas of business, which needed good people. Some even decided to move across several departments. I saw unicorn employees make surprising leaps—one even went from financial specialist to software engineer. I think this is so important to employee growth that we recently launched a new pilot initiative, called the “stretch program,” to help people expand their knowledge and expertise across the business … and grow their unicorn horns.

You think big and small.

Exceptional employees are able to think strategically. This means having the ability to take a step back and see the overall company goals, or the industry as a whole, then apply it to your work. To be effective in business, you must be able to see the big picture.

On the flipside, while big-picture thinking is critical, I’ve also found that the best employees also know the devil is in the details. Running a business requires meticulous attention. A minor copyright issue, improperly executed email campaign, or even what seems like a small technical glitch can end up being catastrophic, affecting a lot of clients in a short period of time. The best employees are those who take the time to read the fine print. These are the types of people I know I can entrust with serious responsibility.

You have true grit.

The concept of “grit” has made its way into popular culture recently, perhaps sparked by psychologist Angela Duckworth’s popular TED talk and book, on the subject. She defines grit as “perseverance and passion for long-term goals,” and says it’s a crucial factor to achieving success.

I couldn’t agree more. Being an entrepreneur since I was a teenager, I’ve learned that the business world is like being on a boat in the open sea. Whether it’s a patch of rough waves or an unexpected storm, unexpected obstacles are inevitable. During these turbulent times, having grit—a dogged persistence—can help you keep focused on the destination. In fact, that very outlook helped my billion-dollar company weather the storm and get to the next level. Unicorn employees have true grit, and are able stay calm and focused on the task at hand, even on choppy seas.

You’re respectful by nature.

The ability to work well with others is a skill that benefits any workplace. It seems simple enough, but you’d be surprised.

A few years ago, I put out a job posting for a high-level sales role. Many people applied, and after a series of interviews, I had some top candidates in mind. However, when I checked in with my executive assistant at the time, I was shocked to find out how many of those people who had been personable and courteous to me, had been downright rude to her.

Unicorn employees are respectful by nature, and would never treat someone—regardless of title —in this way. It’s something that absolutely sets a stellar employee apart from an average one. In fact, this is so important to the well-being of our staff, it’s been built into two of our four core company values: “Respect the individual,” and “lead with humility.”

You get it done.

A few years back, LinkedIn CEO Jeff Weiner sent out a short status update on his platform: “In simplest terms possible, the people I most enjoy working with dream big, get it done, and know how to have fun.”

The update blew up, striking a chord with the tens of thousands of people who commented and liked it. (Weiner followed up by writing a full post on the topic.) Like him, I too am a huge proponent of having fun at work and believe it’s crucial to success. However, I can’t stress how important it is for people on the job to be able to get shit done. After all, no matter how great a co-worker is to be around, if he can’t produce actual results, his presence is isn’t ultimately helpful and may even be damaging to others. Great teams can be shattered by a single member who can’t get shit done.

Meanwhile, studies have shown that top performers contribute to a business 10 times more than their average counterparts. In fact, some firms, including Microsoft, claim that figure to be 100 times.

The bottom line: At the end of the day, you can be respectful, multi-talented, tenacious, detail-oriented and a big thinker. But if you don’t produce real results and move the needle, all those traits are wasted. You must be able to execute. It’s an essential unicorn quality.

For companies and business leaders, it’s probably worthwhile to put some extra time and effort into chasing unicorns. Unlike their mythical counterparts, they’re very real and they can change your company. And for unicorn employees in the making, it’s never too late to grow your strengths and make yourself more rare and valuable than ever.

Ryan Holmes

CEO @ HootSuite

Image: Evonne Heyning

Careers in Wine

How Millennials are Changing the Wine Industry

August 5, 2015

Article from Wine Industry Advisor

While the precise dates governing the birth years for the biggest generation in history known as millennials vary, (somewhere between 1976 and 2004), there is no dispute that they love their wine. The first segment of this group hit legal drinking age in the early 2000s, as U.S. wine consumption surged. It has increased at a steady rate ever since. Millennials are responsible for nearly 27 percent of the total U.S. wine consumption, second only to baby boomers (born between 1946 and 1964) who account for nearly 42 percent.

Approximately 70 million millennials are currently age 21 and account for 30 percent of weekly wine drinkers. As the number of aging, wine-drinking boomers decreases, the millennial generation is stepping in to fill the wine buying slack — and marketers and industry experts can’t help but notice. This generation’s whole approach to wine is vastly different from those who have come before them.

