April 13 2008
It is a provocative question: one that is as likely to divide a room of people as any hot button issue around religion, politics, the death penalty, etc.
I exchanged a few emails with a person that is in the business of creating successful wine brands and he posed the following question:
Questioner:
You have $3 million dollars starting tomorrow to pursue your dream to make a wine, what are your top five priorities?
Exclude the legal elements, (i.e. lawyers, business set up).
1) Where would you start?
2) What kind of wine would you make?
3) What would it cost?
4) Who is your winemaker?
5) How would you utilize the money and why?
My response:
I think before you get to any of your questions, you have to ask who you are trying to sell it to and build backwards.
It starts with the customer and the market.
Part of the problem with marketing in the wine industry is there is very much a gulf in between large production wines with distribution muscle and the lifestyle-based ivory tower approach to wine marketing.
I would spend $2M on researching a market that I could capably penetrate with the remaining $1M buying high quality bulk juice (in a negociant model), if that would yield the best results with a targeted customer.
Questioner:
I like your answer; the only problem with the bulk concept is it seems more and more apparent that the consumer is demanding some ownership of the land, vineyard or the appearance thereof. We launch brands constantly that have no soul yet, it is a tough launch…
However, I do agree that I would want a sound outlet prior to making the project real.
My response:
You are right; people are looking for provenance, at a higher price point. I think it depends on what market you are going after. Yellowtail still sells by the boatload and I personally have a lot of friends and family that, if asked, would proclaim themselves a wine lover, but they show up with Alice White at parties.
It begins with the target. I think the ultra-premium category that was formerly $12 - $15 and is going upstream to $16 - $19, but below $25 is going to be very crowded with small and medium size producers.
I would do what K-J is doing with Vintners Reserve and target that $13 affordable luxury mapped to a target market. Claritas can help you find a market, positioning that resonates, and that price point is not really all about the dirt.
My two cents.
Questioner:
The one piece of this theory that we are talking about is it lacks soul ... I think those with finances to hallmark their lives with a wine have to be involved, I am growing weary of the contrived brand. The marketing think tank putting Barney on a bottle … it has no heart, no one to tell the story.
As we continue to launch brands, I see a big difference in the absentee owner and the one that is buried up your backside. The biggest difference is in those who truly care for what they are doing and live it ...
My response:
I do not disagree with anything you say, but your initial question was related to what I would do first. And, if I had to do something first, I would first find a customer. Presumably, I’m interested in turning a profit, so in answering this question I’m more capitalist than soulful humanitarian, therefore I’m less discriminating in building a brand with heart, soul and passion and more inclined to build one that will sell wine.
Fred Franzia is never going to be accused of being Mr. Rogers, and I am taking a pure business approach to the question.
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I guess the real litmus test is how you interpret the question and the part about, “your dream to make a wine.” It could, literally, be done a hundred different ways. Personally speaking, if I was coming into the business cold, I would want to make some money before diving into the passionate, “life’s labor” part and going artisan/boutique, but that is just me.
How would you respond?
Posted in, Free Run: Field Notes From a Wine Life. Permalink | Comments (2) |
A bit late to this post… finally catching up on my blog reading. Wow… 3 million?! Really? I’m trying to start a wine brand with less than $100K. I know, I know, it sounds kind of hobby-ish, but I just don’t have the kind of money required to build a traditional winery or wine brand. Just a passion for making the “stuff” and sharing it with people. Anyway… I could not agree more that one must start by asking “to whom do I want to sell this wine to?” Then work from there “backwards”. Physical location or the “home address” of the wine is also critical. Are we talking about CA, NY, Spain, Chile, etc.?
More importantly, the #1 question is: Why would someone buy my wine and not one of the other thousands of wines already available?
Note to person “in the business of creating successful wine brands”: Send the $3M to me and I know exactly how to spend it… 
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Let’s start by eliminating things that don’t work.
No Critters, no whimsy, no knock offs of cultural icons. Consumers have caught on that wineries that are conceived by marketing departments are not authentic and therefore to be avoided.
No focus groups. Wine conglomerates love focus groups, and while the result will be pleasing to the eye it will reek of marketing fever. All risk is removed and without risk there cannot be a successful wine brand.
Which leaves wines that are named either for the owner of the brand or the place where the grapes are grown.
3 million is not much so there probably isn’t land ownership involved so given those constrains here are the top priorities.
1. Identify a grape source for red grapes that may not be at the peak of popularity right now (Syrah, Merlot, Grenache). If the best grapes are from Lodi then go for a family name or a person’s name. If they are from a source that is not well known but not considered inferior by consumers then go for a place name.
2. Start with just one wine at 12.99 to 14.99 retail but label as a red blend instead of a varietal. If you’ve got courage go for a proprietary name.
3. Sit down at the kitchen table with your SO and design the label or start the design of the label. The label must send a message of authenticity, so do it yourself at least as a concept.
4. Build the very best web site that you can afford with the intention of selling almost all the product that consumers will drink at home from the web site.
5. In major cities appoint a small distributor to push for on premise sales. Give them a significant margin and hold there feet to the fire on a 70- 30% on premise to off premise sales ratio.
This plan may not work, but it isn’t a guaranteed failure either.
Zinman