By: Jonathan Smalley, President and CEO of SmaK Plastics
The Times They Are A-Changin
According to CNN, global wine consumption has fallen about 6% between 2017 and 2022. Consumers have changed their drinking habits and inflation has eroded their disposable income. That means nearly 1.9 billion fewer wine bottles were consumed last year than in 2017.
Today, operating a successful winery requires more than just producing exceptional wines.
It demands a strategic approach to maximize operations space, production and labor, reduce overhead costs, and increase revenue and create growth.
• The wine industry is evolving. Gen X-Z tastes are changing.
• Wineries are at the intersection of artistry and business acumen.
• Behind the scenes, winemakers and CFOs grapple with OpEx challenges.
• At the same time, retail shelf space is getting more crowded – with flavored beverages.
In this article, we will explore proven methods to increase winery revenue.
1. Diversify Offerings to Attract a Broader Audience: An effective method to boost winery revenue is by diversifying product offerings to appeal to a wider customer base. While the core product remains wine, expanding into related areas such as events, food, and merchandise can significantly increase revenue streams.
Silver Oak Cellars has successfully diversified its offerings. In addition to its acclaimed Cabernet Sauvignon, the winery hosts events like wine dinners and tastings. The winery’s online store also features branded merchandise, from glassware to clothing.
2. Create a shelf space strategy – Evaluate and create modernized, distinctive labeling. Craft an eye-catching and distinctive packaging design for your Wine Club offers. Consider packaging that not only highlights your brand but also communicates the craft and quality of your wine.
Create open communication with distributors and retailers about your differentiation and process. Collaborate on promotional events (where legal). Utilize data to ID regional preferences to tailor your product assortment. Consider P-O-S displays that showcase the craftsmanship behind your wines. Utilize shelf talkers and promotional signage to highlight unique tasting notes, food pairings, and any awards or accolades your wines have received
3. Expand Specific Production to Match Trends – Create craft beverages that meet emerging trends. Be a trendsetter. Consider new methods to expand your production to deliver new flavors that buyers want.
Be aware: Buying used oak barrels used can sound affordable, but is risky. Used barrels can come with risk of bacterial contamination as well as a lower impartment of oak. And used tanks are not warranted by manufacturers.
4. Implement Wine Club Memberships for Customer Loyalty – A new, modern wine club can create a loyal customer base, consistent revenue and a strong sense of community. Offer exclusive benefits such as early access to new releases, discounts on purchases, and members-only events.
Ridge Vineyards is known for its exceptional Zinfandels and Cabernet Sauvignons. Ridge has a well-established wine club called the Monte Bello Collector Program. Members receive allocations of limited-production wines, invitations to member-only events, and access to library releases. This not only generates consistent revenue for the winery but also strengthens the connection between the brand and its customers.
5. Enhance Online Presence and E-commerce – In the digital age, an online presence is crucial for wineries. Establishing a user-friendly website, utilizing social media, and implementing e-commerce capabilities can broaden a winery’s reach and drive sales directly to consumers. Invest in strong brand visibility and “edutainment.” Provide insight. Engage with your audience online and offline to create a community around your brand. A strong and recognizable brand can attract attention from retailers and consumers, and lead to increased shelf space.
La Crema Winery has effectively expanded its online presence. The winery’s website offers a seamless e-commerce experience. La Crema actively also engages with its audience on social media platforms, and has created a virtual community around its brand.
6. Optimize Production Space – Unleash the Cellar Potential: Say goodbye to wasted corners and hello to reimagined production. Evaluate every nook and cranny. Reorganize with precision. Utilize the space that is wasted on racking.
Embrace flexible, movable vertical storage to increase capacity without sacrificing accessibility. Utilize stackable solutions to create skyward profits. Stackable fermentation, production, blending and aging solutions increase production, allow easy access, and deliver results. Easily blend without having to un-stack, un-rack and re-rack-and-stack barrels.
7. Shorten the Distance and Vessel Use Between Processing Stages – Modernize your production Transfers. Reduce barrel transfer time with a streamlined, repurposed container layout. Redefine your processing flow to minimize transfer time, reduce labor, and eliminate spillage risks.
Increase efficiency across all processes. Streamline labor-intensive tasks, from juice movement to cleaning, stacking, and maturation. Optimize productivity across your square footage. And vanquish the evaporation enemy.
8. Embrace Modern Winemaking Techniques with Oxygen – Permeable Polyethylene Tanks:
In recent years, wineries have increasingly turned to innovative winemaking equipment, such as poly, food-grade plastic tanks, to optimize production efficiency and cut costs. These tanks, made from high-quality polyethylene, present a viable alternative to traditional oak barrels.
Oxygen-Permeable Polyethylene Tanks provide winemakers with a more cost-effective and sustainable solution. The use of plastic tanks aligns with sustainability goals. These vessels require less water and chemicals to clean, are lightweight and can be used for all winemaking processes, last more than 25 years, and reduce the demand for dwindling oak resources.
Les Bourgeois Vineyards, situated in California, has successfully incorporated plastic tanks into its winemaking process. By investing in Oxygen-Permeable Polyethylene Tanks, the winery has reduced operational costs associated with barrel purchasing, maintenance and replacement. The polyethylene tanks allow Seghesio Vineyards to allocate resources to other aspects of production.
• Poly tanks give winemakers scalability, and stackable use of production space.
• Polyethylene vessels are sustainable. (Water and Labor Savings). These tanks can be utilized in all aspects of winemaking: production, fermentation, maturation and transport to bottling.
• French oak barrels are produced at approximately two barrels per 100-year-old tree. Oak barrels must be sanitized using chemicals and large quantities of water. And they’re only good for 4-5 years.
• Advanced, Oxygen-Permeable Polyethylene Tanks are long-lasting, controllable and breathe like a barrel.
• Winemakers can easily and quickly expand capacity and space use. Polyethylene tanks are easy to move, clean and stack. And have low up-front capital cost.
Summary
A combination of strategic planning, modern communication, customer engagement, adaptability to market trends, and new production techniques is required to grow winery revenue.
Wineries can both build strong relationships with their customer base, and create sustainable higher margin revenue by diversifying offerings. At the same time, wineries must work strategically to create additional market pull, and shelf space. This can be created via consistent (short and unique) communication, and community building.
Wineries must look forward to the future buyer profile and engage prospect/buyers via modernized wine clubs, enhanced online presence, and content.
Wine owners and financial managers must also look at methods to reduce OpEx costs, streamline and increase production efficiency, sustainability and margins and revenue.
These methods can help wineries steadily grow in a competitive market.
Author’s Bio
Jonathan Smalley, President and CEO of SmaK Plastics. An expert in the production, fermentation, aging and transport of craft beverage and food production solutions. Over the last 20 years, he successfully directed the engineering and development of successful products for more than 4,000 global wineries, cideries and food processors.
