Posts Tagged ‘wine club’

‘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

Part 4 of the “12 Days of Wine Christmas” Wine Clubs – A Review of Different Types and Benefits

Are wine clubs a good value? Do they make good gifts? I will explore the various benefits, but in a short answer,  for the wine aficionado there are a number of reasons to consider. These  make an excellent gift for parents, kids over 21, people in far reaches of the country, as a way to expand their horizons, and get them off of ‘plonk’.

There are a variety of types of wine clubs; generally you can categorize them into Three:

  • Wineries Clubs that are Direct to Consumer (DTC)
  • Wine Shop Wine Clubs
  • 3rd Party or Aggregator like Wine Clubs.

Winery Wine Clubs

The most common of wine clubs; these can vary significantly by winery, but have numerous advantages.

  • Club members get discounts. Wine Clubs often have multiple tiers, and the higher the commitment, generally the larger the discount. (This is less of a benefit if you are already receiving Industry discount; although I have one wine club that doesn’t give Industry, a bit irksome, but love the wines.)   If you aren’t Industry, and buy a case or more a year of wine from a winery; consider joining the club if for no other reason  to save money. Wine Clubs like Quivira offer a large discount, on par with Industry, for the First 30 days of a new Wine Club release.
  • Access to Releases for Wine Club Only. Many of my clubs will do very small releases, perhaps 25-50 cases. These wines maybe reserved for Wine Club only and not for sale. Often this is a compelling reason why I join; lesser know varietals like Cinsault, a Rhone red varietal I am fond of; is the only way I can get it from Preston Vineyards.  Similar with Paso Robles Rhone producer Tablas Creek. Even very large producers like Kendall Jackson, who ship hundreds of thousands of cases a year; have wine clubs that offer small, under 20k case a year productions, available only in the tasting room and/or to Club members.
  • For Locals: Wine Clubs offer pickup events with music, food, and of course wine, often free pour. Sometimes these are free, or at very low cost. At a recent Wine Club event at Longboard, for $25  the event offered a band, an awesome pulled catered pork feast, free pour of new releases, and a bottle of Sauv Blanc to take home…find entertainment like this for that kind of money! Plus as a local you get to interact with the winemaker and the hospitality staff. Wine is as much about the experience and artisanship as it is the beverage.
  • For Non-Locals: Many great small wineries can’t find distribution as you go East. Why buy only mass produced wines, or be limited to what your local wine shop has, when 2-4 times a year you can receive a few bottles (or more) from your favorite producer.  If you are having your wine shipped, look at shipping costs and see if a larger membership makes sense.
  • Other benefits. Occasionally something very unique is offered. Rotie Cellars, one of my favorite Walla Walla Rhone producers is offering, until end of year only, Lifetime Pricing.  New members signing on by 12/31/10 get fixed pricing for the duration of their membership. FYI, Rotie Cellars is a highly rated, sought after producer, and the wine club list is nearing full and will close soon to allocation only.

Wine Shop Wine Clubs

No matter if you live in Wine Country, or in Wisconsin, I always encourage finding a good local wine ship to frequent. Here in Wine Country, its generally how we get wine from outside the area. In much of the US, this is your best bet to get small producers you can not find via retail. Mounts Family awesome Malbec or Grenache, or Cartograph Wines Pinot or Gewürztraminer isn’t going to be on your local Safeway, but your local wine shop may have it, or could order it if asked.

My favorite wine shop and wine shop club, is K&L Wines, also known as ‘my dealer.’ Why?

First their selections of wine, especially International, is amazing. They send buyers out all over the world to buy direct, so their prices are great. (Takes the sting out of not getting industry discount!)

Second, you can order quickly online, and WillCall your orders for 2 months. I order a bottle here, a bottle there, and then pick up my few cases when I swing through San Fran. (Other options are Redwood City, and Hollywood, CA.) They will also accumulate and ship; I used K&L regularly when I lived in Denver after I left the Bay area in 2002 .

Third, K&L has a number of wine clubs, but their most unique is the Personal Sommelier Service. You literally create your own wine club, picking price range, wine type, region. You can also pick from their extensive list of buyers, who makes your selections.So for example,  each month I have Mulan Chan-Randal pick for me a Rhone Red blend, from the Rhone Valley of France, for $20-$40. I have additional club picks where I have her select a Gigondas, and a Châteauneuf-du-Pape. Then I have a West Coast Red Rhone club, picking from CA, OR, WA. If I wanted I could make that as specific as Paso Robles, or Sonoma, only. If your selection is too narrow, the system will advise you perhaps you should widen your selection. You can revise any of the many variables each month if you like, or suspend one. You can have your monthly selection shipped, or held for Will Call. Highly Recommend.

3rd Party Wine Clubs

Lastly, there are ‘aggregator’ like wine clubs, like the International Wine of the Month Club, whose Chianti I reviewed recently. California Wine Club is one I belonged to many moons ago when living in Texas. Many lifestyle publications, like Sunset Magazine also have one. These can vary widely in focus and benefits, but typically they source wines from many producers, and include educational material, food pairings, winery information. These can be a great way to get diverse exposure of wines, domestic and International.  If you live in an area where unique, interesting wines are hard to get, this is a great way to get a regular supply of something new and different.

A Gift For Others, Or Yourself

Many wine clubs are available in a giftable, pre-paid fashion. Buy your parents, adult children, or your boss, a 3, 6, or 12 month pre-paid  membership, and let them enjoy your present throughout the year, as well as perhaps broaden their horizons and palate.

Cheers!

The 12 Days of Wine Christmas

Part 1 of the “12 Days of Wine Christmas”: Wine Road Winter Wineland, Redwood Foodbank Raffle.

Part 2: “12 Days of Wine Christmas” – Gadget Review of the VinniBag

Part 3 of “The 12 Wine Days of Christmas” – The Wine Check (no, its not money!)

Wine Review – 2005 il Molino di Grace Chianto Classico

A few months ago I was sent a media sample from the International Wine of the Month Club, featuring a red and a white. I will be releasing a feature piece on Wine Clubs of various types in the next week or so as part of my ’12 Days of Christmas Series’ that is about to commence.

Tonight’s sample being reviewed is the 2005 il Molino di Grace Chianto Classico aka a Chianti Classico. A Chianti Classico is required to be 75% sangiovese, this release however is 100%.

I will give kudos to the International Wine of the Month Club for their documentation. The bottle comes with a 4 page, very well written handout that discusses the History of the Winery, Tasting Notes, Food Pairings, a recipe, and some history on Chianti Classico. For the wine consumer interested in learning more about wine and its many facets, its a great accompaniment. If you don’t there is always Safeway…get what ya pay for.

Color: A Rich,  Dark Red, slightly opaque

Nose: Earth, spice, red fruit, cranberry

Mouth: Plum, black fruit, meaty. Good structure, moderate tannin, high acidity.

Pairing: Like many Italian wines, this one ancestrally begs for food, pasta. Don’t disappoint it, and let it breathe, open up for a bit if you can.

Where to Buy: Appears to be decently distributed. Vintages may vary. $15-20 retail.

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