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North Bay Business Journal

Monday, May 27, 2013, 6:00 am

Wine tasting sales boom but club churn high, survey finds

Also: St. Helena Hospital bolsters orthopedics

By Jeff Quackenbush and Dan Verel, Business Journal Staff Reporters

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    Napa County’s wine producers enjoyed strong growth in case sales through their tasting rooms last year and even stronger growth in consumer spending on wine purchases at those venues, and membership in the county’s winery-based clubs is rebounding at a strong clip as visitors are convinced to become purchasing members, according to a recently updated annual survey of several hundred mostly North Coast vintners.

    But there is clear room for improvement suggested by the even higher rate of attrition from Napa County winery clubs and below-average typical length of membership — just short of two years, according to the 2013 Tasting Room Survey of 552 vintners by Silicon Valley Bank and Wine Business Monthly.

    Napa County tasting rooms sold 11.9 percent more wine last year than in 2011 and harvested 13.2 percent more revenue, respondents said. Average growth was 9.9 percent by volume and 9.4 percent by value. Vintners in Sonoma and Mendocino counties followed that volume-over-dollars pattern, with 9.2 percent and 9.7 percent volume growth and 8.7 percent and 6.6 percent dollar growth, respectively.

    Rob McMillan, bank senior vice president and founder of its Premium Wine Division, in a webcast last week on the survey pointed to a California Winery Advisor informal poll from a few years ago that found the top reason for leaving a wine club — 26 percent of visitors to that website — was not liking the wine.

    “When they signed up, they liked it,” Mr. McMillan observed. Other top responses in that poll were bottle prices and shipping costs that were too high.

    He pointed to responses in the latest survey that suggest the ability to choose wines in a club shipment reaped higher sales per member — $362 with choice and $324 without — but 35 percent of vintners asked if they give their club members such a choice said they didn’t.

    Eighty-five percent of respondents offer a club. Annual revenue per member is $583 in Napa County, $448 in Sonoma County, $191 in Mendocino County and $183 to $393 for other regions in California and the nation.

    The fastest growth in club membership last year was 15.3 percent in San Luis Obispo County, followed by Washington, Oregon, California’s Central Coast, 11.9 percent in Sonoma County, Middle America, 10.8 percent in Mendocino County and 9.7 percent in Napa County.

    Mendocino, Sonoma and Napa ranked second, third and fifth in the rate conversion of visitors to club members — 9.0 percent, 8.8 percent and 7.7 percent, respectively.

    However, Sonoma, Napa and Mendocino had the second-, third- and sixth-highest rates of club membership attrition — 12.2 percent, 10.4 percent and 7.7 percent. The average time members stayed with a club was nearly 28 months, tied with the loyalty period in Sonoma County. Napa County vintner respondents said they kept members two weeks short of two years, and those in Mendocino County, a quarter shy of three years.

    Also on the webcast about the survey was Brian Baker, sales and marketing vice president for Chateau Montelena. That Napa Valley winery has lowered its attrition rate by forming an in-house telesales department last year, and one person personally calls new members to thank them for signing up and sends handwritten notes.

    The turnover rate has been lowered to around 5 percent in the tasting room by focusing on hiring from the hospitality industry and not just from the pool of experienced tasting room veterans.

    “My question to them is, ‘Can you sell?’” Mr. Baker said. “I can teach you about wine.”

    About the same proportion of tasting room visitors are the “dirt and acid crowd who want to hear about pH and terroir,” he said.

    ***

    St. Helena Hospital Napa Valley said it has entered into a new agreement with five orthopedic surgeons to expand round-the-clock care, including orthopedic trauma and fractures, minimally invasive joint replacement, and treatment of other orthopedic disorders.

    Board-certified surgeons John Diana, Daniel Birkbeck, Michael Shifflet, Jason Huffman and Brian Freeto are longtime providers in the Napa Valley.

    Under the new agreement, the orthopedic surgeons will see patients at the professional office Building adjacent to St. Helena Hospital in St. Helena, and will provide 24-hour emergency room care for St. Helena Hospital, which is owned by Adventist Health.

    Dr. Diana specializes in joint replacement, including minimally invasive anterior hip replacement, computer-navigated total knee replacement and minimally invasive partial knee replacement. He has more than 12 years in private practice.

