Horse vs Engine, Disk vs Cloud and how it impacts your winery (or widgets)

If I had asked my customer what to build, he would’ve said ‘a faster horse.’ -Henry Ford

If you are buying traditional media instead of finding a way to crack the consumer code, then for you it may as well be 1915 when Henry Ford introduced the conveyor-belt assembly lines at Ford motor company and you are investing in a state-of-the-art horse and buggy factory. Instead you should be buying rubber plantations in Brazil.

So what does this have to do with your winery (or widgets)?

It’s simple, change is coming always – but it’s coming faster than you know, in fact it just past you.

Traditional media campaigns are still alive, but soon they will be as antiquated as the horse and buggy. At today’s speed, even Microsoft has to change, 80% of MS income comes from Windows and Office, and with Cloud computing and Open Source any business still using those systems won’t be in the near future. Even Microsoft has to retool to be nimble enough to conquer the new reality or go the way of the 8 Track.

Yesterday, only the biggest brands could afford to have a market impact. Now everyone can afford, and must afford, to be present in the market. The goal is not to be viral, but to be find-able. 

Being present in the market means actively using Facebook and Twitter, to have Youtube videos about your brand, to engage consumers on Yelp and to understand and use SEO, because if they can’t find you then they can’t buy from you. If you don’t have someone dedicated to this function then hire someone, or better yet, outsource it so you can do what you are good at and what you love, make wine, or widgets, or sales or whatever you do.

In short Traditional Media is going the way of VHS and TV antennas and even a traditional, stoic business like  wineries have to embrace this new reality.

Wine - Buying Influences, Marketing, Retail and Distribution

Click Here for Larger image

Find your retail price and this chart will show you who your target customer is, where they get influenced, how available like wines are and where they are most likely to be sold at retail and by distribution.

Juice Buyers – buying for alcohol content and are influenced by price.

Connoisseur – has favorite vineyards and varietals and will seek out wines with high critical acclaim and ratings, typically higher income, status and age. Brands are traditional and they are influenced by educated sales people in the store or traditional wine reviews.

Hipster – a wine drinking party goer, 20 – 30 something’s, enjoys wine, may have limited knowledge but is interested in learning. These are highly engaged consumers. They are influenced by friends, word of mouth and Social Media as much or more than traditional advertisement. Branding & Labels can be very important to Hipsters.

No matter the consumer, if they buy a great or poor product they will remember the brand and won’t make the same mistake twice.

Media Influences on Wine Buying

Clearly the most influential is traditional media, commercials and adverts.

At the higher price points, critical reviews and wine ratings are the most effective means of influencing buyers.

In the medium price range, $8 -$24, Social Media is gaining influence as are nontraditional reviews from bloggers and word of mouth.

As the price points get lower so does the influence of factors other than price.

As important as influence is availability

It is common sense that a fine Wine Shop should not be selling a $3 mass produced bottle, nor should a hypermarket have a  $2,700 Screaming Eagle on its shelf.  In the same sense a Winery must pick its importers and distributors to target the right retail outlet with the right clientele.

The smaller your production the less likely a “one size fits all” distributor will work for you. 

www.iwinefind.com is a resource for the trade matching wineries to importers, distributors and high volume buyers.

For Wine Importers – have you ever sipped tea through a bombilla from a dried gourd? If not, you haven’t tasted Argentina’s best wines.

There are over 1100 wineries in Argentina, and Argentina has a wine history that goes back to 1557.

So how many Argentine wineries have you heard of?  How many of the wines have you tasted?

Argentina consumes most of the wine it makes, and it makes some great wines, most of those wines go undiscovered. In the last 10 years Malbec was discovered, and it’s widely recognized that Torrontes is becoming the new “it” white wine, converting fans who don’t drink whites. Bonarda is also on the horizon and Tannat isn’t far behind. Argentina’s many wineries produce these undiscovered and exotic varietals with the rich flavors from the high deserts regardless of the untapped US market.

How can an importer find these and the wineries that make them? You probably have to go there, and probably have to have a translator for both language and culture.  

