Sonoma State Forum Covers Wine Trends

Winery pros hear sales and marketing news from writers and market researchers

by Jane Firstenfeld
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The expert panel included (left to right): Deborah Parker Wong, Christian Miller, Cyril Penn, Mike Colicchio, Liza Zimmerman and Luke Sykora.

Rohnert Park, Calif.—An intimate group of 20-plus, virtually all representing North Coast wineries, grilled a panel of wine writers and data miners about marketing issues during Sonoma State’s Wine Trends seminar. Prior to the formal session, moderator Liza Zimmerman, an editor at Cheers, a restaurant, bar and hotel publication, explained that this second annual event held Nov. 15, would focus on empirical vs. anecdotal information.

When she polled the audience about their concerns, “getting media attention” remains an issue, even among long-established wineries.

Wine Business Monthly editor Cyril Penn fielded that topic with Zimmerman. Like most wine journalists, both are bombarded with dozens of email article pitches daily from wineries and PR agencies: Many seem to be randomly generated.

Senders fail to understand the focus of an individual publication and what stories will interest its editors. Public relations people will benefit from accurate targeting and an individual approach to journalists.
“Do your homework,” Zimmerman stressed.

“If you’ve read the publication and thought about it,” a thoughtful pitch will set you apart, Penn said. “Look at the editorial calendar on the web, see how you could fit in. Focus on the type of coverage the publication provides.”

Zimmerman pointed out that most wine business publications rarely feature profiles of individual wineries. Penn agreed, “We do trends.”

Zimmerman offered more advice for PR practitioners: “Be a resource who will help enable a writer to write a useful story. Build relationships with editors and reporters.

Don’t be a pest, Penn said. “Picking up the phone is a lost art. But don’t do it randomly. I just got ambushed by a wine company that began sending wine and setting up interviews I hadn’t agreed to.”

Building a relationship can mean inviting an editor for a drink or lunch and brainstorming, Zimmerman said. “Think beyond your local market. Wine writing is not just San Francisco and New York anymore. Pitch lifestyle publications; package your winery in a different way.”

But, she warned, “Don’t send samples without asking first. Writers have lost their jobs for accepting unauthorized samples,” junkets or other temptations.

Buy the numbers
Mike Colicchio is a client business partner with Nielsen’s Beverage Alcohol Team. He detailed ho Nielsen collects its data and how wine marketers use it. Nielsen collects retail data and sells it back to suppliers who can examine varietals, key price-points and more. In general, the current sweet spots are $3-$6 per 750ml and $9-$11 bottles. Higher price points are also “very healthy,” Colicchio said. Sales of 1.5L bottles and 3L boxed wines continue to grow.

“The largest sales increases are at the extremes of the market,” Colicchio reported. At the high end, demand allows producers to maintain prices. At the low end, case volume is declining, but from a huge base.

Wineries can commission specific market data from Nielsen. “Data costs depend on how deep you want to go. A snapshot of a retailer or a channel would cost $3,000 to $6,000 per report,” Colicchio said. More detailed in-depth studies can cost 10s of thousands of dollars.

Current trending wine styles include female-focused brands like Bitch and Fetzer’s Little Black Dress, which in the last 52 weeks have accounted for 2.4% of the table wine category, at an average of $10-$12 per 750ml bottle. “New labels are still coming in,” Colicchio said.

Newly popular red blends and sweet red wines are still growing. Wineries producing these, Colicchio advised, would be best served by clearly stating on the label exactly what type of wine is in the bottle or box. Moscato experienced revitalized demand in recent years, but declined 10% in the last 52 weeks.

Focus groups online
Christian Miller, proprietor of Full Glass Research and co-founder of WineOpinions.com, said his companies are “not as much into trends” as Nielsen. WineOpinions data are derived from consumer and trade research panels: The consumer panel consults 8,100 wine drinkers; the trade panel, 2,400. “We work with wineries on their clubs, social media, and trade contacts,” he said.

Miller’s data showed that 44% of all U.S. adults drink wine; 34% abstain entirely, and 22% drink beer and/or spirits. Full Glass focuses on high-frequency wine drinkers: the 39% who consume wine once or more per week. Of these, 25% are responsible for 90% of all purchases of 750ml bottles priced at more than $20, and 40% of wines sold between $10 and $20/bottle.

