Dan Berger

Opening the Market

One of the key reasons Starbucks is so successful has nothing to do with coffee, or coffee quality. Nor has it anything to do with the coffee culture it created in its hundreds of stores worldwide.

It has to do with branding.

To be sure, that familiar green logo is to the 21st century what the Howard Johnson billboard, the McDonald’s golden arches, or Texaco service station images were to those brands in the 1960s. More than anything else, what Starbucks did to etch into granite its worldwide image of a friendly weigh station in which to grab a cup of joe was to offer the broadest visibility it could by opening literally dozens of stores in major cities.

It became a go-to place. Many cities have better coffee houses, but if you’re from out of town, Starbucks is where you go.

I witnessed this visibility issue 25 years ago when I agreed to meet a colleague at the Starbucks on Wacker Drive in Chicago for a breakfast meeting. I arrived on time. He didn’t show. After 20 minutes, knowing of his punctuality, I asked the clerk if there was another Starbucks nearby. He said there was one half a block away. (He was there.)

There are many Starbucks locations, if you hadn’t noticed. A decade after my Chicago episode, Jay Leno delivered one of his best lines: “Congress just passed a new law that prohibits Starbucks from putting another Starbucks inside an existing Starbucks.”

And this relates to wine how?

Imagine you are a Pacific Northwest winery making superb wines, as verified by solid tasting room sales, gold medals at wine competitions, and accolades from local and national magazines, and on the web. And you have local visibility.

Now imagine that you are hoping to increase sales by buying additional grapes and making a bit more wine. But the 2008-2012 recession (not yet fully over, according to some economists) and other marketing considerations have set back your plans. Even your plan to expand sales to major U.S. markets has stalled. To do so is risky.

Marketing an additional 10,000 cases of wine entails financial risk. Your $50 Cabernet Sauvignon, which earns about $50 when you sell it out of the tasting room, might earn a net of $15 or $20 when you contract with a wholesale company to sell the added volume for you.

What to do?

What follows isn’t a solution, but could be valid for some wineries. And it calls for a strategy that could initially be costly, but which may have long-term positive implications for not only you, but the entire Northwest region, and all its sub-regions.

It is to go national without a wholesaler.

I think we’d all agree that Pacific Northwest wineries have limited national visibility, but make stellar wines.

Wineries are in a unique position to be able to set up direct-to-retailer and direct-to-restaurant agreements as long as they adhere to the regulations of the other states.

Make your wines visible in places where they can be seen for what they are – great wines from exotic regions (be it Snake River, Ancient Lakes, or the Umpqua Valley).

There is a kind of “coffee mystique” that glorifies the coffee culture of Seattle when a Starbuck’s opens in Sheboygan, just as a Snake River Tempranillo being offered in one of Sheboygan’s top restaurants, such as Lino Ristorante Italiano, casts a positive light on the exotic wine culture of Idaho.

How does such a thing occur? It has to be a carefully laid-out plan starting by identifying a city the winery owner or spouse has a fondness for, or perhaps went to high school in. and might like to go back to for a visit, such as for a high-school reunion or a family function.

Say it’s Sheboygan. You have always wanted to go back and visit old friends, and you already know something about the town. First, learn all about the licensing and tax issues regarding sending commercial amounts of wine to Wisconsin (any number of compliance companies will help with this).

Next find out something about the retail and restaurant wine-buying patterns. What are people buying? Call and speak to restaurant owners, wine retailers, the local wine columnist (if any) or newspaper food editor. Search the web for help.

Then plan a five-day trip there.

Here is where the real expense comes in for such things as air fare, rental car, hotel room, meals – but since it’s a sales trip, the tax implications are obvious. Just keep good records.

Imagine you get Lino and Therese at Lino Ristorante Italiano in Sheboygan to take two cases of your Syrah, Tempranillo, or Pinot Blanc. Are you making any real money yet? No. But this is just step one.

Lino’s is an Italian restaurant, and part of your agreement with Lino and Therese is that you will not offer your wines to any other Italian place in Sheboygan. This leaves you free to make an agreement with Rupps Downtown to sell your Cabernet Sauvignon only to them, the only Sheboygan steak house with your wine.

If Rupps takes two cases of your Cabernet, the trip has paid for itself, and since you have already paid your compliance fees for Wisconsin, additional sales in other cities there make sense.

Assume you now get a Platinum medal for your dessert wine. You may now call Lino and Rupps and tell them that nice little fact. And having your wines visible in a far-flung area helps with future sales trips. Medals at wine competitions can be great sales tools. Chicago and New York, Miami and Houston are more difficult markets to attack, but remember: You control your own destiny with this slow start-up campaign.

Moreover you learn as you go. Your family reunion trip may not prove successful the first time, but it beats flying to Sheboygan with no plan.

The more Pacific Northwest wines are seen on a national stage, the more people will take Oregon and Idaho Riesling, Washington Merlot, and British Columbia Pinot Gris seriously.

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