During Tuesday’s class, we asked the question, does a
tasting room increase the authenticity of a wine? I’m sure there will be
several other of my classmates who will debate this question on the blog, but I
first wanted to look at whether tasting rooms actually result in any meaningful
ROI.
It turns out the Sonoma State University looked at this very
question in a paper (link here) they published in Vineyard and Winery Management in 2012. The paper examines the
inherent tension which exists in tasting rooms - the maximization of DTC sales vs.
the building of brand loyalty and recognition with the hopes of increased sales
tomorrow. The paper asks two principal questions: First, what is the effect of
tasting rooms on a winery’s long-term sales through the traditional retail
channels? Second, if tasting rooms are effective in promoting long-term retail sales
growth, what type of tasting room produces the greatest long-term growth rates?
The paper looked at the wineries in Sonoma County along the
Highway 12 corridor between Glen Ellen and Kenwood (high traffic) and those
from northern Sonoma with fewer tasting rooms (control group). Below are the
key findings of the study:
- Wineries with higher-traffic tasting rooms result in greater retail sales growth through the off-premise channel than lower-traffic wineries (or no tasting rooms)
- Lower-density, more relaxed tasting rooms experience greater growth in sales through the off-premise retail channel than the higher-traffic, more commercially oriented wineries
- Wineries with tasting rooms which require reservations experience the highest growth in the off-premise retail channel
The paper is an interesting read although it does acknowledge
there are various aspects that make it a challenging exercise e.g. a lack of
reliable data on tasting room sales and traffic
From personal experience alone, the study's findings seem pretty spot on.
ReplyDeleteIn September I went to Viansa winery (http://www.viansa.com/the-property), which is one of the first wineries / tasting rooms you hit when driving up 121 to Sonoma. As such, foot traffic is super high, and my visit was no exception - the tasting room was jam packed, despite it being a rainy day. It took forever to order a flight, and service was subpar (the two guys behind the counter were frazzled / overwhelmed, and barely had time to tell us what we were drinking). The tasting room itself felt super commercial, with Viansa-branded merch everywhere you looked. Needless to say, I left without buying anything.
Last weekend, I drove up to the Banshee tasting room in Healdsburg (http://www.bansheewines.com/visit/), and the experience couldn't have been better. The decor is chic, and despite arriving at 11:30 on a Sunday, we had no problem grabbing a table. The staff were super friendly / laid-back (i.e., people I'd want to drink with), and spent a ton of time telling us about the wines and the winery. We also scored three "premium" tastes which weren't part of our tasting. Of our four-person group, two joined the wine club and the other two bought three bottles each. That's way higher than the average wine club conversion rate (and likely much higher than Banshee's conversion rate). But I'd be curious to know how Banshee's per capita conversion rate compares to Viansa's. My bet is on Banshee. And I'm guessing those results have a lot to do with the sense of "authenticity" the Banshee experience provides.
I'm with Tier having had both great wine tasting experiences at wineries (which led to me joining the Wine Club in the case of Cakebread, and buying on premise) as well as bad experiences (where I have never gone back, didn't buy wine and have avoided drinking the wine as a result even).
ReplyDeleteBut what I find really interesting about the study you brought up are the first and third points which seem to imply a causal relationship. In the first case, it's not clear to me that this isn't just a correlation. A winery with higher traffic could just be a popular wine with a good brand that people want to visit when they're visiting Napa (think maybe Duckhorn?) and not necessarily because of that also has high sales off-premise because of the brand-- not necessarily because people visited.
Similarly, with the third point, the wineries that require reservations in my experience are already wineries that have strong brands (and higher end) so they're already experiencing high growth off premise and therefore they can require reservations.
I'd be interested to see if there are any other studies that allow a more conclusive causal relationship between tasting rooms and later sales.
This was really interesting! I've questioned the ROI of several activities that many wineries engage in - including, but not limited to, funding wine circle pours for 40 people. As a leader in wine circle, I've noticed that we get many inbound requests from wineries hoping to come to campus and pour us wine. Can couple thousand dollar expenditure possibly be ROI positive? We are certainly a great demographic for wineries, but they would need several at least one or two wine club sign ups to justify the expense. I'm not sure that the math works out for this - but, as a beneficiary of their generosity, I certainly won't be the one to tell them :)
ReplyDeleteWinery brand reps are betting on you coming to the winery with a group, buying the brand (at corporate dinners), etc., hence the investment in MBA brand awareness.
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