Now is different
The wine industry needs to change. It needs to realize that now is different, and the old ways of making and selling wine will have to change.
The wine industry needs leaders, not managers. As we enter a period of rapid change, the wine industry will only thrive if it is led by brave, visionary leaders. If it is led by managers with a fear of failure and a tendency to maintain the status quo, then we're stuffed.
Note: there's a difference between embracing tradition and heritage as part of a deliberate strategy, and sticking with what we've always done because that's the way it's done, and the way it has worked in the past.
If you use sales figures or other data points as performance metrics, you need to understand the time-lag behind adopting new initiatives and the results of these initiatives in the marketplace. Often, this time-lag can be significant. As a result, those statistics you are looking at are telling you about what happened in the industry some time ago. You can get caught out in this way: it can lead you to think all is well, when in fact a lack of innovation today will only become apparent in two or three years time.
Leaders and managers are different. Often, organizations are born as the result of the vision of a leader, and they start to grow - often quite fast. Leaders frequently make the mistake of hiring people like them - other leaders. This doesn't work out, so they hire a manager to work with them and look after all the details. Things are much better.
Then the initial period of growth begins to wane, and the leader wants to move on to a fresh challenge, or retires. What the organization badly needs now is a new leader. But what they invariably do is reward the manager by promoting them to run the organization. This invariably results in stagnation, because the manager hires other managers and feels threatened by leaders within the organization, so they end up leaving.
The wine industry is facing a difficult time: there's oversupply, and there's a recession. What it needs is not managers to give a safe steer, although there's a temptation to play things safe in such difficult times. It needs visionary leaders, who are fearless innovators, looking for opportunities, developing new markets and recruiting new wine drinkers.
posted by Jamie @ 11:40 AM
21 comments
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21 Comments:
One of the best posts I've ever seen about the wine trade!
Justin just commented more-or-less exactly what I was going to say!
Couldn't agree more...
In 2009 and going forward independednt are gong to have to work much harder to be creative in the way they sell. It won't any longer be good enough just to have great wines - you need to tell people about them and get yourself noticed - give the customer s many chances as possible to read about them, see them (video), hear the winemakers talk about them, taste them... lots of options, but one isn't to keep doing the same things you have been doing all the time!
This advice should be taken by more than just the wine industry!
Let's do it!
Lets help people enjoy wine...really enjoy it.
Let's let people know they don't have to break the bank to drink a great bottle (Ninth Island Pinot noir from Tasmania $16, Terra Andina Carmenere $12)
Let's continue to use the blog-o-sphere to encourage readers to search out something new and help give them the confidence to do so.
People are excited out there. Times are tough here in the states yet my little wine shop has not slowed down. There is a need there. Yes, it could be part of that famous saying but there is a need to hold onto something solid. And that is the decompression at the end of the day. That is solid and real and with a friend or a loved one with a good bottle of wine...a genuinely good bottle of wine that solid state of decompression is rounded off and truly fulfilled.
We work hard and deserve not to get jipped at the wine stores.
Let's help the public tap into that idea of luxury with wine and while not draining their wallets.
We are the ones on the battlefront. The wine bloggers. Buying the wine and figuring it all out for the rest. We are the geeks. We can help.
EvWg
www.winegeeknyc.com
You've just described the problem with every wine retailer I've worked for and with. Look to the Uk's leading mail order business (will they turn a profit this year? Watch this space) as an example of a collection of brands that just don't get the changes that are happening to the way consumers are making decisions.
Too many retailers are relying on paternal "we know best" old school marketing techniques and seem terrified of the social media revolution.
However there are innovators out there, witness Rowan Gormley's initiatives at Naked Wines and as always applaud Berry Bros web initiatives with blogging and podcasting.
Good positive comments.
I had a beer at lunch time today with a French bloke who said it didn't really matter what he or I did anymore. We should all just wait and see whether Barrack Obama succeeds or fails. If his plans succeed we will all be fine.....if not 'we are all doomed'....I came away feeling very negative. He continued munching his cheese and ironing his white flag!!! Everyone should just get a grip and focus on the core business, core strengths and clear business plan. Make adjustments when we are hit by inept politicians or volatile exchange rates, but fundamental strong management adapts to change in a positive way.
Jamie, you get some serious points for this post. As you so well stated, when we get scared, the last thing humans think about is massive change. The notion of risking everything we've worked for to embrace a leader who supports a new vision that will shake up our foundation on an individual and winery level is not only frightening but terrifying. Add centuries of "traditional winemaking" based on tried and true methods, and you would be hard pressed to find a winery that wants to risk some crazy internet phenomenon that focuses on social collaboration, honesty, trust, transparency and vision during a financial crises?
