Unless you have been living in a cave for the last six months, then you are aware we are in the midst of tough economic times. The financial crisis has taken a toll on everyone and Clos LaChance is certainly not immune.

So what are we doing about it?  It’s hard to predict what is going to happen with sales for next year. So if we can’t guarantee additional revenue, then there is only one thing left to do: cut expenses

What are we cutting back on as we plan budgets for 2009? Christmas cards, for starters. Between our investors, wine club members, vendors, wholesalers, accounts  and growers…we were sending over 500 Christmas cards per year. With the cost of the card, postage, labor to address and stamp them all….we are talking over a grand to get our Christmas cards out.  There has got to be a better use of $1,000. Don’t get me wrong, I love a good Christmas card from friends and family, with pictures of the kids and updates of where the family traveled (as long as it’s not too braggy).  But business Christmas cards…eh, I can leave them.

So this year we did an electronic card. With a custom Christmas Carol. Didn’t get it? Click here. Yours truly wrote the song.

http://www.clos.com/index.cfm?fuseaction=category_detail&category_id_int=16082

What else are we cutting back on? On an annual basis, we have two departments that book the most expenses: Production and Sales and Marketing.

 On the production side, Mother Nature solved our expense cutting decisions for us. Yields in 2008 were very, very low. We did not pick as many grapes as we expected to, so we are bottling less next year.  By not bottling, we save on the costs of the packaging, the transport, the storage. Also on the production side, we purchased more barrels then we needed to in 2008 (again, low yields)—so we will be buying less in 2009.

In addition, we have consolidated a lot of our supplies for labels, bottles, capsules, corks….and are streamlining everything to be as simple and economical as possible. For example—our Vineyard Designate Pinots have traditionally been packaged in heavier, more expensive bottles. The fancy bottles cost A LOT more per case (we were buying very small quantities and they are pricey models), as was the transport because of the extra weight.  So we ditched the expensive bottle and are now using the same Burgundy bottle as our regular Pinot Noir.  

In addition, we have been re-evaluating all of our outside service contracts (thanks to Tom our Maintenance Supervisor) and made some major changes to our landscaping maintenance and regular deliveries of things like water, linens and doormats. We are saving a ton of money by hiring someone part-time for landscape maintenance and using our own crew vs. hiring an outside gardening service. Next up for review: phones, Internet, fax, cell phones for everyone that has one on the company. Telecommunications is expensive! But I bet we can get a better deal then we are getting right now.

On the Sales and Marketing side, our other major expense category, marketing expenses have been cut in half. Absolutely zero advertising (stop calling me if you are in ad sales), dropping out of a few trade organizations and tastings, and putting a hold on any press events or tours in 2009. However, on the sales side, this is not a good time to scale back. When times get tough, the big suppliers pull out their giant marketing budgets and start flying buyers around the world, giving huge incentives, and selling wine at a giant discount (can you say “2fer?”).  So to cut back on my miniscule sales budget—which pretty much includes only salaries, benefits and expenses for 6 people—is not an option. We would be completely ignored by distributors and accounts—who can be easily mesmerized by the flashy things offered by the “big boys.”

There are many more examples of the “little things” that are being done around here to cut expenses.  And we are doing them so we don’t have to raise prices or lay people off. Because two of my favorite things in life (outside of my family) are the people I work with and drinking good wine that is not crazy expensive.   I also like to combine the two. Bring on the Clos LaChance Christmas Party!