Are Wine Clubs Passé?
This is a guest post from Tammy Boatright at VingDirect. VingDirect helps family wineries grow their DTC sales through training, tasting room and wine club recommendations, educational webinars and tasting room dashboards. VingDirect’s Vin65 integrated dashboard provides wineries with real time tasting room results.
I was first introduced to the concept of wine clubs in 2004. I had just landed in California, working for Foster’s Wine Estates (now Treasury) and a very smart marketer with Beringer explained wine clubs to me. She said “it’s really incredible that consumers sign up for wine clubs… they don’t really get any benefits that other consumers don’t receive – just discounts”. She went on to tell me that she didn’t see a future for wine clubs because wineries didn’t understand how to retain those loyal “members”.
Fast forward to 2016 and we at VingDirect have had the opportunity to work with hundreds of wineries, helping them create memorable wine clubs and identify ways to retain their valuable wine club members.
And I continue to ask myself - will the traditional wine club model survive? What is next?
There is no debate about the value of reoccurring revenue. You can bank on it! And, very few industries have as perfect a product for a club as does the wine industry. Why?
- Wine is a consumable. Your customers drink it and want more. They need to restock and they probably consume (and buy) wine every week.
- Your wine is uniquely yours. It can’t be price shopped online, unless you are using third party online retailers.
- The majority of U.S. wineries produce fewer than 5000 cases. This means that consumers probably won’t be able to get your wine at their local grocery or wine shop.
All these reasons point to the value of a wine club; whether you call it a wine club is up to you, but as long as consumers love your product you’d be foolish not to offer them a convenient, consistent way to receive it!
Occasionally we meet a winery owner who has decided to opt out of wine clubs because they don’t like the perception of a wine club or they don’t like the traditional wine club model. Wine club represents 50%+ of the profit for family wineries, so if you don’t have a successful wine club you might not survive to see what is next!
What’s next for the wineries who’ve mastered the wine club model?
Who are the masters? Wineries who consistently achieve 5%+ club conversion and low annual attrition (25%-). And, by the way, these wineries are in the minority. Once your winery is consistently achieving these results we think you should explore other avenues to grow your consumer sales.
We don’t have all the answers, but we do have some good questions and thoughts about the next evolution for winery consumer sales.
- There are lots of people who don’t want to join your wine club (19 out of 20) but they love your wine and they may buy 6 bottles or a case every time you contact them. Are you ignoring purchasers?
- The biggest barrier is actually your tasting room team, because most wineries aren’t obtaining the data necessary to market to these high potential consumers. If you do nothing else, create processes for your team to start capturing purchaser data in the tasting room.
- Will the next wine consuming generation be loyal to clubs?
- Recent studies say yes! In fact, 25-35 year olds are more likely to join a club, or continuity program than their parents. They value convenience and consistency, but they need a different payment model and a different approach.
- Will social media ever be a sales channel?
- I say yes. The platform for this probably doesn’t yet exist, but there’s no doubt that social media is how the next generation is communicating and where there is communication there is opportunity. Opportunity for peer referrals, wine communities, etc.
The new pioneers of our industry will be those who challenge the status quo and look for new ways of engaging consumers.
I hope you are looking outside of the wine industry for examples of models that work for other consumable products. I hope you are asking questions, such as “what’s next”. I hope you are taking risks, trying out new club models, learning from your mistakes and moving forward.
If you are, you are a future pioneer and we want to hear from you!