Millennials are the first digital generation, and their technological fluency shapes their buying decisions. They
have grown up with instant, on-demand access to information, price comparisons and peer reviews. They don’t wait for a special occasion to drink wine, nor do they stash wine in a cellar for a decade like their boomer parents. Wine is used to relax, to socialize with friends or family, with or without meals, while cooking, while hiking, during wine tasting parties, and on vacations. A 2011 study of 467 millennials by the Wine Business Institute at Sonoma State University showed that this generation drinks wine as part of their informal, everyday life, and therefore in larger quantities than previous generations. The study suggested that “ by linking into these motivations of socialization, relaxation, and fun regarding wine, marketers will be able to relate better to Millennial desires.”

Millennials are not fans of slick advertising or pretentiousness, and want authenticity and transparency from winemakers. They want to know the unique story behind their wine, how it is grown, blended, and by whom. Critics’ scores and gold medals hold little weight for them; instead they’ll value what their friends are saying about the wine on social media.

These wine lovers are experimental and they crave adventure. Traditional wine and food pairing rules don’t concern them. The per bottle maximum they pay for a celebratory quaff hovers around $20, but the daily drinking comfort zone is closer to $10. Millennials are active and they want their wine to be just as mobile and portable. This marketing shift is a challenge that the wine industry appears to be excited to tackle.

Companies are increasingly allocating more of their marketing dollars to social media advertising, and interactive online marketing strategies. Wineries have created digital marketing divisions and director of social media positions. They maintain active and engaged roles on Facebook, throw Twitter parties, curate wine blogs, and produce tasting videos to keep the wine chat flowing 24/7. Wine apps allow users to shoot a photo of a wine label and immediately access descriptions and ratings, adding their own tasting notes to the database. The Wall Street Journal noted that when it comes to wine apps, “Sometimes it seems as if there are almost as many wine apps as there are wines.”

Millennials value the connectivity and networking benefits of in-person social settings — wine bars and festivals are thriving, and tasting groups are forming. Producers such as Gallo, owner of Barefoot Wines, sponsor face-to-face events, like the World Series of Beach Volleyball. Stephanie Gallo, VP of Marketing, draws her inspiration from Starbucks, “which brought a premium product — gourmet coffee — into the mass market.”

The yearning for authenticity and the desire to know where and how the products they eat and drink are sourced has spilled into wine packaging. Millennials value eco-conscious products, and alternative packaging is evolving to comply. The proliferation of premium-boxed wines that use recyclable materials is illustrative of just that.

The wine company Bota uses soy-based inks printed on recycled, unbleached Kraft paper, bound with cornstarch instead of glue. Many box wine producers use organic grapes from sustainable, fair practice farms in California, Washington and Italy. To quench the millennial thirst for information, producers are including more product information on packaging as well.

Several companies now offer single-serving wine pouches. All this experimentation pays off for wineries because approximately 85 percent of millennials are willing to purchase an unfamiliar brand, according to the Wine Market Council. Just as long as that brand offers them sufficient information, authenticity, convenience, and eco-friendly, portable adventure.

Careers in Wine

When Not Everyone Agrees With You

August 26, 2014

News From Napa…
As I am sure you have all heard and seen the images from Sundays 6.0 quake. Thank you so much for all the calls and texts, and emails. We were very lucky – the Benchmark family is safe and intact. We had a few few minor breakages, but overall we are grateful and our hearts and prayers go out to our neighbors and friends who did not fare as well.

We wish a speedy recovery to our industry friends and families.
………………………………………………………………………………

When Not Everyone Agrees With You
The more invested we are in an idea, the more likely we are going to present an idea persuasively. And even if we do present it well, there will likely be some resistance to some or all aspects of it. How we react to resistance is a determining factor in both the growth of our ideas and ourselves.

What is there to do when not everyone agrees with you? You could rejoice at the evident diversity of perspectives, but realistically, you must remember that this is not a personal evaluation. Keep discussions objective and tightly anchored to the original idea.

Perhaps you feel very strongly about something. As situations become more qualitative than measurable, the ultimate redress may be impossible to define. As you may have previously noted, others will have their ideas and beliefs at least as strong from another perspective.

Perhaps you have taken great pains in presenting an idea. Opening ideas up to questioning allows you to use the knowledge gained from experience and research to further elaborate on the merits of the issue. As you rationally express your points, you will learn more deeply about the subject, as well as increase your general ability to maintain a positive and productive attitude.

