Wednesday, April 1, 2020

Wineries Changing Tactics While World Faces New Reality

Cameron Hughes marketing chief explains how wineries are coping with COVID-19 challenges.

VWE Tasting Room 4

When The Tasting Rooms Closed…

Jessica Kogan was “super bummed” when the COVID-19 pandemic forced winery tasting rooms to be shuttered. As chief marketing officer of Cameron Hughes Wine and chief digital officer of Vintage Wine Estates, it was time to go to work. We caught up with Jessica for an interview last week.

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“How do you make up for the experience you get in a tasting room?” said Kogan. Vintage Wine Estates is a collection of 40 wineries and producers that span Napa, Sonoma, Oregon and Washington State. All were dealing with closed tasting rooms. “You have to be everywhere your customer is or wants to be.” In these days of stay at home restrictions, it means relying on technology and innovative direct-to-consumer strategies.

For the VWE wineries, that has meant putting tech in the tasting rooms to let employees work remotely. Customers can text or message tasting room associates right from their phone. It doesn’t make up for the tasting room experience, but it creates a relationship with the brand and tasting room associates.

New Ways To Engage

One way to create excitement is to make available wines that normally can only be purchased in the tasting room. Wines like Girard’s 2015 Cabernet Sauvignon, Calistoga, B.R. Cohn’s 2009 Cabernet Sauvignon, Olive Hill Estate magnum and Swanson’s 2013 Face Cabernet Sauvignon, Napa Valley, are exclusive gems that will shatter the isolation blues for any wine lover.

Never Miss A Beat – Follow Vino-Sphere On Facebook

Virtual tastings and Facebook Live shows allow the wines and wineries to get online exposure. Winery staff can also provide online support to customers needing advice purchasing wine. VWE has also found other positions when needed for tasting room staff. Some workers have shifted to production or other areas, but the rate of pay is the same.

Preston King Headshots SLO, CAThree years ago Vintage Wine Estates acquired Cameron Hughes Wine. That deal not only added an internationally respected wine négociant but a wealth of knowledge and connections in the digital space.

Online Wine Sales Surge

Cameron Hughes doesn’t have a winery but instead focuses on sourcing the very best wine and negotiating the most favorable price. The name of the source winery is undisclosed to protect the brand. As a result, Cameron Hughes Wine can obtain $100 Cabernet Sauvignon and sell it for a third of the price, or offer a $60 Pinot Noir for less than $20.

Cameron Hughes wines are only available online and CHW has become a leader in the direct-to-consumer wine sector. It’s a good position to be in as online sales of wine have exploded. According to Kogan, there is a big oversupply of premium wine. Cameron Hughes excels at purchasing the overage and reselling at attractive prices. She said CHW is performing at the top of the list of Vintage Wine Estate brands.

Sea Change In Wine Purchases

While e-commerce sales surge, Kogan sees some subtle changes. “It’s the same listing of varietals, Cabernet and Chardonnay, people are buying across the spectrum. The average order value is going up and people are willing to experiment more without fear. Value wines are becoming popular.

“All indications are the higher-priced wines are taking a hit and it’s not just the virus,” said Kogan. “It’s the choices Millennials are making. They don’t have the same buying power as Baby Boomers, but this is beyond their personal financial situation. They just don’t desire really expensive wines.”

Preston King Headshots SLO, CAThe $20-$25 is the growth area in premium wines whereas the sweet spot used to be $35-50. There is a decline in the super-premium category with prices $50 and above. Kogan sees a huge shift in the market to mainstream consumer behavior and not so many wine collectors seeking high-priced bottles.

There there are contrasts with the current crisis compared to the economic meltdown in 2008. “In 2008 no one knew what to do,” said Kogan. “We didn’t have money and everyone just froze.”

Back then social media and means to connect with customers digitally were nascent. “This has a different feeling,” said Kogan. “I’m happy to see that businesses have been able to engage with consumers versus wondering what to do. Wineries are rightsizing inventory and finding alternate ways to connect with customers.”

When We Get Through It

No one has a crystal ball to foresee the end of the COVID-19 pandemic. “It’s hard and it’s emotional,” said Kogan. “Everything feels tenuous and uncertain. However, I’m seeing some good leadership from companies. We’re trying to provide employees a vision and a path.

At this point, there appears to be no impact on the 2020 vintage. There are adequate workers and so far everything is on track.

“This is a hard time,” said Kogan. “Everyone should be encouraged that at some point we will get through it and your favorite wine will be there when we do.”

Photos courtesy of Vintage Wine Estates

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