Posts Tagged ‘Randall Grahm’

‘Shipping Included’ – the Future of Direct to Consumer? An interview with Bonny Doon Vineyard

Randall Grahm

Bonny Doon Vineyard has been an innovative leader in the U.S. wine market for 3 decades. With Randall Grahm at the helm, Bonny Doon will boldly dare to go where no Rhone Ranger has gone before.   In January, they caught my attention as they jumped into new ground with revolutionary changes to their wine club. (I am a member.)

(Note – Simple Hedonisms writes primarily for consumers, but with an increase in demand recently for marketing consulting and input, I will occasionally feature a piece like this for the Industry. I hope my consumer readers will find it insightful as well, and share their feedback.)

The Genesis…

Was Meg Houston Maker, author of Maker’s Table and former executive editor of Palate Press. Meg joined Bonny Doon last September as Director of  Direct to Consumer (DTC) sales. Wasting no time, she applied her Ivy League brilliance to  examine Bonny Doon’s historical direct sales performance, review emerging trends in  DTC, and take their  consumer program down a new path.

Wine Clubs – Friend or Foe

One of my most popular articles in 2010 was “ Wine Clubs – A Review of Different Types and Benefits “ focusing on the benefit of Wine Clubs for the

Meg Houston Maker

Meg Houston Maker

consumer. For wineries, a wine club can represent a significant opportunity  in normalizing cash flow and  revenues; it helps to wake up each quarter knowing  ‘X’ percentage of sales are in the bag. (In my ‘other industry’ we call this backlog.) Wine clubs can also represent a high human touch and labor factor, but since they are sold DTC, carry a higher profit margin than distribution sales, so most wineries view Wine Club sales, and members, as very valuable.

Bonny Doon’s Challenge

Bonny Doon has a large, loyal wine club of over 3,000 members. The company has been managing multiple wine club categories at high labor cost and fulfillment complexity. Each shipment  requires considerable consumer interaction to update shipping addresses, credit card numbers, expiration dates, and member shipment customizations.

Additionally, about forty-five percent of members received 2 bottles of wine 6 times per year, and paid $14.25 per shipment for UPS charges. This meant that customers were paying about $86 per year to have a case of wine shipped to them—even though Bonny Doon was subsidizing part of these shipping costs.  (Shipping costs vary widely by state.)

Meg’s goal was to move more wine in the direct channel. To do so, part of the strategy was to encourage members to take more wine per shipment, fewer times per year. Through number crunching and detailed analysis, it became clear that simply sending more bottles per wine club shipment four times per year rather than six would lower the total shipping costs to club members while also reducing the effort needed to process the shipments.  It would also be greener: this change alone meant 31% fewer shipments per year, a substantial carbon savings.

One possible consumer objection to larger shipments, especially in tight times, is  that smaller shipments allow the consumer’s cash payout to be more spread out.  Could the perceived negative of larger shipments be  addressed by capitalizing on people’s general abhorrence of shipping costs?  When Bonny Doon has run ‘shipping included’ offers for orders over a certain dollar threshold—$99 or $129, for example—they see a significant jump in large orders.

Shipping Included, Explained

What does “shipping included” really mean? Free shipping? A hidden cost buried in?  Unfortunately, consumers often think the latter.  So why do wineries use this term? The good people at the ABC , protecting us from harm’s way,  do not allow wineries to say ‘free shipping.’ (Some businesses still do, but that’s technically not allowed and can lead to trouble.) “Shipping included” almost always means free.  But people aren’t sure, which is why you may also see offers like “shipping for $1.”)

Back to Bonny Doon Wine Club & Numbers Analysis

Through detailed analysis, Meg realized that fully subsidizing shipping cost to wine club members might be the answer to shipping more wine in fewer shipments, increasing the volume of wine sent to wine club members and making it easier  to sell the club to new members in the tasting room, online, and at events. And the consumer would win by paying less overall per bottle.