Argentina is European in every way with Buenos Aires often called the Paris of South America. But like any culture it has its uniqueness. An Asado (Argentine Barbeque) is almost required to develop a relationship, Mate is a brew the gaucho’s drink out of a dried gourd and it’s loved as much as coffee, and “Oh! The coffee!” I don’t care who you are, drinking café and eating facturas (sweet croissant) at a street café in Mendoza is as good as Paris any day!

So if an importer wants to find those hidden, family wineries and small batch boutique wines he is going to have to go, meet people, walk around and talk to the wine makers, the farmers, the owners. He is going to have to eat the best beef in the world, free range and as organic as organic gets. He is going to have to sip mate from a bombilla (metal straw) and eat 3 hour lunches after which a siesta is required (at least for impresarios in Mendoza).

It doesn’t sound so bad does it? So what’s keeping you? I have room for a few more importers on my next trade only wine tour – 10 wineries in 5 days coming this March, which is harvest time (Vendimia) in Argentina.

How to sell your $20+ Wines

How to sell your better wines
- Get your wines rated

Many wineries from Argentina and other regions ask me how they can sell a better wine. There are two ways: one is to have a huge marketing blitz, (introducing a new line costs about $2 million dollars per market) the other way is to get your wines rated by one of the big three magazines. The Wine Enthusiast rates wines by region. if you score 90+, well that's the "Golden Ticket" and your wines will sell for over $20.00. The Wine Spectator and Wine Advocate are a bit more complex.

It's really very simple, there are lots of great wineries making great wines lined up at the doors of importers, distributors and retailers - the supply is higher than the demand and prices are driven down since wine is a commodity. You can buy very excellent wine in the US for surprisingly low prices because of economic realities.

If you want to sell your wines for more than $9.99, you have very little choice except to get them rated. Wines rated over 90 points are in limited supply and have limited production but the demand is always high, so the supply and demand curve is in your favor and that is reflected in the price. You still want to be aggressively marketing, but it's pretty easy to get people to buy a 90+ wine. Hang that on a sign at the Hong Kong wine show in November and you will sell your entire inventory. 

So what is the difference to you? If you're wines earn a 90+, then you can sell your wines between $250 - $300 per case. And if you score above a 92, then you can really see prices increase.

We all talk about how our great wines are, getting wines rated proves it.

If you don't know how to get your wines rated, or need help getting ratings, feel free to contact me, Brad@iwinefind.com.

Shipping Mistakes

Shipping Problems

For Importers and Exporters
Now that you have sold or bought your wine and loaded it on the vessel, you may assume your problems are over until the container lands. They are not.


Here is what can go wrong in transit and how to avoid it:
If your container is loaded wrong the wine can spoil in the heat, or be bruised from rough seas; the importer unloads and opens his wine bottles to find the wine has gone bad, or worse the corks have popped.
- You can avoid spoiled and overheated wines by making certain your freight forwarder loads the wine below deck, uses a thermal blanket or temperature controlled container, keeps the wine away from the engine compartment and as close to the center of the boat as possible.


The vessel unloads it's cargo onto a hot dock (Panama, Freeport) and your container sits waiting for the connecting vessel.
- Avoid this by only accepting direct vessels, and if that is impossible, insist on temperature controlled boxes if off-loaded.


There are documents due before the ship sails or you can be charged a $5,000 fee when it arrives in the US, plus drayage and storage fees until you get the mess cleared up. 
- You can avoid this by clearly communicating with the Freight Forwarder who is responsible for these documents and when they are to be sent, to whom and by whom.


The overland carrier does not load the wines on the vessel because he is due funds from either party depending on the contract terms. The container will sit, hopefully in covered storage, until the overland carrier releases it. This is costly and once it is in storage you start to accrue other costs and have to wait for another vessel going to the same port.
- Make sure all parties to the transaction are operating in the light with clear dates for payments, documents and product to move from one hand to the next. If there is a breakdown anywhere, fix it quickly.