A common response from a winery owner in Spain to social media might be, "Honesty? There's no way I'm going to tell my full story to the public! What if they find out all the bad things that happen during a vintage, or that our fermentation tank is on the fritz, or that we may lose our viticulturist next year! We'll lose all of our customers!"
However, I have hope, a lot of hope. On a larger political scale down to school lunch programs, there is an international outcry for full disclosure, allowing customers to converse with businesses directly. Everyday I come across large Iberian businesses with blogs. As an example, I recently bitched about a plug-in on twitter, and not 15 minutes later did I get a response saying, "I'm sorry, but we have some glitches right now. We'll send you a message when we've got it sorted out". Direct. Honest. Open. Communicative. Refreshing!
Will wineries catch on? Will wineries provide videos, podcasts, real honest stories? Yes! I'm seeing it more and more everyday and I have faith!
Jamie, The one thing missing from your comments are the consumers who, at least in the USA, will be necessary to lead the (wine) economy out of recession. The (wine) world will be stuffed if we all emulate the Frenchman in HamishWM's post and rely on Obama's policies. The new administration here in the US will throw money at the problem but without the optimism of consumers it may all come to naught. Those of us with stable employment and discretionary income need to be taking a few paces down the wicket and hitting out rather than padding up in front of the stumps. I am buying up whatever may come my way in terms of my favorite Aussie Shiraz now that they are coming back down to realistic prices. I’m also looking at purchasing directly in Australia, now that the exchange rate has changed so dramatically, and having the wine stored there by relatives so that we have a stash for when we visit. Adversity always presents opportunity to those who are prepared.
Why do we need to change the way we are making and selling wine? I did not see a specific critque on these topics, or a suggestion.
From
Large Company Wine Exec working on exactly this
Exactly - Nothing more than empty rhetoric.
Any practical ideas, Jamie?
Jamie---do you not think there are few innovative merchants and winemakers out there? I could give you quite a long list but would just mention two ,Jamie Hutchison and Eben Sadie.
There is also plenty of innovation in the auction world,bid for wine for example and, as already mentioned,traditional companies like Berrys who have a wonderful website.
Sure like any business,there are the complacent inefficient,badly led organisations,but why single out the wine industry?
I prefer to think that the poor will fail and the excellent will prevail.
SOME THOUGHTS ABOUT WINE MERCHANTS AND THE ON-TRADE
As the curse says: May you live in interesting times. We are witnessing a deeply polarised wine industry. Some areas of our business will continue to flourish, whereas for others (small independent retailers, for example) there will have to be a long period of retrenchment, and even survival. Whilst big companies are trying to ride out the recession by throwing money at every eventuality, smaller operators are obliged to protect their margins and to pass on price rises to their customers. Whereas the business of wine used to be about buying and selling, now it is about savvy financial strategy.
*If you strip away duty and factor in average inflation the price of wine in real terms has decreased during the past five years. Skilful negotiation -and thumbscrew tactics - has persuaded growers to keep price rises to a bare minimum, and the relatively strong pound has meant that there has been sufficient fat in the margin for deals and discounts.
*The problem is that an expectation was created within the wine trade that the price of wine would never increase. As the market became increasingly competitive, the trade was able to pick and choose who they would buy their wine from. They began to insist on keener discounts and longer lines of credit. It was a true buyer’s market; the culture of wine mirrored that of the buoyant economy and thus was essentially unsustainable.
* The credit crunch initially had little effect but slowly the economy went into recession. The banks were immobilised: by not lending money and rewriting terms and conditions of loans they are driving small companies out of business.
*The slowdown: The loss of thousands of jobs in various sectors of the economy has had a deep impact on restaurants.
* Anecdotal evidence: A well known restaurant in Soho had only a table of two one lunchtime - normally, they are full and one would have to book; another restaurant in Mayfair reported trade 30% down on last January; a bonded warehouse went into administration; a delivery driver for another company had only three deliveries into London restaurants last Friday (and one of those was a case of cooking wine); a small chain of off-licenses has been liquidated.
*Two of London’s highest profile restaurant groups with a combined total of millions of pounds of turnover are in financial difficulties.
*Bad debt and late payment is responsible for terrible cash flow throughout the wine trade. It is the classic example of the global “knock-on effect”. Without the business the restaurant can’t pay the merchant, the merchant can’t pay the growers and the growers can’t pay their bills.
As if that wasn’t enough the collapse of the sterling has thrown a massive spanner into the works:
*Last year the pound dropped over 20% against the euro and even more against the dollar
*The cost of dry goods once again (bottles, cardboard, paper) increased
*2008 was an exceedingly difficult, sometimes very small vintage, in certain parts of the world
*Hefty duty rises above inflation were imposed (and more to come)
As a result:
* Commensurate price increases from wine merchants are inevitable. Unable to absorb huge cuts in their margins, unlike supermarkets, who can effectively sell wine as a loss leader to create brand loyalty, they must evaluate whether they want to maintain turnover at a loss or walk away from unsustainable business.
