How resilient is your wine business for wildfires, pandemics, other crises?

The North Bay wine industry is no stranger to resiliency. Companies have contended with disruption for the past several years, from major fire events to the current COVID-19 pandemic. Through all of this, we’ve been inspired by the way brands have adapted, and we actually see opportunity in the current landscape to drive growth.

A recent RaboResearch Wine Quarterly report took a look at how changes implemented over the past decade by Constellation Brands and Chilean wine company Viña Concha y Toro Worldwide have continued to produce positive results today. Here, we dive into some of the key lessons learned from their success and discuss how you can make them work for your company.

Take a close look at operations

Operating structures are built over time and often remain static, even as the market changes. A strategic review of operations with a fresh set of eyes can often identify changes that are both more efficient and more effective.

Now is a great time to step back and ask yourself some key questions to ensure you have the leanest, most effective operating structure and route to market possible:

• Are you targeting the right channels?
• Do you have the right staff in place?
• What strategies have helped your brand grow the most over the past nine months and how can you continue to optimize those?

For example, promotional activity has been effective at helping to drive e-commerce direct to consumer (DTC) sales during the pandemic and compensate for the loss of foot traffic into the tasting room. This creates an opportunity to experiment with different types of promotions and specials to see which types generate the greatest impact — not just on revenues but on the bottom line.

Closely evaluating all the pieces of your operations — retailers, wholesalers, price point, DTC structure, etc. — could identify some necessary changes that will ultimately help your bottom line.

Identify priorities

Similar to analyzing operational structures, identifying the correct priorities for your brand and effectively measuring the performance of those priorities will be critical to increased sales and growth. In other words, measure what you want to manage.

With fewer visitors and an increase in email marketing, the actions that will drive sales growth have changed. It is important to not only determine what you want to achieve and what actions will help get you there, but to then set quantifiable targets. Do you need to track the number of emails sent? Or maybe a target response rate to emails? Set goals, measure progress and then check to see if targets are achieving the desired goal.

Managers should also apply this principle when measuring the effectiveness of different types of promotions (e.g., reduced shipping costs, access to special offerings, additional gifts, volume discounts, etc.) to determine how to best drive the growth of priority brands. As mentioned above, wineries might be finding it difficult right now to sell more luxury and higher price point wines.

If this is a priority, the upcoming holiday season might provide opportunity to do so. As people potentially opt out of travel and large group gatherings, they will look for alternative ways to reach out and connect with family and loved ones. Offering a “Wish we were there” promotion in which customers have the option to send a special bottle of wine and gift (from your gift shop) might be just the thing to resonate with your existing customers, build sales and introduce your brand to a new set of consumers.

Incentivize staff and customers

Incentives have long been a staple tactic to motivate sales professionals and to push growth. Now more than ever is a great time to take a look at your incentive structures and make sure they align with the goals and priorities you’ve set. Given the stress and uncertainty of this year, rewarding your employees will go a long way toward boosting morale and building loyalty. Can you get creative with your incentives? If now is not the time for traditional bonuses, maybe an extra paid day off or bottle of your premium small production Cabernet would be particularly motivating for staff to reach their sales goals.

Brands should also think about incentives in terms of their customers. In the current climate, what will incentivize buyers to come visit your winery, and if they can’t do that, to purchase from afar? Maybe it’s running a special promotion for in-person tasting or highlighting your sparkling for New Year’s with custom labeling options and a shipping special. The end of the year also gives us a great opportunity to say thank you to our customers. Authentic and sincere messaging goes a long way in attracting and keeping customers.

Let go

Finally, and perhaps the most important takeaway of all, let go of the notion of what you think things should be like right now. Evaluate what you’re spending your time on and strip away the things that are just too emotionally draining. This could be an under-performing SKU (product), a certain brand in your portfolio or the pressure to attract more on-premise customers. Move away from distractions and allow yourself to focus on actions that will move the needle toward growth.

If you would like to receive a copy of our quarterly wine industry report that expands on industry insights like this, call Steven Knudsen at the Rabo AgriFinance office in Santa Rosa at 707-591-8016 or email Steven.Knudsen@raboag.com.