Monday, December 21, 2009

The demise of the Family owned winery has been greatly exaggerated



There is considerable hubbub floating around the wine web world these days as a result of a controversial report by the Marin Institute recently reporting the fallacy of the California Family Owned Winery. As a representative of many "family owned cali wineries" I can assure you, they do exist. This report has been taken perhaps a little too literally by some. The gist of the report is pretty simple: 81.9% of all wine produced in California is under the umbrella of some half dozen or so diversified (often in Liquor and/ or beer) multinational corporations. For those in the industry surprised by these numbers, you simply haven't been paying attention.
While I could rail, and have, about the public being duped, the virtual winery betraying consumers trust, and many other problems. I will instead focus on one glaring reason why the aforementioned statistic is not changing anytime soon: distribution. What was the unspoken reason for Inbev's ludicrous acquisition of Budweiser? The channels of distribution. Trucks and feet on the streets win nearly every battle in this industry.
Now, our good friend Tom Wark probably believes that the way around this is to allow direct shipping to all states. This would in theory, open up the flood gates and change the balance. I believe the impact of this would be minor. As much as we all would like to believe to the contrary, the flow of information does not begin and end with the publications like Spectator and Parker, nor is it with the Gary Vee, but with the traditional 3 tier system. The overwhelming majority of consumers buying the wines mentioned in the report, learn about these from their local vendor. The battles aren't won in the big city wine shops or 4 star restaurants, but in the mid markets with the moderately (wine) educated that want to find a dependable brand with relate able packaging and labels. This is the arena where the marketers have won. The other? suppressing the sophistication. No, not by nefarious means, but by sheer ease of selling the generic crap with a slick package. This is the domain of the big distributors: distilling a wine down to a slick campaign, a few bullet points, and crazy competitive pricing that makes the retailer (or restaurateur) feel like the first person on the block to discover this brand new find from blah blah blah. Meanwhile, here is mister small distributor sulking in the corner with his or her crazy good, small production, single vineyard wine at twice the price and three time more complicated story. How can you win?
Here's how:
  • Your wine is awesome for a reason, proudly explain it, and make it simple
  • Your story had better be good, make sure the distributors know it by heart
  • Listen to where the competition lies, if you can't compete on the shelves, you're doomed before your start
  • Good marketing will only help you, produce great marketing materials, have a great website, and have a strong presence (i.e. Market work)
  • Small distributors are often labors of love, but not always tightly run. Help them where you can, but hold them to a higher standard.
  • Many larger distributors are beginning to realize the cache and credibility of small distributors, and are beginning to start their own smaller divisions to compete, this adds credence to the argument for family owned wines. In some markets, they may be worth taking a look at.
  • It will require 3 times the work to sell your small family owned wine over the next Trinchero product, but it's a noble and winnable pursuit. Building a brand takes sweat equity, but cynicism for the inauthentic wines is turning your way. Your credible story is the best thing you can have (besides whats in the bottle).

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