Careers in Wine

Sonoma County Winegrowers Announce New President

March 7, 2013

Sonoma County Wine Growers Announce Ne Karissa Kruse says one of her top priorities when she assumes the position of president of the Sonoma County Winegrowers is to continue the joint marketing effort developed by the organization and the county’s vintners and tourism groups. Kruse, who had been hired as the Winegrowers’ marketing director in August 2012 has been picked by the group’s board to replace outgoing president Nick Frey, who will officially retire May 1. With the industry associations in Sonoma County already linked by the same marketing strategy, Kruse said the next step is to leverage that cooperation to elevate the reputation of the county’s wine and grape industry both nationally and internationally.

“What a win for the growers to have such a strong relationship with the vintners,” she said. Getting to know their neighbors Kruse will also continue to implement the group’s community outreach program to help Sonoma County residents who don’t work in the wine industry gain a better understanding of it. “They often don’t even know as much about our vineyards and wineries as our visitors,” she said. And while the county’s wine and grower groups have improved the region’s reputation in the wine trade and press, Kruse admitted the same isn’t necessarily true for the people living in the group’s own backyard.

“We haven’t done as good of a job of relating to our community,” she said. Some of the tension between growers and county residents has stemmed from vineyard development. Just recently, Sonoma County and conservation groups worked out a $24.5 million deal to preserve 19,652 acres of land, of which nearly 1,800 were to be developed into vineyards in a plan backed by the state employee retirement fund CalPERS, according to a report by the Santa Rosa, Calif., Press Democrat newspaper. Kruse said the proposal and deal were worked out well before her transition into the president position, but she views it as a “win-win” agreement for conservationists and growers. Simple supply and demand economics indicate there’s benefit to not having a large amount of new acreage getting planted with vines. Kruse said the winegrowers are focused on producing the highest quality fruit and improving the region’s reputation for fine wine. “It’s nice that it doesn’t have to go into development,” she said. Keeping the transition smooth Nick Frey joined the county’s grape growers association in 1999 and led the group through its reformation as a state commission in 2006. He will stay with the group through the end of the year to help ensure a smooth transition. When the change is complete, Kruse will oversee the roughly 1,800-member group, which recently changed its name from the Sonoma County Winegrape Commission to the Sonoma County Winegrowers. The organization has a small staff including a grower programs manager, winery and sponsor-relations manager and a part-time bookkeeper and part-time web developer. Growers pay $1.2 million to the group in assessments collected from grape sales.

“Karissa has been a great addition to the commission staff in just six months,” Frey said in a statement released by the group. “She is quick to learn and motivated to represent growers’ interests to the wine trade and local community. Karissa’s experience and energy are what is needed to continue moving the commission to new heights.” The promotion came at the end of an 18-month recruiting and succession-planning process, during which the group’s board identified Kruse as someone who could first help the group’s marketing efforts and then follow Frey.

Kruse earned a master’s degree in marketing and a bachelor’s in economics from the The Wharton School at the University of Pennsylvania. Prior to joining the winegrowers, Kruse worked for General Mills, Universal Studios and the Dairy Management Inc., a national marketing group for the U.S. dairy industry. Kruse came to Sonoma County in 2007 to purchase a vineyard and pursue a career in wine. She owns a 25-acre parcel in Bennett Valley AVA, of which 5 acres are planted to Syrah, Pinot Noir and Chardonnay. The grapes are used for Kruse’s Argot Wines, a company she owns with a partner. Kruse said she makes about 2,000 cases with fruit from her vineyard and also buys grapes from county growers. “I’m not just the president, I’m a client,” she said.

Original Article Here

Careers in Wine

Curiosty

January 5, 2013

The important thing is not to stop questioning… Never lose a holy curiosity.
Albert Einstein

Curiosity is an important trait of a genius. I don’t think you can find an intellectual giant who is not a curious person. Thomas Edison, Leonardo da Vinci, Albert Einstein, Richard Feynman, they are all curious characters. Richard Feynman was especially known for his adventures which came from his curiosity.

2013 is a new year. A new time for all of us to discover what makes each of us unique and wonderful and how we pull that back into the universe.

In the Wine Industry, curiosity is the mainstay of our existence. Ask any Winemaker, if it wasn’t for curiosity wine would not be what it was is today. With the shrinking of the individual family wineries and the drive to recreate over and over again the same wine flavor profiles we may be losing what makes us special on many levels. Not allowing ourselves to take the time to allow curiosity and discovery to take over we will lose what makes us special.

When looking at yourself or your team or your company…ask yourself, “Are you curious?”

