We all know that a winery wanting to compete in today’s crowded marketplace should produce tasty wine. (And of course, do so “with passion”, make it “in the vineyard” and hopefully offer something that the critics will admire.) We also understand that packaging is an important element because many people form opinions and buy wine based on the label design. Finally, we comprehend why pricing, while tricky, should, at least in theory, reflect the quality of the wine in the bottle.
There are also numerous seemingly good excuses for not planning, including “lack of time,” “it’s difficult”, “need to sell/do versus think/plan”, and my favorite, “too small to have to worry about it”. Just as “the dog ate my homework” didn’t work in grammar school, “I don’t have time to plan” doesn’t work in today’s competitive wine market.
There are thousands of wine brands from which to choose, each with its “unique” offering of “top quality”, “amazing fruit” and a “passionate owner/winemaker”. So it takes a set of brand differentiators to set you apart from the competition. And while a high Parker or Spectator score may attract attention, “getting a high score” is not a sustainable business model. What happens when your wine gets a dreaded 89?!! And more importantly, how does your 90+ point wine stand out from all of the others in a sea of brands?
All too often, small wineries start with a great name or look in mind, fall in love with the industry, and figure that the rest will “happen”. While that may work for a few lucky souls, for the majority of us, success requires work. The good news is that business planning is not as complicated as you may think. Sure, it requires time and energy, but you’re doing this because you love wine, right? Selling it and doing so profitably is even more fun than loving it!
There are three crucial questions and set of related sub-questions that every small winery should ask regarding its wine brand:
1. Where am I now? Do I have a unique brand story that is meaningful to me? Does it connect with all of my communication – verbal, written and visual? Do I know what differentiates me from the competition? Who is my target customer base?
2. Where do I want to be? Number of cases? Number of markets? Key accounts? Certain distributors or websites? What will my growth look like? Will it be in terms of numbers of cases or enhanced profitability?
3. How will I get there? What percentage will be sold over the web versus by hand versus through wholesalers? What types of customers will I target? How will I reach them? What types of media will best drive my customers to buy? How will I get and keep media attention? Who is going to do what?
After answering the above questions, small wineries are in a much enhanced position from which to move forward on all aspects of communication and business planning. These answers in essence lead to your brand’s mission (or what it provides) and vision (or what it strives to be). After those two steps are tackled, the strategy part begins.
Let’s start with what strategy is not: “get a good score” (passive); “sell out of my wine in two months” (a goal); “make money” (a rather vague and obvious goal, although perhaps less so for the number of folks losing money in the wine business).
According to David Collis and Michael Rukstad, co-authors of “Can You Say What Your Strategy Is?” in the April 2008 issue of Harvard Business Review, a strategy is comprised of three primary elements: 1) objective; 2) scope; and 3) advantage.
Objective states your business goal. For example, XYZ wine brand will make $20,000 of revenue in its first year by selling 25 cases of premier Pinot Noir. Scope defines your brand’s market. XYZ’s scope is to sell wine to 50 friends and family in Oregon, and 30 wine club members via the website. Advantage – my favorite and perhaps the most critical element of strategy, states why XYZ is better/ unique/ more qualified to enter its customers’ palates than ABC, 123 and Do-Re-Mi.
In pulling together a sound business plan, your winery is better positioned to succeed. It also gains focus, which can be very helpful in dealing with the myriad of people who assist in your winery’s path to success. These include, but are not limited to graphic designers, web developers, marketing gurus, and yes, even compliance folk and attorneys (fewer hours means less bank drain)! This efficiency translates into cost savings, which means more money, better margins and the ability to reinvest in your success.
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