The United States' wine industry already has faced many challenges, particularly in marketing, since the official declaration of a recession Dec. 1, 2008. Production obstacles have been remarkably few and relatively minor, such as maintenance of output levels with a reduced labor force, more minimalist winemaking due to a decreased budget for consumables, and fewer resources for wine services. In regard to increased barrel prices, wineries theoretically made the appropriate adjustments prior to the economic downturn.

Marketing, on the other hand, has suffered the hard slap of the economy. In my view, it is imperative that wine industry marketing professionals determine a new methodology for developing a sales plan in this tenuous and unprecedented economic environment. Enter the Selby Integrated Marketing Plan (SIMPL), a focused equation that helps to establish successful short- and long-term marketing strategies.

This unusual formula integrating production and marketing was developed from the unique perspective I have as owner, winemaker and national sales manager for my own brand. I have successfully applied it to my winery and believe it can be a good marketing tool for wineries of any size during these economically challenging years.

Positive indicators do exist. Direct sales have experienced anywhere from a 7% to 10% increase this year, and wholesale depletions for the gamut of all price-points (ultra-premium being the most sluggish) have been rising since January 2009, according VinQuest's 2009 Marketing Survey.

Even with a first-quarter sales increase, it is uncertain whether the slight windfall is from "gloom fatigue" or a true resurgence of the economy.

Wine marketing professionals may feel they are in a difficult position of outlining short- and long-term strategies based on consumer buying trends. It is impossible to accurately predict consumer behavior, because the U.S. hasn't experienced this type of economic climate since Prohibition.

Focus on popularity?

The traditional approach would be to continue to base decisions on cyclical buying trends for the last five, 10 or even 20 years. With the exception of the unpredictable Hollywood phenomenon that catapulted Pinot Noir to popularity, the wine market has been fairly stable, in that conventional varietals have come in and out of favor, but have remained viably marketable.

Given these factors, a winery of any size may be tempted to focus on whatever wine(s) brought its particular brand to popularity in the first place, and then assign a percentage increase or decrease on cased goods and grape purchases. The targeted goal, of course, is to assure that the winery is neither short nor long on inventory, thus maintaining placements, price-points and vintage demands.

In this scenario, the numbers are generated by the marketing department and given to production. ("Production" includes winemakers and individuals involved in cellar/winery operations.)

Sometimes the owner or even the winemaker is the "marketing department," but someone or some group is always in the predicament of determining the type of grapes to plant or put under contract, the amount to bottle and the concurrent marketing plan. Again, this situation is grossly exaggerated by an economy that acts as a tremendous deterrent in the prediction of sales trends and subsequently stifles any attempts to chart a course of action.

Calculate price/quality

With this ambiguity in mind, why not consider alternative ways to guide the marketing plan? Consumers purchase wine more than once at any given price-point because they perceive that there is a positive price/quality ratio. In the world of branding, promoting, maintaining placements and vying for shelf space, the price/quality concept is the basis for a new way to develop decision-making strategies in an economy that triggers such fierce competition. The SIMPL approach to the sales plan does not start with marketing, it starts with production.

When the dollar is this valuable, there are two key factors to consider. The first is that consumers seldom take risks on purchases. This has been repeatedly proven in bad economies. Consumers are likely to select either brands they know or brands endorsed by people whom they respect (e.g., friends, retailers, wine writers).

The second is that consumers will not repeatedly purchase any product that did not meet their price/quality expectations. With this in mind, the SIMPL concept is a straightforward way to gauge the public perception of your products' price and quality.

Begin this strategic planning by requesting a tasting list from the winemaker or the production team of the top three to 10 wines (based on your number of SKUs) from each of the vintages in the cellar. These should only include broad market wines, and not smaller lots that are earmarked specifically for consumer-direct.

The wines should also be composite samples, since the goal is to determine the superlative products, not the best individual lots. Every person tasting will assign a score of 1 to 10 (10 being the best) number to each blend, based solely on the merit of that particular wine. The numbers will then be totaled so that each wine has a score. Once the individual scores are divided by the total number to form percentages, there is a Production Quality list that equals 100%. Here is an example from a phantom winery:

In this example, the production team is giving each wine a score from 1 to 10, and the scores listed are calculated as an average of the three.