The vessel, like the vessel below, runs into problems that delay or destroy your wines.
- Have insurance that covers your losses. Importers should take into consideration the cost of the lost business. you can always get more wine, but it will generally take 45-60 days to go from order to US port.


A word of advice to Wineries and Exporters - you may feel shipping doesn't involve you since you sold your wines ex-cellar or FOB and as far as you are concerned, it's out your hands. Not so fast! If the importer off loads spoiled wine he is going to send it back to you and you will incur the charges both ways and most likely a spoiled relationship. The cost of landing the first container is roughly the same as profit on a container, so losing a customer is expensive. It is far better to help your customer and be his supporter than his adversary.


A word of advice for Importers - the exporter is probably not a logistics company but they most likely have a relationship with one. It may not be the cheapest bid, but it is probably safe to say the importers trust is well earned. All your hard work on finding the right wine, striking the deal, and working with the TTB can go away over a few pennies per bottled saved on a fly-by-night forwarder. It is better to work with your importer and take advice for forwarding companies and overland carriers, they may know something about the local businesses that you don't.

Zero to four in 12 months

Zero to four in twelve months


Not too impressive for cars, but for finding wine importers it’s huge.


At the beginning of 2011 our winery had no US importers and no promises of any in the near future. By the end of 2011 we had shipped containers to four importers in major markets and have orders placed into the future. Here is how.
The effort began in late 2010, with absolutely no prospects I did a mass emailing to importers. Surprisingly, I got a few kind responses and I sent out 6 sample sets but closed no deals.
I began to use social media, particularly Youtube.com, to create a presence, to show our production facility, our people, and our products and to share who we are with potential customers at all levels. These videos were done in POV style, not at all slick or commercial, rather hands on as if the viewer is with us in the winery, tasting room, or bottling facility. You can see the videos here: http://www.youtube.com/user/BradLaRochelle
I employed all major Social Media sites, including LinkedIn, Twitter and Facebook but understand that none of these resources can convince an importer to risk their reputation or money on you.  The value of social media was to improve opportunities that were created in other venues and to solidify relationships and to remind buyers why they want to spend $60,000 on a container of our wine.
The next phase was to get in front of decision makers, Importers, Distributors and Retailers. In some parts of the world you can sit in front of someone’s office until they see you. In the US that will get you a restraining order. The wine shows allow me to talk to all levels and get an understanding of what they like and don’t like, label ideas, price ideas and how we stack up against other wines.
Two importer relationships began at shows and there are at least two more that I expect to finalize in early 2012. I budgeted the shows at $6,000 each and spent substantially less.
Wine tours are also extremely productive. Asking an importer to invest a large sum of money in you and your winery means he has to know you have the capacity, the integrity and the desire to do exactly what you say you will do. His entire season is wrapped up in your wine. It better be what he tasted and it better be on time. There is no better way to show your importer who you are than to tour him through your facility. Let him see the vineyard and see how you cultivate each varietal, how you irrigate, how you harvest. Let him meet your artist, your winemaker; let the importer engage the passion.
Two importers came to us after tours and there are several more that I am in discussions with. The cost of wine tours varies but they are without doubt the best way to secure a deal; it doesn’t hurt to tour the Importers warehouse either.
Looking into someone’s eyes and talking to them is invaluable in creating relationships and deals. Connecting with potential customers face-to-face is cost effective but not free, but all of our import deals were made over a glass of wine, in our tasting rooms or at a show. Email is free and useless unless there is a relationship. Social Media campaigns are extremely effective if you have an international brand, but if you are trying to build a brand it requires a human touch.
After we began to get serious inquiries from importers, I realized I had to take a step back. We had to identify the consumer, who we wanted to buy our wine and what our price strategy would be.
The wine buyer (consumer) in the US is segmented into 3 groups: Juice Buyers, Connoisseurs, and Hipsters.
Juice Buyers are just buying the cheapest juice out there, in the US that is around $3 bottle – this is not our customer.
The Connoisseur buys expensive wine, usually has favorite vineyards and likes to show off that knowledge to impress others. They are very knowledgeable and spend a lot of money on wine but they are not our customers, they usually prefer old world wines.
The Hipster is a partygoer, they drink wine because they like the taste, maybe they can’t identify the region or varietal or if it has oak or not, but they like wine. They share wine with friends and drink wine with dinner. The magic price point is below $9.99, sure they buy some more expensive wines but in an unrated wine they are most likely to stick to $9.99 and less. This is our customer and probably yours.
Once we established who our consumer was we could market, to them, through our labels, our print and web presence and establish relationships with Importers, Distributors and Retailers who market to this consumer. Never underestimate the value of real estate, and being in the right piece of real estate requires you know who you want to sell to.
Now comes the most important part: How do we produce our wines at a landed cost that allows the retailer to shelve the wine at $9.99 or less so the Hipster will try it?
I have created a spreadsheet that shows the landed cost at any US port and the expected retail, including Importer and Distributor add-ons (taxes, storage, drayage, commissions and margins) it is attached at the bottom.