Using diverse recruiting methods, including ads on wine websites, search engines, referrals and social media, Full Glass tries to avoid “professional panelists” for its online surveys, according to Miller.

Generalized top-line data can be viewed for free on the website, but wineries can request more specific information, Miller said. “You can measure by price-point, or occasion. We test on line: In-person focus groups are much more expensive.”

“How would a winery know if it needs help with its labels?” an audience member asked.

“If you sell a lot of wine off-premise, labeling is critical. None of us can predict what consumers are going to like. You might think (a design) is hip and modern, while consumers might think it’s cold and weird,” Miller said.

Full Glass can offer testing with its trade panel for $9,000, or set up an online, interactive trade panel for $7,000-$9,000. It can survey your wine club members and other direct-to-consumer buyers for $3,000-$7,000, he said.

Sales and pricing trends
In addition to Zimmerman, Penn, Colicchio and Miller, the panel discussion “What’s Hot and Not in the Wine Business” included Deborah Parker Wong, Northern California editor of The Tasting Panel magazine and Luke Sykora, senior editor of Wine & Spirits magazine.

How does the 2013 wine market differ from 2012? “There’s recovery in the ultra-premium class,” Wong said. “That’s good news for artisan and small producers.”

The recovery is only up to a point, according to her data. “Above $30, purchases are not yet where they were in 2007; it’s a much slower recovery,” she said. “Very cheap wines ($6 and under) had a nice bump but have now receded.”

Price is playing a bigger role this year, SKU by SKU, segment by segment, Colicchio said. “Price is becoming a big ‘watch out.’ How far can you go (raising prices) before turning consumers back” to lower tiers?

The $10-$20 price-point is where everyone wants to be, Penn said. Still, “Medium-sized producers—up to 500,000 cases per year—don’t want to play because the big guys can discount. People raised prices because of two short vintages. The largest producers can raise prices, then discount them at retail.”

Is it difficult for small or medium-sized wineries to compete in the popular $10-$20 arena? It depends on the sales channel, Miller said. “It’s hard to compete in the big box channels. But if you can get through the distributor to the retail level, opportunities are still expanding.”

Wine in a bar fight
Spirits and craft beers are encroaching into valuable shelf space previously held by wine, Wong said.

Miller noted that 45% of alcohol drinkers drink craft beer. “On-premise, it’s a big threat to wine-by-the glass. It offers the intensity and novelty that used to to be wine’s prerogative. On-premise, gourmet cocktails function the same way.”

In a market like San Francisco, Sykora said, “Five years ago, sophisticated restaurants used to have a bulky wine book. That’s turned over: Now it’s wines-by-the-glass, craft beer, cocktails, maybe even no wines by the bottle. People are afraid to make the massive investment to load up their cellar to get the kind of buzz they used to need to be considered fine dining establishments.”

The U.S. wine market is always swayed by fads. After the recession, Miller said, “People say they are not moving up in their purchasing price-point. They found good values and are not trading (back) up that fast.”

Recent trends, according to the panel, include Iberian varietals (Tempranillo, Garnacha, Albariño); relatively inexpensive imports including New Zealand Sauvignon Blanc and Argentine Malbec and domestic Rhône varietals and Rhône-style blends.

Formerly dominated by Italian imports, Miller called the market for Pinot Grigio “instructive.” These days, “Domestic producers know how to market it. It’s the same reason you don’t see much French wine in grocery stores. Californians are in the market, can leverage it. It’s not necessarily style or substance—it’s marketing and sales.”

Miller added that whatever their preferences, “People are ordering the wine they want. They drink big reds as cocktails, Moscato throughout the meal.”

Direct to the point
As Wines & Vines reported recently, the direct-to-consumer channel is booming. Originally most valuable to smaller producers with limited production or distribution, “DTC is now important to mid-level brands,” Penn said.

Some 80% of wine club members have visited the winery, according to Miller.

“DTC plays into the wine life style,” Wong added. Wineries should be zoned for entertaining, she said, and investors need to market the whole life style experience.

To retain club members, a winery needs to have a variety of wines in order to include something different in every shipment, a winery executive chimed in.

Miller agreed: “People skip around in wine clubs because they want something different, but not outside their comfort zone. Know your customers.”

The Wine Trends seminar was presented on campus at Sonoma State University, as a program of the Wine Business Institute.

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