But what about profits? Bonny Doon already has consumer friendly pricing (see my Clos du Gilroy review) and they have to make a profit. Clearly net margins (profits) per transaction would be lower with a higher shipping subsidy. But would net margin dollars, be higher, if overall more bottles of wine were moved to offset the lower transaction margins?

The Math

Lets look at some sample math. (These numbers are my own invention for illustration purposes.)

  • Let’s assume a wine club shipment of 6,000 bottles at $20 a bottle with a 30% margin.
    • This shipment would yield $36,000 profit.
  • Now let’s assume a shipment of 10,000 at $20 a bottle and a 23% margin.
    • This would equal $46,000 net profit—in other words, a lower margin per sale, but a net overall increase in margin dollars.

Now that the onus is on BDV to carry shipping costs, they’re exploring an alternative shipping company to save costs, too, and increase consumer satisfaction.

Results To Date

How has it worked?  So far – wonderfully.  BDV launched a massive communications effort in January to roll out the new shipping-included offer to all existing club members. A key goal was to get those who currently receive 2 bottles six times per year to take 4 bottles four times per year; any who did would pay no shipping fees. The result: Ninety percent of those 2-bottle, six times per year members have agreed to step up to 4 bottles, four times per year.  It’s kind of a no brainer, really, for most. They buy more wine, but this is almost completely offset by the savings of $86 in shipping costs. The net result is that for about $25 more dollars per year, they get four additional bottles of wine.

There are also other inherent benefits of consumers drinking your wine more often: they become brand ambassadors, share the wine with friends, cellar some for later, etc. Broadened impressions and consumer awareness also leads to an increased chance of re-orders, especially when reinforced by other shipping specials, like no-cost shipping for orders over $99.

Why buy plonk wine at Safeway, when for $102 (at the 15% discounted member price of $12.75 per bottle), you can have 8 bottles of Clos du Gilroy Grenache sent to you without a shipping fee? Seriously, consumers, think about it.

Additionally Tasting Room conversions are up significantly since the new club structure was introduced in January.  People are responding well to paying no shipping. I can personally relate. I buy a lot of wine, and have more wine clubs than I should, and paying for shipping is one of my largest mental barriers to buying wine. If I can’t will-call, or if a club threatens me with shipping charges 30 days after release, I don’t join, or I drop the club.

As another reflection of their love for members, no one is being left behind; club members unwilling to convert are allowed to stay status quo, even though it adds complexity.

Conclusion:

As wineries look to grow sales, especially Direct To Consumer, which has been the 2010 mantra, “shipping included” represents a significant shift and potentially positive impact.  For those willing to adopt, it can represent a win both for the consumer and the winery. My hat’s off (and my $$ in wallet) to Bonny Doon for continuing to forge new paths, staying focused on a positive consumer experience, and of course, for making great wines.

Bravo

Thanks for reading! I’d love comments and feedback from both consumers as a Wine Club member, and from Wineries as well.viagra in canada

Wine of the Week – Bonny Doon Vineyard 2009 “Clos de Gilroy” Grenache

Simple Hedonisms returns from its Christmas break! MANY things to share in future posts; the next few months are very busy with some exciting new wine endeavors; more details soon.

Last week I started a new column, ‘Wine of the Week’, this series is more subjective, and reflective of my personal palate, as opposed to normal reviews, where I more objectively review the wine itself.

Grenache

Rhone wines are one of my favorite regional categories. Of the red varietals, Grenache is my overall favorite red. (Or known as Garnacha if from Spain.)

When grown in proper conditions, and not made in an attempt to make it Cab or Zin like, Grenache can be a subtle, elegant wine.  It’s best aged in neutral or very minimal new oak to let fruit express itself, if I try a grenache I don’t care for, its usually from the New World fascination with too much oak.

Grenache can also be lighter in color, like Pinot Noir. (Real Pinot, not Pinot infused with Syrah for color.) While on the topic of color, let me shatter a myth some consumers hold; dark color does not automatically equate to complexity or indicative of quality in a red wine. It’s unfortunate the Parkerish mentality of big wines has driven this belief.

