‘Really a cause for alarm’: Wineries urged to go digital as tasting room traffic declines

Optimism that post-pandemicconsumers would return to winery tasting rooms after they reopened has turned to concern as visit number decline , according to experts at a large wine business event in Santa Rosa on Thursday.

While much of the wine produced in the U.S. comes from large producers, many vintners are small-scale operations, and getting consumers in to sample and buy their wines helps convert them into club members, generating recurring direct-to-consumer revenue.

Clubs account for 62% of that revenue across the hundreds of wineries, said John Keleher, founder of Santa Rosa-based Community Benchmarks and part of a panel discussion at the WIN Expo at the Sonoma County Fairgrounds.

Panelist Jim Agger, senior vice president for e-commerce at Napa-based WineDirect, told audience of industry professionals that tasting rooms are the “lifeblood of your clubs.”

“It’s how you build your email list. It's how you start this long-standing relationship where you can recount the amazing brand experience that people had when visiting the winery — and all your digital follow-up,” Agger said. “So if that spigot is getting turned down a little bit, it's really a cause for alarm.”

Visits to West Coast tasting rooms fell 39% in 2020 from a year before after public health orders restricted access to such “nonessential” gathering places with the intent of slowing the coronavirus, according to Community bench mark’s monthly survey of about 450 wineries.

After reopening early last year, tasting room visits for 2021 were still down 7% from 2019 levels. Through October of this year visits were off by 12% from pre-pandemic.

A falloff in tasting room sales was a key contributor to the 4% slip overall in direct-to-consumer transactions in the third quarter of this year, compared with a year ago, according to Agger. For five years, WineDirect has been following sales metrics for about 1,100 of WineDirect’s 2,000-plus winery customers.

Tasting room net revenue for that cohort of wineries dropped 20% in the third quarter of 2020, when the many of the venues weren’t allowed to open.

But a year later, after restrictions lifted and consumers ventured out again, net sales were 50% higher, even going above even 2019 pre-pandemic levels, the WineDirect data showed. Yet the net value of such point-of-sale transactions at the end of the third quarter this year was 11% lower than a year prior.

The advice from Agger, Keleher and the other panelist, Brent Bellm of BigCommerce, for small wineries fretting this tasting-room slump is to go back to what saved many of them during the lockdowns — e-commerce.

But the rapidly evolving technology landscape is calling for winery websites to be revamped to focus on personalized experiences, especially preferred payment methods. While credit cards dominate, shoppers also want other options such as electronic checks and digital wallets like Apple Pay, Google Pay and PayPal.

About 2,800 were registered to attend Wine Industry Network’s 10th annual WIN Expo Trade Show and Conference.

In a presentation on the North Coast grape and bulk-wine market, Christian Klier and Marc Cuneo of Turrentine Brokerage noted the continued rapid rise in winery interest in the past three years for sauvignon blanc.

The white grape known for its floral and citrus notes continues to be in short supply, but it still commands a small percentage of the California winegrape market, compared with top-sellers cabernet sauvignon and chardonnay.

“Sauvignon blanc is one of the only varieties we are seeing multiple contracts being offered for planting,” Klier said.

While pricing for the grape is at a high and there’s little of the wine available in bulk for wineries to purchase, Klier and Cuneo urged caution after similar boom-and-bust cycles for the variety over the years.

“A lot of wineries brought in sauvignon blanc from South America and South Africa. But when shipping shut down, then they came looking for it in California,” Klier said.

“It will be interesting to see what happens when shipping lanes fully open up and the supply of juice starts making its way back.”

Jeff Quackenbush covers wine, construction and real estate. Reach him at jquackenbush@busjrnl.com or 707-521-4256.