If you discover that you have been in the weeds and lost your way to curious behavior..I have listed a few ways to take it back.

But why is curiosity so important? Here are four reasons:

It makes your mind active instead of passive
Curious people always ask questions and search for answers in their minds. Their minds are always active. Since the mind is like a muscle which becomes stronger through continual exercise, the mental exercise caused by curiosity makes your mind stronger and stronger.
It makes your mind observant of new ideas
When you are curious about something, your mind expects and anticipates new ideas related to it. When the ideas come they will soon be recognized. Without curiosity, the ideas may pass right in front of you and yet you miss them because your mind is not prepared to recognize them. Just think, how many great ideas may have lost due to lack of curiosity?
It opens up new worlds and possibilities
By being curious you will be able to see new worlds and possibilities which are normally not visible. They are hidden behind the surface of normal life, and it takes a curious mind to look beneath the surface and discover these new worlds and possibilities.
It brings excitement into your life
The life of curious people is far from boring. It’s neither dull nor routine. There are always new things that attract their attention, there are always new ‘toys’ to play with. Instead of being bored, curious people have an adventurous life.

Now, knowing the importance of curiosity, here are some tips to develop it:

1. Keep an open mind

This is essential if you are to have a curious mind. Be open to learn, unlearn, and relearn. Some things you know and believe might be wrong, and you should be prepared to accept this possibility and change your mind.

2. Don’t take things as granted

If you just accept the world as it is without trying to dig deeper, you will certainly lose the ‘holy curiosity’. Never take things as granted. Try to dig deeper beneath the surface of what is around you.

3. Ask questions relentlessly

A sure way to dig deeper beneath the surface is asking questions: What is that? Why is it made that way?When was it made? Who invented it? Where does it come from? How does it work? What, why, when, who, where, and how are the best friends of curious people.

4. Don’t label something as boring

Whenever you label something as boring, you close one more door of possibilities. Curious people are unlikely to call something as boring. Instead, they always see it as a door to an exciting new world. Even if they don’t yet have time to explore it, they will leave the door open to be visited another time.

5. See learning as something fun

If you see learning as a burden, there’s no way you will want to dig deeper into anything. That will just make the burden heavier. But if you think of learning as something fun, you will naturally want to dig deeper. So look at life through the glasses of fun and excitement and enjoy the learning process..

6. Read diverse kinds of reading

Don’t spend too much time on just one world; take a look at another worlds. It will introduce you to the possibilities and excitement of the other worlds which may spark your interest to explore them further. One easy way to do this is through reading diverse kinds of reading. Try to pick a book or magazine on a new subject and let it feed your mind with the excitement of a new world.

Research

The New U.S. Wine Market

November 7, 2012

The U.S. wine market fell off a cliff in September 2008, and it is still hanging in mid-air.

Far more has changed in this market than the behavior of the American consumer: The companies that distribute and sell the vast majority of wines have dramatically changed the way they do business.

To begin to understand this new market, Stonebridge Research created its Fine Wine Trade Monitor in March 2010, with support from industry groups including Napa Valley Vintners, the Paso Robles Wine Country Alliance and South African Winegrowers, and with help from industry leaders across the country.

From March to June 2010, we conducted telephone conversations of one hour or more with more than 50 top managers in the wine trade: eight distributors, 17 independent wine retailers and 25 full-service restaurants (both chains and independents, including national accounts) in the top wine markets in the United States (New York, Boston, Miami, Atlanta, Washington, D.C., Chicago, Las Vegas/Reno, Dallas, Houston, Seattle, Los Angeles and San Francisco) and several smaller markets.

In each conversation, we asked:

How has your wine market been, over the last 24 months?
How have you adapted your business?
What is selling and what isn’t?
What moves wine in this marketand what doesn’t?
What notable trends have you seen in consumer behavior?
What has been the impact of changes in distributor business?
What can – and should – producers do?
What worries you about the future?In the process, we learned what exactly this new market was and how the trade – wholesale, retail, restaurant – has changed to adapt to the new economy.

BEYOND GROCERY STORE DATA

We know that Americans are still drinking wine. They are just paying less for it. Consumers have changed what they buy, what they are willing to pay for it, and particu- larly, where they buy it – with consequences for everyone in the wine business.

You may have read that not only are retail wine sales rising, so are wine prices at retail. But that is InfoScan data, which is primarily grocery and drug store data, in the states where wine can be sold in those channels. In late 2008 and early 2009, grocery stores closed out – at huge discounts – most of the higher-priced, small-production wines on their shelves. Pretty much everything else has been heavily discounted.

