Surviving  Growing in a down market.

In over a quarter of a century of sales/marketing for small to medium sized California wineries, I have experienced numerous market fluctuations/recessions. I have never had a down sales year, and actually have often seen bigger than expected increases in tough economic times. There are several reasons I attribute to attaining growth:

The wine industry is somewhat resistant to bad economic times. People seem to drink more, but often trade down. This presents you with the perfect time to establish greater margin products in your portfolio. People will be moving away from their “standard ,“ that they have been purchasing in “good times,” and looking for direction in trying something new at a lower price.  This opportunity to establish yourself and your company is seldom witness to so willing a customer for change.

Many competitors look to do business as usual. They often look for a quick fix. Dropping prices and margins moves boxes, but does nothing for the future of the brand and its image. Being progressive and looking to the opportunities this type of market condition offers the greatest growth potential.

Be positive, what brings us out of this often is led by those who aggressively seek to grow rather than contract. They emerge faster and stronger, with greater positioning for when the market expands.

Compete in the right place (categories, price points, trends), at the right time. Establish for your company a new market footprint. Pursuing the same old is not a recipe for success. Typically a good portion of your sales increase percentage over the previous year is achieved through new products and new focus. This is an ever changing/evolving process that requires constant evaluation and re-evaluation.

Here are some observations to reflect on and to use to your advantage:

• Mass production wineries will look to big deals to make numbers. This erodes the market price point for their brand on and off premise. Panic mode seems to set in. The big deal you buy into now, is often followed by an even bigger deal that your competitor down the street will buy into. You are then stuck with large inventory of a product that your competitors have a price advantage on you.

• Consumers will be looking for more/better. They will seek out value. True there is a comfort level associated with mass production wines; however consumer brand loyalty is now less important to your bottom line than customer loyalty. Promoting brands that are not available everywhere is a key to establishing better customer relationships.

• Value/perceived value:  A small production wine has an intriguing story to tell the consumer. This perceived value to the consumer involves getting more for the same $’s. Whether the alternative to the mass production wine is a limited production/single vineyard/estate bottled/ hand harvested/organic/sustainable, these all offer the consumer more than the usual.

• Explore, expand and promote hot new categories/trends that are experiencing growth. These include Organic/Sustainable wines, Unoaked Chardonnay, blends, appellations, and countries. Less “manipulated” wines  can also offer opportunity; hand-picked, unfined, unfiltered, estate bottled, single vineyard. A more natural approach to winemaking.

• Look to re-align your selection and inventory. As the consumer trades down, key price points become more important and greater diversity in that range is the way to achieve growth. The consumer will be looking to move away from what was their regular wine in good times, to something new @ a lower price. This is your opportunity to steer them towards wines that offer you higher margin.  Higher end sku’s need to be replaced by those that will see movement, turn and greater margin %.

• Brands that are limited in production offer better margin potential, and less of a chance to your being exposed to the customer as having a higher price on a specific item than your competitors.

• Interaction with your customers is now more important than ever. They will look to you for direction and guidance. Let them know that you are there to assist them in their search for their new standard. Being prepared to offer them alternatives, accompanied by thought out reasons and options is an integral part of building customer loyalty.

Flat doesn’t have to be the new up for everyone. Good Selling !