*It has been said by many in the trade that wine companies are no longer in the business of sourcing and selling wine, but have turned into financial institutions expected to hedge currency and take long term views on investment. Amongst certain companies the imperative for expansion is enormous because investors insisting on quick return for their money. Those companies will have to buy greater market share through deeper discounting and cash deals to maintain the necessary growth.
* Restaurateurs will have to make a critical decision and either trade down for much poorer quality wines at the same price or move away from the time-honoured blanket gross profit margin calculation towards more progressive cash mark-ups. The gross profit is a tyrannical tool, responsible for driving up prices and driving down value in restaurants for a number of years. It may seem counter-intuitive to increase prices during a recession, but it is surely more important to offer value by reducing the margin and demonstrating better quality.
*Customers are more adept than ever at spotting lazy wine lists; it behoves the restaurateur to stimulate spend by stimulating interest.
*The most intelligent and prescient operators emerge from recessions stronger than ever, the myopic and venal go to the wall. For years restaurants traded on the good will of their suppliers – and this was fair enough, but with current economic fragility it is time for a reality check and for the appropriate medicine to be swallowed. It is time also for the trade to pull together, to put mutual interest before short term gain, to improve communication and work on imaginative solutions to ride out this crisis.
Solutions might include educating customers to spend more and drink better. Merchants and retailers have to enthuse people and drag them from the mighty maw of the supermarkets and their 3 for £10 offers. At my company we are going to prevail upon our wine producers to visit the UK, do more proactive tastings with customers and help make the product come alive (or become more than a product). We need to excite, challenge and inform customers, we need to remind people that wine can be delicious, provoking, a consolation in difficult times and a pleasure always.
Jamie,
I find it hard to believe that these are your words or thoughts. I can't even believe that this text is somehow wine-related in the first place. Rather, I think that you've extracted this bullsh**t bingo from a speech of the CEO of an auto maker (or even worse: an investment bank, or somthing), and replaced the relevant key words with wine-related stuff.
Cheers,
Ollie
Spot on.
As we enter a period of rapid change, the wine industry will only thrive if it is led by brave, visionary leaders.
What a load of Brent-esque management speak.
The last paragraph says it all for me. What I take away from this post is this. Many retailers buy a lot of wine, maybe too much. In 2009 my focus is going to be to make sure our customers are introduced to, and are properly aware of many of the wines we have heavily invested in.
It's not going to be good enough in the current U.S. economy to plop a big display on the floor of a new item, and then move on to working on something else.
Let's SELL some wine.
Nice post, Doug - whose Blog is it? ;-)
Great points Jamie. Many people in the wine industry have similar hopes.
And the online wine community is full of potential new visionaries!
Interesting thoughts Jaime and you definitively have a point though I’d add a couple of other thoughts to yours. The wine industry, and this is especially true in Spain, needs initiative leaders being leaders or managers. What is lacking today is innovation and knowledge in contemporary Wine Marketing and I am not talking large budgets, Guerrilla marketing might as well do. We have great examples of leaders but little focus on the importance of new packaging, marketing and communication, added values that make a wine stand out. At Proodevo (www.proodevo.com) we start our Wine Marketing seminar with “Today it is pretty difficult not to make a decent wine”. The issue is no longer the quality, the problem is to find out what a winery can do to sell their wine, to make the wine stand out in the crowd, to get that hands-on close and direct communication with the consumer. Summarizing, just as well as the wineries spend money on production equipment, today one need to invest in the Marketing part, in selling, in communication.
The trade needs to remember it is the buying habits of consumers that leads to business success.
This dialogue, if true reduces the consumer to someone with no capacity for making their own decisions. Only capable or of responding to marketing messages.
Consumers have a new role in the global wine industry and will make this a very exciting time. Some will care more than others.
Any industry can take a lot from these words. Two the exec "working on it" I say, quit being anonymous, and you may find that things work differently.
Too the guy who claims this is empty rhetoric, I say the point is that those who develop the ideas that break the mold will be the ones to succeed.
As for practical ideas: ENGAGE YOUR CUSTOMER for real!
Treat them as your equal, and sell them your wine like you would sell your wine to your best friend. Do that, and you will succeed.
Thanks for the post Jamie!
I love how none of those who cared to disagree bothered to leave contact details or even a name.
I think there is a lot of truth in the post, and much to take from it, but what we do is up to us (Jamie, after all, is writing about wine, not making or selling it).
Disagree if you must, but come on boys and girls, be brave enough to say who you are if we are going to have a proper debate
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