Don’t be afraid of a Grenache, Pinot, or other red wine light in color. I generally give it an immediate extra star, knowing the winemaker hasn’t manipulated or blended to achieve color, but instead let the varietal and vintage express it self.

Bonny Doon Vineyards

I could write the entire article just on Bonny Doon and Randall Grahm’s contribution and dedication for over 30 years bringing Rhone wines to the US. I am a huge fan in what Bonny Doon stands for, and for the wines they share with the world. If you are ever near Santa Cruz, enlighten yourself and stop in their tasting room. The staff hospitality is as noteworthy as the wines. The attached Cellar Door restaurant, open Wed-Sun. is also pretty amazing and worth time for a meal if you have it.

2009 Clos de Gilroy Grenache, Monterey County

A blend of 88% Grenache, 10% Cinsault, 2% Syrah

To the Eye: lively, translucent, light purple

On the Nose: Gorgeous – Red fruit, Strawberry, pepper, and that classic Grenache slight hint of hard candy

In The Mouth: A delight of strawberry, rhubarb, red fruit, cranberry, that shines through not masked by oak. Silky in the mouth, excellent body, and delivers front, mid palate;  the finish is pleasant, lingering.

I am not one to call out other reviews as wine is subjective, but I couldn’t disagree more with a comment of  “Our hope is that with age (or if you must drink this wine young, decant as much as possible), it will mellow and come together.”

This wine is highly quaffable, needs no decanting, and drinks well solo. Its intended for immediate consumption. (Suspect it will cellar as well, but have little intent of laying mine down.)

Where to Buy: Various distribution outlets (Not K&L Wines at this time) and  Available online. Almost steal at $15,   discounts for cases or wine club. (I belong.)

Food Pairing: Very versatile, love mine with poultry, last night had it with pasta. Or as Bonny Doon more eloquently states To really tease all available horsepower from CdG, a roast turkey, chicken or other large fowl and trimmings can hardly be bested. Exceptional food and wine combinations are a wondrous experience though in all honesty they are not uncommon – barbecue ribs, grilled tuna, veggies, pasta arrabiata, tapas, poulet tagine, anything al fresco, all by itself or annointed with olive oil CdG proves itself a partner in bliss.”

(By the way, if you haven’t read Randall’s award winning “Been Dewn So Long” – I highly recommend.)

Recommendation: Granted I am biased, stating up front Grenache is a personal favorite, however all Grenache’s are not the same. This is one of my everyday red”s now – ‘everyday’ because its ridiculously affordable, so I stocked a case at Christmas. If you like Grenache, or are a Pinot lover looking to expand your horizons, or want a break from big red wines, but seek subtle complexity, I highly recommend as a buy.

Wine Geek Info:

Varietal Blend: 88% Biodynamic® grenache, 10% cinsault, 2% syrah
Appellation: Monterey County
Alcohol by Volume: 13.5%
TA: 6.0 g/L
pH: 3.8
Production: 750 cases

Sonoma Rhone Garagiste Part 5 – Grenache Blanc Road Trip, and a new Test of Endurance

It’s about to kick into over drive. Over the years I have been described with a number of terms, ‘Tasmanian devil’  ‘energizer bunny’ and a few others of color, as a compliments (one assumes) to my drive. This weekend it kicks off a whole new level and test of my endurance, especially Sunday.

If you know me personally, or follow my Tweets or Facebook updates, you know I am a massive fan of the Rhone white varietal called Grenache Blanc, which is growing in popularity in the US amongst knowledgeable consumers, branching out.

Of all the Rhone whites I wanted for my ‘project’ this year, this topped my list. Sadly its not widely grown in Sonoma County, and the few growers I talked to had lost some due to sunburn in this years challenging harvest. It’s grown much more abundantly in Paso Robles (a Rhone wine heaven) and Santa Ynez.