Click Here For Larger Image

The complexity is added to with marketing costs. I have offered every Importer the best price and let them know this does not include marketing costs. Sure I can charge you an extra .50 per bottle and then give you .40 cents back as marketing, but isn’t it better to just have the lowest and cleanest price? Two Importers said “yes” and two said “no”. I do have a small sample budget but it is very small. Many US Importers use the “Sample Budget” as a discount, so you may have to factor in 6% free wine on each order; it’s not clean and not the lowest price but it is customary.
The biggest obstacle I have faced is human. Cultural obstacles are always huge, when moving in different parts of the world, different customs, behaviors, and languages make every transaction edgy. Business rules in the US seem simple to those of us raised in it, but it’s harder for others, especially when you move from being in production to sales, or from being King of the Mountain in your valley to just another of the 4000 unrepresented wineries trying to get into the US Market.




There are some basic business rules in the US:
  1)      Expect people to make money, never do business with someone who does not expect to make money, they are either lying to you or to themselves.
  2)      Be honest, humble, kind and courageous and expect the same from people you deal with; someone who is not is probably not going to be a good partner.
  3)      Answer the phone messages and emails within 2 hours, especially in off hours and weekends; if someone emails you at 1 AM on a Saturday night, they must really need you. Stay in contact and not just when someone owes you money.
  4)      Keep everything simple.
  5)      Expect mistakes, accept them and learn from them and don’t repeat them.
  6)      When there is a problem, solve it regardless of who is at fault, even if it is not your company. If you cannot solve it, let everyone know what the problem is and how it needs to be solved and by whom.


Everyone on your team dealing with the US will need to heed these rules. Make sure your US Partners know what to expect when dealing with your Region as well because it may be foreign to them.
Make sure samples are available in the US so they can be shipped quickly. You may have to hire someone in the US to do this; you should also submit your wines to the Wine Enthusiast, Wine Advocate, and Wine Spectator magazine for ratings. Regardless of other awards, these ratings can be very influential.
There are several pieces of the puzzle that need to be handled as well before you jump into the market. Make sure you have FDA approvals, starting here at the FDA International Activities page:  http://www.fda.gov/Food/InternationalActivities/default.htm
Remember that labels are approved by the TTB and it takes 90 days if they are perfect. Most Importers will know exactly what needs to be on your label and font sizes, etc. You can look at the TTB page here:  http://ttb.gov/
For 2012 I intend to continue to grow the brand and take on new wineries that want to come to the US Market.  I will use my own Import License along with other Importers to introduce new wineries that want to do Direct Importing to larger customers, chain Restaurants and large grocery clients.
Feel free to contact me for advice or information and I am always looking for new wineries to partner with.


Brad LaRochelle 

Influences on wine buying

* Gender: Females are 30% more likely to be influenced by bottle labels.

* Age: Over 40 year olds heavily rely on trusted staff members
* Volume Purchased: Bottle labels are extraordinarily important to low volume buyers
* Price Point: The higher the price point of a wine, the more likely a buyer is to be influenced by independent bloggers.
*  Use of Social Media: Tendency towards influence by press and blog sources for social media user
From an Article by Paul Rickett found here: It's All About Trust

How does your Malbec stack up? Does it matter?