    Dr. Birkbeck is a fellowship-trained surgeon, with a certificate of added qualification in hand surgery. He is accomplished in the surgical and nonsurgical treatment of elbow, wrist and hand disorders.

    Dr. Shifflet specializes in joint replacement, general orthopedics and sports medicine and is experienced in trauma reconstruction and fracture management, as well as minimally invasive hip and knee reconstruction.

    Dr. Huffman specializes in the diagnosis and treatment of spinal disorders of the neck and back. He is a recognized leader in minimally invasive micro-decompression, advanced minimally invasive spinal fusion and fusion alternatives, including disc replacement and dynamic stabilization.

    Dr. Freeto specializes in sports medicine, advanced arthroscopic surgery and complex reconstruction of the knee and shoulder. Dr. Freeto is highly skilled in minimally invasive treatment options that can speed the recovery for many shoulder, knee, hip and ankle injuries.

    Drs. Shifflett and Freeto will also treat Lake County patients at Clearlake Family Health Center.

    ***

    Napa was the 16th most popular U.S. travel destination in 2013 Travelers’ Choice survey by bookings Internet portal TripAdvisor, up four spots from 2012. The top three were New York, San Francisco, which also was the seventh-favorite destination in the world, and Chicago.

    And according to reviews compiled by online restaurant reservations portal OpenTable, the Auberge du Soleil location in Rutherford was among the 42 California dining establishments on the list of the top 100 outdoor dining spots nationwide. Reviews for the 2013 Diners’ Choice Awards came from more than 5 million people visiting 15,000-plus restaurants.

    Another North Bay outdoor-dining winner was Corks at Russian River Vineyards in the west Sonoma County community of Forestville.

     ***

    Pacific Gas & Electric Co. has presented Napa’s Vintage High School with the largest award it offers through its Bright Ideas grant program, with the $10,000 gift planned to support the school’s Green Technology Pathway program.

    The program offers courses in fields like engineering, alternative energy physics and sustainable construction, providing skills in construction of alternative energy systems like solar photovoltaics and usage of computer modeling software. The career pathway also receives support from the Napa Valley Unified School District, the California Department of Education, Napa Valley College and business partners including Recolte Energy and MK2 Engineers.

    The PG&E grants range from $1,000 to $10,000, with other awards planned throughout the state this year.

    ***

    Emily Pickral-Papach of Chappellet Winery in Napa was the newest local inductee to the Court of Master Sommeliers (mastersommeliers.org), among four announced last week.

    They passed an invitation-only diploma examination of wine and spirits knowledge and service in Aspen, Colo. Aiming for the title were 63 candidates from 19 states and three countries who previously had passed the introductory, certified and advanced exams.

    Ms. Pickral-Papach received the highest score among the 13 who passed the advanced exam three years ago, according to a Wall Street Journal report at the time.

    The diploma test covers theory, blind tastings and service. The court started in England in 1977 and issued its first U.S. diploma in 1987.

    There are 133 master sommeliers – 114 are men and 19 are women — in the court’s Americas chapter and 201 worldwide.

    ***

    Mira Winery last week ended a three-month experiment in underwater cellaring. The Napa-based vintner pulled up four cases worth of 2009 cabernet sauvignon wine submerged 60 feet in the Charleston, S.C., harbor. Mira said it is the first U.S. winery to successfully experiment with undersea wine aging, but European vintners have been doing so for generations.

    In February, Mira began phase I of the project, sinking submerging cages filled wine to test major elements of aging — temperature, humidity, pressure, motion, light and oxygen. Readings will be posted at miranapa.com/charlestonharbor.

    Twelve bottles of the wine will be sold via the website to club members beginning July 1.

    President Jim “Bear” Dyke Jr. said Mira plans to try aging twice as much for twice as long that way in the fall.

    ***

    Send items for this column to jquackenbush@busjrnl.com or call 707-521-4256.

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    Comments

    1 Comment

    1. May 28, 2013, 11:39 am

      by Rob McMillan

      Jeff, for your readers should they be interested in the participant chat from the live VideoCast, it is posted on my blog, SVB on Wine: http://svbwine.blogspot.com/2013/05/successful-tasting-room-metrics.html


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