Brian Baker is well known in the wine industry as a Sales and Profitability specialist and has given many talks and workshops on the subject. He is also a managing partner of Cultivar Marketing, which provides wine sales and marketing consulting. We recently reached out to Brian to discuss the future of the tasting room, especially in the face of COVID-19 quarantine.
Milton Cornwell: Thank you for agreeing to the interview, Brian! There is a lot I want to discuss with you, especially with all the changes we’re seeing with coronavirus [COVID-19] and how wineries are embracing technology. I can’t help but compare this to Y2K—that event fundamentally changed how companies embraced technology. Are we in a similar kind of moment now?
Brian Baker: It is a pivotal moment, if that’s what you mean. Disruptive events like these have disruptive consequences. They also create opportunities. Coming out of this crisis, winery-owned tasting rooms have a chance to solve an age-old problem: How do we attract more customers outside of traditional tourism channels?
It doesn’t have to be a negative event that drives the change, either. Social media was a disruptor for the wine industry when it burst on the scene in 2004 with Facebook. Finding ways to monetize it has been challenging. However, when combined with some of the innovative ideas that are being tried, virtual marketing should become a part of every tasting room’s tool bag.
Milton: So let’s go back a little bit. What exactly is the purpose of a tasting room? How did it come about?
Brian: It’s a fascinating history, really. Charles Krug began the first “Cellar Door” tasting in 1862 shortly after he opened his Napa Valley winery. It was a novel idea at the time, and one not necessarily taken from the old world.
As more and more wineries opened over the years around the country, the image of “three barrels and a plank”—a simple place to taste wine, set up inside a winery or nearby barn—was ubiquitous. You can find that same experience today at Belden Barns in Sonoma County.
In 1991, the tasting room was elevated to a new level when Opus One opened its winery and tasting room. With its vanguard design, sleek lines, and modern materials, it ushered in a new era of tasting room design. As new money flowed into the wine industry, tasting rooms became more glamorous, more sleek and modern—but the concept was still the same:
Guests come to a bar and either pay for, or receive gratis, tastes of wine.
The original purpose was to promote trials that then drove sales to more traditional retail channels. Those tasting rooms were often a part of the PR and marketing department budgets Their success or failure each year was measured as a “debit or credit” to their department
Over the last 30 years, there have been numerous improvements to the basic concept, including creating private tasting salons, “club rooms,” urban tasting rooms, and library experiences…tastings in caves…tastings in the vineyard to enhance the enjoyment of the guests…. You name it. These “enhancements” are primarily aimed at club members and collectors but are now available to anyone who wishes to spend the money.
Milton: So you mentioned club members. What is the tie-in between tasting rooms and the DTC model? What is the purpose of the tasting room then?
Brian: Well, the purpose of tasting rooms began to change in the early 2000s. Direct to consumer was starting to make its way into the industry, and more and more tasting rooms were viewed not as a PR tool but as a “revenue channel” for the winery. As such, they needed to be run more like a standalone retail businesses. They needed to have a positive profit/loss statement, and they needed to generate wine club sign-ups.
Milton: That sounds a lot harder when you put it that way. So what are some of the challenges associated with a modern tasting room? And what about tasting rooms competing with retail partners?
Brian: That’s a big issue. When wineries moved from being mainly a PR and marketing tool to drive business to wholesale to becoming their own DTC channel, they set up a conflict with wholesale that is still raging today: i.e., should they compete on price against off-premises partners?
Wine club members typically complain that they see the wine at a lower price offered by retailers. And retailers complain that wineries are competing with aggressively discounted tasting room pricing and have to follow suit. The winery’s comeback to this is simple: “Our prices are higher because we have vineyards, and natural beauty.
Ideally, a retailer should not have to compete against their supplier’s internal retail operation. The winery should strive to not allow this conflict by implementing effective channel management—i.e., the tasting room should not be a primary source of wine revenue, but it could be the primary source of wine club memberships.
There’s also a symbiotic relationship between wineries and their wholesale partners. According to several studies that looked at wine club members’ purchasing behavior outside of the wine club channel, as much 42% of all wine club members buy their brands’ wines through traditional retail channels. And they “pull-it-through” when they order it in restaurants.
Milton: Interesting! So club members are buying DTC and retail, so you have to keep everyone on good terms, then?
Brian: Right.
Milton: So let’s get back to the issue of challenges for tasting rooms. What have been the challenges for the last few years? Or what will be their challenges in the next few years, for that matter?
Brian: First, the basic concept of a tasting room hasn’t changed for 150 years. Can you think of another channel—brick-and-mortar stores, order by mail, anything—that has not changed in that time? So it might be time for the tasting room model to get a refresh.
Second, tasting rooms are seasonal and heavily dependent on foot traffic. To survive, they will need to find new ways to attract new customers outside of traditional travel patterns. The recent pandemic is really bringing this point to the fore.