The answers:  it probably tastes better but its no-where 

close in sales, and it does matter to you.

This photo is in a hypermarket in Florida. Would your wine stand out on this shelf? Would consumers see your bottle as special? Prices shown here go from $2.97 to $9.99, the magic price point.

Here is a display of Malbec in the hypermarket, it’s been here for 6 months filled just as you see it and there is no dust on these bottles – the product is moving and moving fast.  If this is in every hypermarket, then they are selling millions of liters of this product. A $7.97 Malbec from “Bodega Elena de Mendoza” would sell at an FOB price of around $2.27 (Click here to see the chart showing how to figure US retail prices here). The bottle talks of a 19^th century history of Bodega Elena, the website is registered to Gallo wines on 3/26/2010 and the TTB label registration was 4/26/2010 to Ecco Domani, a Gallo company. All of my time in Mendoza I have never heard of this Bodega .

I bought a bottle, and it doesn't taste like the Malbecs we drink in Argentina, this wine lacks the depth and complexity of good Malbecs. It tastes more like grape juice with 13.6% alcohol, it is better than an entry level wine. This wine is selling in the US market and educating many Americans that Malbec is a cheap wine with simple flavor. The damage done can be huge, people will buy this product and decide they don’t like Malbec and will never taste your product.

How does your wine compare? We say “my wine is different, my Wine Maker is better, my vines are older, we cultivate with more care” etc.  All the volume wine buyers see is price and bottle label unless you plan to stand in the their stores and tell every customer why your wine is worth more, then there is no sale; when they want a better wine they are going to buy the best name recognition in the market. Is that your Winery? 

 How does the customer know you are different? How are you telling your story?

Let’s talk Marketing and Price: Should you race to the bottom on price and compete with Gallo or tell your story?

I have heard estimates on marketing costs of about 2 million dollars per market, or 100 million dollars for a national launch. One way is for wineries in Argentina to work together and build the brand. This requires working together for a common goal. The cost per winery is about $100,000. When compared to the amount of capital invested in a winery this is minimal, but getting wineries to work together for a common goal – well that’s a lot harder.

You can create the best image on your own by being the Winery buyers want to do business, never lose a customer due to poor service or product.  You also must understand how pricing works in the US, an unrated wine has to sell for $9.99 or less. In the above photo Alamos by Catena can be seen at $9.99 on the shelf beside “Bodega Elena”. Compare your brand recognition and name to Catena and use them as the bench mark for price – you have to be able to compete with a wine that has international name recognition and a winery that has highly rated wines at an FOB of less than $3.

Understanding pricing in the US:

The best selling, unrated wines in the US are $9.99 or less, and $9.99 has earned the title of the “Magic Price Point” because it is so important to the retail community.

Wine ratings come from Wine Spectator, Wine Enthusiast or the Wine Advocate – if your wine isn’t rated it must sell for $9.99 or less unless you have put substantial marketing/brand recognition in place.

Common Sense says that your personal opinion of what your wine is worth has no value in the market, only the consumer gets to make the decision about your wine's value.

If you need to get your wines rated or need advice on how to open the US market, feel free to email me brad@iwinefind.com

twitter follow @bradlarochelle or @iwinefind

Click here to find out about our upcoming trade only tour to Argentina's Wineries

How does a $5 bottle in Argentina end up costing $13.50 on a US store shelf?

                                                             Click here for larger image

This is a mystery to many wineries, so attached is a simple pic that will show expected prices from ex Cellar to Retail Shelf. If I left anything off, let me know or comment! 

Upcoming for 2012 - Argentina Wine tour for Importers, Distributors and Retailers in March.

Always looking for wineries that need a serious wine partner in the US - connect to me!

Regards,

Brad

There is a larger image here: http://twitpic.com/85gq9q

Independent Winery Finder, Services to Wineries (www.iwinefind.com)

Services Offered and Pricing Click here for pdf




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January 6th 2012 is Launch Day