The Rhone Ranger Comes to My Rescue

I had been putting out on the Social Media wire for awhile I really wanted Grenache Blanc, and with some luck and karma, a source was revealed, through none other than the Father of California Rhones, the original Rhone Ranger, and a man I deeply respect and admire: Randall Grahm of Bonny Doon Vineyard. (And of course, love his wines.) The source was in Santa Ynez, 6 hours away. I get to thank Randall personally tonight (as well as pick up my wine club and re-stock) at his Le Cigare Volant Retrospective dinner tonight in Santa Cruz. I can’t wait.

I called the Santa Ynez grower Randall tipped me to: my luck seemed to expand; the fruit was ready now, and I was already going to be in Paso Robles Saturday for the Grand Opening of Edward Sellers new tasting room. Thats four of the 6 hours already behind me. I have a new trailer I purchased for reasons like this why not. The plan aligned well; Friday night in Santa Cruz, Saturday in Paso, a leisurely day exploring Santa Ynez Sunday, and then leave early Monday morning with my grapes, and process them early afternoon back home.

The luck slipped after that, bringing back the theme, “No Plan Survives Battle’. A major account we have been pursuing in my real life job (that pays for all this) popped up and requires an on site Executive  meeting on east coast that required Monday travel.  (Additionally complicating the week as it looks like that my Saralee Vineyards Marsanne, Grenache (Noir), and Syrah will be ready as well! )

Now it all compresses and looks like this.

Sunday, Marathon Madness:

  • Leave Paso at 5-6 a.m. Drive two hours to Santa Ynez.
  • Help a (now reduced) crew of 3 pick 3/4 ton of grenache blanc, load up, dry ice it and head north with a 6 hour drive home.
  • Quick stop in Santa Maria to pick up as many neutral white oak barrels as I can fit on the trailer with 2 bins of fruit.
  • Pull into North Sonoma late afternoon and process the fruit. (Haven’t decided vinification process yet.)
  • Collapse in bed a sometime, then get up early morning to drive to SFO.
  • Fly across the country, have a day of meetings, cross it back, and then pick/process at least 3 more varietals. Whew!

Saturday in Paso: Garagiste Training

One highlight that emerged, I had planned a casual day Saturday in Paso. It’s their Harvest Festival and town is jammed pack, so any serious private tastings were out.

I had been communicating with Anthony Yount, the head winemaker at Denner, as well as his own brilliant label Kinero. (I will be writing more about Anthony later, and one of the best vineyard tours in my life.) He is a brilliant young wine maker, off the cuff, colorful, yet an old soul, whose knowledge, confidence, and wines belie his youth. This is a man to watch in my opinion.  His Kinero Grenache Blanc and Roussanne sell out very quickly each year, and are two of the best expressions of the varietal I have ever had.

He has a new release,  I wanted to  try, buy: 2009 Cabrida Blanca (34% Picpoul,33% Grenache Blanc,33% Chardonnay). I also asked if I could have a few hours of consulting time as I have so many decisions still to make and love what he does stylistically. Turns out he is picking and processing Grenache Blanc that day and offered insight in exchange for help. Jackpot! I can always come taste wine, but a chance to do my favorite hard work on a varietal I love with Anthony is a not to be missed opportunity for this wine geek.

Never A Dull Moment:

For those interested, I will as best as time, cell coverage and batteries allow, leave a trail of updates and pictures on Twitter and Facebook.

To the local wine industry; I apologize for the decrease in blog coverage of events and things I said I’d cover, those who have reached out for my help. I am temporarily saturated, but promise to get my head back above water, very soon.

The Garagiste Series (click to read):

The Garagiste Series (click to read):

My 2010 Rhone Harvest – Garagiste or Passion Gone Runaway?
Part Two of My 2010 Rhone Garagiste Project: It’s All about the Vineyard (my source revealed)
Sonoma Rhone Garagiste Part 3: Where to Crush?
Sonoma Rhone Garagiste Part 4: First Crush aka No Plan Survives Battle
Sonoma Rhone Garagiste Part 5 – Grenache Blanc Road Trip, and a new Test of Endurance
Chapter Six: Garagiste Rhone Adventure Continues: 4 in One Day; & The Crush Facility Revealed
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