Third, tasting rooms are prone to natural disasters like wildfires and economic downturns that impact tourism, like recessions and pandemics.
Fourth, generational buying patterns. Tasting rooms run the risk of becoming generational dinosaurs: They were the answer to the Boomer generation’s question “How do we discover wine?” And that question was given a 1970s answer. But Gen X does not buy things in exactly the same way, and they do not buy things the same way as Millennials, either. Gen Z is still an unknown. (And who knows what Generation Alpha will do?) What is known is that Boomers have almost aged out of the market…five years to go and counting. This means a lot of things…not least of which is that tasting rooms have to be careful not to price themselves out of their market.The cost of tasting experiences has been steadily climbing.
My final point is not a challenge per se, but something that tasting rooms should be leveraging: Their own natural beauty, their proximity to the vineyards and the access to principles in the winemaking process…owners, winemakers, etc. Those are assets, and they can use them to their advantage.
Milton: With everything going on right now, we’re seeing a lot of folks moving to virtual tasting rooms and parties. What do you think the future of the virtual tasting room is? Virtual pick-up parties? Virtual food-and-wine-pairing? Trivia contests? Any other out-of-the box ideas in the virtual space?
Brian: I’m seeing a lot of ideas out there. I’ll list a few and who I’ve seen doing them:
- Personalized wine tastings by appointment with Clos Du Val and Chateau Montelena Customers choose a time to meet one-on-one in a zoom meeting with a wine consultant, four bottle standard or custom set.
- Regularly scheduled tastings on a day of the weekwith Chappellet, WALT Wines, Viansa and many others.
- Hosting a virtual wine chat with a winemakerwith Supéry. This is happening every Thursday afternoon for the next six weeks on Zoom.
- Guests from the industryFor example, Jeff Cohn Cellars. Jeff invited afriend, French winemaker Anne Charlotte Mélia-Bachas of Domaine de la Font du Loup in Northern Rhône to join him to explore their fabulous collaboration, the 2016 Déesse Pourpre—the purple goddess of Châteauneuf-du-Pape.
- Iron Horse is hosting Sunday Brunch with owner Joy Sterling.
- JCB Collections has tried multiple concepts, including Facebook live tastings with owner John Charles Boissett and a “QVC style” shopping event through its Salon brand.
- Ceja Vineyards is hosting Tuesday Taco night.
- Rams Gate Winery is delivering the meal kit to your door for the cooking demo that you will tune in to watch.
- Several wineries, including KJ, Cakebread, Le Vigne in Paso Robles are broadcasting cooking demonstrations.
- Technical Thursdays Tolosa Winemaker Frederic Delivert hosts a behind the scenes tour of Tolosa’s Estate Vineyard, Edna Ranch, and our Cellar.
- On April 21 Groth Vineyards & Winery did a Happy (Half) Hour Virtual Concert featuring Justin Diaz on Instagram Live
*Note: virtual events may have changed since publication
Milton: That’s a lot of ideas! So to wrap up: What can a winery do, today, to prepare for this future?
Brian: Experiment. Fail. Learn. Succeed. Think about Virtual Marketing in the future as the fifth channel of DTC
There is no better time than now to try one of the many different virtual marketing ideas out there. Not only test them with your audience, but encourage staff to join virtual events and ask them to report on them. Gather the best ideas together and find ways to incorporate them.
Milton: And if they do that, what do you think they will look like in the future?
Brian: There will be a lot of things they could do differently
For example, wineries could roll out a virtual strategy for the off-season. Target areas that are snowbound at that time of year, like the Northeast or Upper Midwest. Utlize virtual and create year-round business
I also foresee virtual pick-up parties. When a wine shipment is sent, club members can tune into a Zoom meeting and be guided through the wines by the winemaker or other expert. There could also be monthly food-and-wine-pairing shows, combining a traditional cooking show with a guided pairing and tasting of the wines. (Those would be limited to those with a license for food service, of course.)
Could a winery have a virtual tasting room? Sure. Using AR/VR/MR technology, a tasting could be guided from a remote location, showing off the property and the products 3D Guests pre-purchase wines and receive a unique winery experience.
Milton: Thank you, Brian. This has been a really great and really timely discussion!
Brian: My pleasure!
Milton’s Wrap-Up
My interview with Brian Baker was a trip, all the way from the very beginnings of tasting rooms to where they are going in the future. One thing that became clear: The idea of virtual tasting rooms and events won’t be going away once COVID-19 quarantine is over. There’s just too much opportunity to reach new audiences and build brand loyalty in the off-season.
That said, every winery will have to find the kind of event that works for them. Brian gave us many ideas, but the next genius idea might still be out there, in somebody’s head.
Naturally, many of these virtual events need to be coordinated with your wine club channel, with carefully timed shipments. If you would like to discuss how to better integrate your wine club with your tasting room—virtual or not!—please reach out and contact us.