So what does it mean if those prices appear to be increasing? Either that discounts may be some- what smaller or that consumers are taking advantage of better wines being discounted.

So, wine prices are rising…from what?

Are wine prices recovering?

What is really going on out there?

RETAIL

Here are some basics on wine sales. In the “normal” market, before the recession, it would take about three months to move an inventory of wine at retail (described in the trade as a “turn rate” of four times a year). Some lesser-known or more expensive wines might take longer to move. Thus, much of the cost of wine in all parts of the market is the cost of holding inventory. That inventory turn rate for wine has now slipped to once a year: 12 months to move all but the strongest brands and biggest values. This happened at a time when credit was becoming scarce and more expensive.

From the third quarter of 2008 through the spring of 2010, retail wine sales revenue declined 15%- 20% in most parts of the country, while sales volume – the number of bottles sold – rose. Many retailers found they were “working twice as hard for less money.” Wine would only sell with large discounts – 30% being the norm – or a special event. Many retailers cut staff by as much as 20%. “Hand-selling” of wine was an expense few could continue to afford.

Retailers also responded by cutting inventory, by 20% or more. They swapped out wines costing more than $50 for wines under $20. Anything that didn’t move quickly was closed out. Imports were the first to go, then smaller producers, library wines, multiple vineyard-designates, all those “new varietals” – all gone. And if they haven’t seen you lately, you are probably one of the brands they cut.

If it looks like retail shelves became filled with large-volume brands, they were. Risk-averse consumers were reaching for not only less expensive wines, but familiar labels from large producers able to fund the promotional allowances and discounts needed to sell wine.

The only alternative to discounting that seems to work has been special events with winemakers. Vintners’ travel is up 30% or more.

We do a lot of consumer research at Stonebridge. A few years ago, price was a factor in wine purchases – one of several, along with brand, variety, ratings, the occasion when the wine would be served, etc. Wine was, to use a wonderful phrase from Yankelovich Partners’ study for the California Wine Institute in 2005, a “safe adventure” – consumers were excited about trying something new, even dangerous, in wine. Well, that’s over.

Today no one is quite sure what consumers want, other than price. At least at retail, they are not being adventurous. Not that they are being given much of an option, either, because there is less and less adventurous wine on the shelf.

RESTAURANTS

Restaurants have been much more creative in responding to this economy.

The year 2009 was the worst for U.S. restaurants in almost 40 years. Full-service restaurants were the hardest hit, with particular pain coming from the loss of corporate and expense-account business. The average check was down 15%- 20%, but the average wine sale was down 20%-50%. Wine sales were down far more than spirits or beer, which were seen as more economical alcoholic beverages.

Restaurants responded by adapting their menus to allow customers to “manage their spend” through increased choices in more price categories and flexible portion size, prix fixe meals, special offers, food sharing and small plates. And they have adapted their wine lists accordingly.

Customers have been turning toward wine by the glass for several years, but in 2009, the shift was drastic, from bottle purchases to a cocktail, followed by a glass of wine with dinner. Restaurateurs described their new business as “selling more wine to fewer people at lower prices.”

The “sweet spot” for wine bottle sales dropped to the $40-$60 range from $90 or more – and it hasn’t improved. We even began seeing “house wine” again, albeit of better quality than in years past. With wine sales slowing, restaurants began cutting new purchases, cutting lists and selling from inventory. They put the expensive wines on special and when they sold out, they were replenished with wines they could sell for $40 or less.

Inventory levels were cut, long- term, to reduce costs. Individual orders got smaller – cases became six-packs and six-packs became two bottles – to limit inventory exposure.

Restaurants have long expected to be able to re-order regularly, monthly or bimonthly, for their more active wines, which became more important as individual orders dropped in size.

With the wines they do offer, restaurants have taken a different road than retailers. They are looking for “esoteric” imports, new wines, small producers, wines not available at retail. The last thing customers need to see on a restaurant list is a wine they could have bought in the grocery store or (horror of hor- rors!) at Costco at a fraction of the price.

Thanks to creative wine lists and support from energized sommeliers and trained servers, consumers have regained some of their cour- age to experiment with wine, seeking new, affordable alternatives to the more expensive wines they used to order in restaurants. Thus, wine sales on premise have been shifting toward small-production imports: particularly Veneto whites and Rhône reds. Restaurant traffic was revived in much of the country in 2010. Corporate and private dining business is coming back — yet wine lists have not returned to their glory days.

With restaurants and retailers heading in different directions, how do you build a brand today?