Production Quality Example

Wine	Avg. Score	% Total
1. Sauvignon Blanc	8	35%
2. Chardonnay	4	17%
3. Merlot	2	9%
4. Cabernet Sauvignon	3	13%
5. Syrah	6	26%
Total		100%

The next step is to get a Product Performance list from the marketing staff. Sales numbers should only reflect the percentage of sales as each product relates to a specific year's total. For instance, in a report reflecting one year of data, if Sauvignon Blanc is the top-selling wine, but only one-half of the total production was sold in the given time frame, the percentage of sales would be put into two different fiscal years (or three if it had a three-year sell-through).

This is an example of a Product Performance list compiled by sales and marketing:

Production Performance Example

Wine Sales Percentages (one year or a combination of years)
1. Sauvignon Blanc	25%
2. Chardonnay	15%
3. Merlot	20%
4. Cabernet Sauvignon	30%
5. Syrah	10%
Total	100%

Upon completion of this exercise, combine the numbers from Product Performance with numbers from Production Quality, so that each varietal or product is given a total score. The final SIMPL Calculation is then divided by two (2), to once again obtain percentages that equal 100. The outcome will be a chronological list of products with a statistical basis for predicting which wines will have the best consumer demand-to-quality ratio.

The SIMPL Total Score is the Percentage Total from the Production Quality list added to the Percentage Sales from the Product Performance list.

SIMPL Calculation Example

Wine	Total Score	Score/2
1.Sauvignon Blanc	60	30.0%
2. Chardonnay	32	16.0%
3. Merlot	29	14.5%
4. Cabernet Sauvignon	43	21.5%
5. Syrah	36	18.0%
Total		100%

A Programming Factor calculation, makes an adjustment for increased demand due to incentives from programming. Programming varies greatly--i.e., depletion allowances for by-the-glass pours, retail incentive programs, free goods on minimum case purchases, etc., but cases programmed and the average percentage of the discount can be ascertained. If a product is programmed every year, there is no need to factor it, even if it has specific but consistent parameters.

In this calculation (see Programming Factor Adjustment table), the Factor Adjustment equals the programming discount multiplied by the percentage of total programmed wine. For example, the amount of programmed Sauvignon Blanc was 60% (6,000/10,000). The Factor Adjustment is acquired by multiplying the programming discount (10%, in this case) by the percentage programmed (.10 X 60 = 6%).

The adjusted Product Performance Score is obtained by subtracting the Factor Adjustment from the original Product Performance Score. The new Product Performance Scores likely won't add up to 100%, so adjust them accordingly.

In our phantom winery illustration, Cabernet Sauvignon was the best performing product, because no programming took place. Conversely, Syrah had the highest programming percentage with the largest discount, and the Product Performance score went from 10% to 3%. Even though Merlot, an annually programmed wine, had a neutral percentage, Factor Adjustments on other varietals caused it to have a 4% increase. This Factor Adjustment directly reflects product demand.

After combining the Adjusted Product Performance score with the Production Quality score, the finished SIMPL list is a solid guideline for the strategic marketing plan with a professionally formulated basis for a high quality/price ratio.

In this final calculation, the Sauvignon Blanc has the highest quality/demand ratio. Production gave this product the highest quality score, and Marketing initially determined that it was the second highest wine for product performance. After calculating the Factor Adjustment for programming, Sauvignon Blanc had a downward shift behind Cabernet Sauvignon, which clearly has a demand and price-point that do not require the marketing staff to program for higher distribution demand.

On the other hand, the phantom winery's marketing team was compelled to program Syrah to the extent that, despite the stellar quality score given by Production, market demand simply did not meet the supply.

The SIMPL formula can be applied to wineries of any size, and the Factor Adjustments can be utilized for consumer-direct sales, not just general distribution. It is a guideline to assist with the marketing plan, but is based on integrating the strengths of production and marketing professionals. It is also based on a theory that will always ring true in the wine industry--sometimes it just tastes good.

Susie Selby, owner and winemaker of Selby Winery in Sonoma County, earned a bachelor's degree in economics from Vanderbilt University and an MBA in marketing from George Washington University. To comment on this feature, e-mail edit@winesandvines.com.