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Monday, April 11, 2011, 5:02 am

Wine Industry Conference 2011: Questions for the Direct Sales and Social Media panel

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    The Business Journal asked the four members of the Direct Sales and Social Media panel for the upcoming Wine Industry Conference 2011 about trends in sales of wine directly to consumers and use of social media in that endeavor.

    Ron Denner owns Denner Vineyards in Paso Robles. He uses direct-sales tactics and social media to keep a loyal following for the more than $50-a-bottle wines.

    Lawrence Dutra is president and chief executive officer of Westlake Village-based Adams Wine Group.

    Hahn Family Wines President Bill Legion is a sought-after expert in wine marketing through social media.

    From four years at St. Helena-based luxury wine marketer Wilson Daniels to her current position overseeing communications for the past two years at high-end Jordan Vineyard & Winery in Geyserville, Lisa Mattson has been a big advocate of video as a wine marketing tool as well as use of social media.

    Providing background for Ms. Mattson’s comments is John Jordan, son of winery founder Tom Jordan, has served as chief executive officer of the nearly three-decade-old Alexander Valley winery since October 2005. He also is a partner in the Santa Rosa-based law firm Smith Dollar.

    What is the focus of your wine business and your approach to reaching that goal?

    Ron Denner: Like everyone else, we want to say make great wines. Making great wines is the cornerstone, but the other great task is being able to sell them and how you sell them.

    Wine tasting is where the “rubber meets the road.” If the tasting experience is OK but not great, then that is how the wines also taste.

    What means a great deal are “first impressions are everything” and a friendly, engaging staff who seem to welcome your visit.

    Bad service makes a bad meal. It all happens in the tasting room environment.

    Lawrence Dutra: We tend to focus on businesses that can be vertically-integrated with our other businesses or ones that we can add value by syndicating overhead and deploying existing assets.

    We are fairly unique in that our wine market companies operate in different tiers: three of our six are producers (Adler Fels, White Cottage Ranch and Roblar wineries), two are retailers (Vinesse and our retail store, The Winehound) and third-party logistics (Pack n’ Ship Direct).

    John Jordan: At Jordan, we focus our passion on three things: cabernet, chardonnay and hospitality. My parents fell in love with the artful cooking and gracious hospitality of France — sensibilities we focus on honoring in our wines. The little details separate the good from the great. True luxury means attention to detail by everyone every day.

    Building an adaptive, thriving work culture filled with highly skilled professionals who are very passionate about their respective crafts is the foundation of our success. My philosophy is that I work for my employees — and I give them the tools they need to excel at their respective crafts. And I am very serious about rewarding employees for greatness.

    I’ve spent the last five years renewing Jordan’s commitment to making wines of the highest quality and to ensuring the facilities are more environmentally responsible, the vineyards more sustainable, the farming more precise, sales management more strategic, the visitor experience more intimate and the storytelling more engaging.

    Even though literally thousands of new wine brands have come into the marketplace since my parents founded the winery, we’ve managed to stay relevant and attained 5 percent or more revenue growth every year since 2007. Jordan is fortunate that we proactively adjusted our sales strategy to grow our number of accounts two years before the credit crisis — due to my economic training.

    Our winery also has always took a long-term view on pricing: We stayed conservative in the boom years to remain a value against our competitive set, which put us in an ideal position to gain market share during the recession.

    Bill Leigon: As always, the wine business begins in the vineyards. Our focus is to create a high quality experience for our customer. We have always tried to produce wines, regardless of price level, that offer a superior price-quality relationship.

    From a marketing standpoint, our goal is to create an emotional connection with our customer. Ideally, they would view as a trusted member of the family. We have a simple compelling story about the Hahn family, the creation of the Santa Lucia Highlands appellation and a stunning estate.

    To that end, I have found it best to simply present our story, present our wines and let the consumers take it from there. There is nothing more powerful than word of mouth in the wine business. This is what led me to concentrate on social media very early on.

    What percentage of your overall sales on a volume and a dollar basis are direct sales? How has those shares of total sales been changing over time?

    Ron Denner: Ninety-eight percent are direct and wine club sales.

    Lawrence Dutra: Across all our companies, direct sales account for roughly half, and this figure has steadily grown.

    John Jordan: Three percent of our sales are direct sales.

    Bill Leigon: About 8 percent, including tasting room sales. They have been growing. My goal is to hit 10 percent this year.

    How has the direct sales effort been changing in recent years?

    Ron Denner: Even as an older person, who is several generations divorced from the current generation, the marketing model has changed and some of us have not changed with it.

    Lawrence Dutra: The best example of change is in our retail wine club operation Vinesse. Five to 10 years ago, direct mail was the predominant channel for member acquisition. Today, it accounts for less than half and continues to decline. It has been replaced by all forms of electronic commerce.

    Bill Leigon: It has been a constant evolution and learning experience. I committed to direct-to-consumer sales (DTC) many years ago. We have constantly sought out the new ways of utilizing social media. Today, I think the greatest difference is that we are adopting an integrated approach that encompasses both the three-tier system [winery, wholesaler/distributor and retailer/restaurant] and DTC.

    John Jordan: In 2005, John took over in September/October, and revenue was flat.

    In 2006, John doubled direct-to-consumer business, which added 3.5 percent in revenue to the top-line number.