DISTRIBUTION

Now we get to the distributors.

Think about it: The whole structure of the three-tier system depends on distributors holding inventory. Inventory costs have multiplied as turn rates collapsed. Restaurants cut their purchases by as much as 50% and many closed. Retailers cut orders. Inventory credit costs rose and conditions tightened.

Starting in late 2008, most dis- tributors started trimming everything that had not moved in 30-60 days. During the past 18 months, there were hundreds of closeouts, if not more, flooding the market at discounts to retailers and res- taurants of up to 80%. Accounts often could not find out where to buy many of their usual wines.

Distributors have since cut 20%-30% of brands from inventory, primarily slower-moving small producers, library wines, new brands and imports.

One sales director described distributors as “triaging” customers, with major national brands at the top and smaller brands on the third level, described as the “if you are lucky, we might return your phone call” customer group.

Distributors have targeted inventory for no more than 30-60 days, even if it means out-of-stocks. They are not holding inventory for mid- season re-orders. Allocations go out once or not at all.

In the long run, long after the consumer starts shopping again, it is these changes in distribution that will have the greatest impact on the U.S. wine market.

WHAT DOES THIS MEAN TO PRODUCERS?

First, few, if any, producers will be able to depend on wholesalers to simply take their production off their hands and find a market for it. This situation has been coming for several years, and producers have largely been in denial.

The most immediate impact is on producer cash flow.

Distributors are decreasing what they are willing to buy, and completely eliminating some brands. In September 2009, wineries began dumping inventory to distributors with discounts as high as 60%, after spending much of the year insisting they could not even moderately adjust the pricing they had built up during the boom years.

The idea was presumably to clear out inventory to enable a healthier market with the new vin- tage, yet the discounts continue.

The expectation that pricing would return to old levels is unlikely to be met. Trade and consumers who purchased wines earlier in the year, at higher prices, felt betrayed, and those brands are likely damaged for the long term with these customers.

Next is the realization that producers are indeed responsible for generating their own demand.

Vintners need to nurture their relationships with their accounts, understand what they can sell and be out in the market to provide the training and support sales.

Independent sales and marketing companies are proliferating, assisting producers who can’t afford a sales force, yet this also adds another layer of costs.

Wine companies are learning they need to manage their distributors, monitor their inventories to avoid out-of-stocks, keep an eye on pricing to avoid closeouts, keep tabs on warehouse situations and check on deliveries.

They must work harder to make sure they get paid, and to ensure their wines are valuable to their distributors.

Finally, it comes down to more rigorously managing the business of wine: building sales planning and inventory management capabilities, and understanding and controlling costs.

Most important is to protect and improve quality while tightening business practices.

There is already concern that wine quality may be compromised as vintners try to protect margins, a counter- productive strategy when consumers are discovering that good wine can be found at every price level.

Cost savings will have to come from improved business, financial and operations management, with retaining and improving wine quality a top priority. Or, in the words of one former large-company executive, “taking money out of process to put into quality.”

What other options are there for producers?

Consumer-direct sales have revived in some regions, making up for some of the lost trade markets. But as ShipCompliant data has shown, consumer-direct is still a small segment of wine sales. Most wine will continue to be sold through retailers and eating-and- drinking establiishments.

Attention is gradually focusing on the opportunities for direct-to- trade sales, through so-called clearing distributors. There is anecdotal evidence of distributors setting up clearing divisions to process three- tier paperwork for a fee, leaving actual sales and physical distribution to wine producers. Many of the new sales and marketing companies and brokers, started by distribution veterans, are developing comparable services.

Restaurateurs report that distributors are proposing to take orders for smaller wines they do not usually stock, if the trade commits to pay in advance and to take immediate delivery, so that no inventory costs are incurred.

I had a conversation several months ago with a friend in the industry who remarked, with a startled expression, that he had just realized that he usually said “supply and demand” and I say “demand and supply.” Perhaps, he suggested, that says something about the industry and the market today.

Sadly, selling wine has always been more difficult than making it. Today, it is definitely what a vintner needs to think about first.

Barbara Insel is president and CEO of Napa-based Stonebridge Research Group LLC, a leading strategic advisory and research firm servicing the wine industry. Insel has led major projects for the French Trade Ministry, Wine Institute, California Association of Winegrape Growers, Napa Val- ley Vintners and many others. To learn more about Stonebridge Fine Wine Trade Monitor, visit www.stonebridgeresearch.com or contact Insel at binsel@stonebridgeresearch.com.