    Overall, in 2007–09 Jordan sold every bottle of wine it had to sell — including during the recession. Unlike any wineries in its peer group, the winery did not engage in discounts or downward price adjustments. Conservative pricing strategy with a long-term view during the boom years proved prescient.

    Recent revenue growth for Jordan:

    • 5 percent in 2009
    • 5 percent in 2010
    • 6 percent to 7 percent estimated for 2011

    The estimate includes both winery direct and three-tier wholesale sales. We’ve already seen strong January numbers in terms of sales orders and distributor wholesale depletions — 20 percent higher than in January 2010 numbers.

    How does social media marketing support direct sales and three-tier sales?

    Ron Denner: Social media is where it is going or has now arrived. It’s a whole new world, and we all need to look at where do we belong and who do we want to be.

    Lawrence Dutra: Our experience is that returns on investments in social media are difficult to quantify. We view it more as a branding tool than a direct marketing one. It undoubtedly makes customers feel vested on our brands, and this would enhance participation in special events, repeat visits, add-on sales and overall persistence.

    John Jordan: Modern technology enables us to bring our wines alive by sharing our passion and stories in a vivid and unfiltered way.

    Technology has brought our wines and the people who make them closer to our customers. It’s brought the customer to the center of our work culture. Every key member of the staff responds to questions and comments on Facebook pertaining to their jobs, whether it be winemaking, vineyard management or hospitality. We have 12 members of our staff, including me, who share insights with our customers in our weekly video blog.

    Technology also is allowing us to build more value into the brand for both consumers and our trade partners, the restaurateurs and retailers. The is especially true with our integration of Apple iPad tablet computers and smartphone technology into our culture.

    Last year, we embarked on a new odyssey to capture life on the estate through high-definition video storytelling. Our videography blog, The Journey of Jordan, debuted in early 2010. Every week since, the passionate individuals behind all of our culinary, winemaking and hospitality efforts have offered a glimpse inside the daily goings-on of a successful wine estate. From floral design tips, party planning and appetizer recipes to building projects, composting how-tos and winemaking practices, we focus on ensuring that our weekly videos are both useful and educational to the consumer. It’s all about building more value into the brand, and sharing the disciplines that we practice in winemaking and hospitality is a natural way to forge a deeper connection with our consumers.

    Basically, what we are doing is sharing a story about the pleasures of the table. There is no single pleasure of the table. It is much like a rock band or a symphony — depending on your musical inclination: The combination of a number of different skills and things have to be well-executed while that bottle of wine is open for the experience to be complete. At Jordan, our passion for the pleasures for the table defines not only our house style of wine but who we are as an extended family.

    Bill Leigon: I could write volumes here. Let’s just say that all of our DTC efforts are meant to support our three-tier sales. At a very basic level, one could look at DTC presenting the consumer with a trial of the wine, and three-tier providing sales volume. That’s too simplistic and not the case in very small wineries, but I think it creates the image.

    Lisa Mattson: High-quality video storytelling online allows us to break through the clutter of the web and show how dynamic and diverse Jordan Estate is as well as how passionate and knowledgeable the people behind our winemaking, viticulture and hospitality departments area.

    Guests who visit Jordan Estate quickly realize that visiting us is all about the experience — not the sale.

    Our philosophy with social media is the same. It’s about sharing experiences and stories with our customers and being attentive to their needs. Whether someone visited us at the winery in the past or walks into a restaurant tomorrow and picks up a wine list, we want them to recall an exceptional experience they had with our staff and our wines.

    That is more important to us than leveraging our guest experience online or at the winery to increase sales. We don’t have a traditional wine club or a tasting bar. We bring people together to share wine, food and conversation around a table — as if we’re family sitting down for dinner. That is the way wine should be enjoyed.

    What would you like to add?

    Ron Denner: I love what I am doing and it is just an exciting time to have vineyard and winery. The new world of wine is going to be challenging and it is going to be a wild fun ride.

    Lawrence Dutra: New technologies seem to emerge every decade or so. Now is the time to embrace and utilize social media, as it has not only already become mainstream but also expected by the 20- to 30-year-old consumer.

    John Jordan: Moving forward, I see Jordan continuing to adapt to whatever the digital age or marketplace throws at us without ever compromising the philosophies of classic European winemaking and elegant hospitality that inspired my parents to create Jordan Winery.

    Jordan is a brand people trust. It has remained a fairly priced wine on restaurant wine lists and in wine shops and is known for its ability to pair with a wide range of foods. Our food-friendly wine style is proving increasingly popular in the foodie nation we know live in — Food Network, celebrity chefs, etc. Jordan wine quality has also improved under John’s regime while keeping the prices flat, so the customer gets more value in each bottle of wine.

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    Comments

    1 Comment

    1. January 6, 2014, 10:16 am

      by Debbie Waddell

      So confused regarding shipping rules for Oklahoma. Some of our small wineries here in Oklahoma have gone out of business because they cannot ship wines for increase sales. I thought wineries could ship anywhere as long as the customer visited their winery. Also all the permits that wineries have to purchase just to be able to ship to that state has held many wineries at a standstill. It may not seem like a lot of money to buy some of the permits, but when you are just a small family farm making wine, it could bankrupt your business. Can you give Oklahomans a clear understanding of our shipping laws?


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