A rising tide raises all boats: The wine tourism industry gets a wake up call from Michael Mondavi
Last month I went to the first Wine Tourism Conference – a major contrast from what I’m usually doing mid November: learning from the travel industry’s heavy hitters and the hottest startups at the PhoCusWright Conference. For those of you that know PCW, the WTC couldn’t be more opposite. Thank goodness the wine tourism industry has banded together to help accelerate this potentially huge industry.
In the U.S., wine tourism is driven by having to sell wine in the winery and many wineries are dependent on wine tourism for survival. About half of their direct to consumer sales actually come from the tasting room – hence the importance of driving visitors to wine regions and into tasting rooms.
In terms of understanding how to tap into potential travelers and wine buyers online, the marketing mindset of the wine tourism industry is about where the travel industry was 10 years ago. The industry is made up of wineries and tourism boards that have been generally slower to adapt and just not as exposed to online tech and where the travel industry as a whole is going. But they both have big fish who are highly successful and continue to lead the industry (Mondavi, etc). The difference in the wine world is that although wineries are dependent on tasting room sales, a great proportion of them wineries are, what I’d call “marketing in a box” and are not able to see that collaboration will benefit them more than working in isolation.
Michael Mondavi
1. A rising tide raises all boats. When Michael Mondavi speaks, the industry listens. His message came through loud and clear: “Promote Napa first, winery brands second”. Obviously this message can be applied to wine from any region, but with over 400 wineries in Napa alone, the expense involved in producing wine, and the reliance on tasting room sales, means wine tourism is something every winery needs to be taking seriously.
Success in this business is dependent on these small brands seeing themselves as part of a bigger picture. So what does this big picture look like? Every year in the U.S. wine tourism generates $3B of tourism expenditure * (hotels, tours, rental cars, etc.). When you look at it this way, tourism actually generates more revenue for regions than the revenue wineries generate from tasting room sales. On average people visit 2-3 wineries on a trip* and marketing regions or travel packages and compelling winery experiences can help everyone. Looking at the effect of wine tourism in Napa alone, wineries had 8.5 million visits in 2007, generated $714 million in expenditures, 10,217 tourism related jobs, and $250M in wages. Big business indeed.
“The world doesn’t need another winery. Give yourself a reason to be.” – Michael Mondavi
2. Differentiation is key. “Wineries need to find ways to differentiate themselves” – Mondavi couldn’t have spelled it out more clearly. It’s true, finding a point of difference, something unique about the brand and presenting it as part of the visitor experience is the way to differentiate. Wineries that understand this have successfully created dedicated spaces for wine and taken time to really understand the visitor experience and how it speaks to their brands: “Super Cave” rooms, the additional of food, the addition of art, music, all to create a more specialized visitor experiences. More data discussed by Mondavi:
- Napa is 4% of the CA wine industry (by volume)
- 80% of 400 wineries in Napa are under 10,000 cases
- 95% of wineries in Napa are family owned
- $42B to economy nationally
- Ripple effects are way beyond individual vineyards and wineries
3. “Winery tourism is brand building”. People who visit wineries are brand ambassadors. People buy because of a personal connection, an experience or memory of a place they’ve been. There was a lot of discussion about measuring the ROI of wine tourism and the effect of the tasting room environment on the amount sold. Even though wineries differ on the level of sophistication in their measurement, everyone seemed to understand that winery tourism needs to be part of their wine marketing strategies.
4. The potential for direct to consumer wine sales is huge. It’s easy to forget that that wine sold direct to the consumer is only 3% of US sales. This breaks down into 2% sold in tasting rooms, and 1% of all US wine is shipped/sold direct. This presents a huge opportunity for change. In the National Economic Study from 2007, national winery D to C sales was estimated at $1.75B out of $23.8B total sales of US wine. And, even more staggering, 88.5% US adults have never bought wine directly from the winery (online or in a tasting room). Even though a very tiny amount of people have ever been to a tasting room, the ones that do visit have a huge effect.
5. Popular regions for wine production do not necessarily mirror wine tourism. There are 27.3 million visits to wineries across 50 states. I was really surprised to learn that New York’s Finger Lakes gets as much as 5 million visits a year, compared to the Napa Valley, with about 8.5 million. We also heard about the significant wine tourism focus from states such as MO, NC, OR, WA, and B.C. in Canada.
6. The demo doesn’t get much better: A heads up for luxury marketers. The winery visitor is about the highest quality consumer demographic you can have: $75-100K+ HHI, empty nesters, 45+, well educated, managerial/professional, entrepreneurs, children <18 not at home, with men being termed as “trophy drinkers”. They tend reside in wealthy suburban, ex-urban areas and also retirement resorts (ie Bend, OR, Sun Valley, Jackson Hole) & college towns (highly educated). Top interests of winery visitors include skiing, frequent fliers, tennis, charities, foreign travelers, cultural events.
“Selling wine is about communicating the place it comes from.” Paul Wagner, BALZAC
7. The importance of creating memorable experiences. Paul Wagner’s lively presentation hit home, and speaks to exactly what I’m working on at Lot18. Memorable experiences are ultimately what will build brands that will last forever. Creating opportunities to build relationships and create experiences for customers are they keys to ensuring future sales and loyalty.
8. Tapping into major events. Napa Valley was announced as the “official wine region” of the 2013 America’s Cup – just one example of the many bigger events that wineries can tap into. The America’s Cup alone is expected to drive 5 million visitors into San Francisco. Understanding how to be part of larger initiatives is better than struggling along to gain share of voice.
9. You want people to sign up for your wine club so why don’t you tell them about it? A staggering 75% of wineries are not presenting the wine club opportunity to tasting room visitors. I am constantly talking to wineries who have building their wine clubs as a top priority so this came as a big of a surprise.
10. Non-wine is important in “wine country experiences”. For travel packages and itineraries a well balanced experience is more appealing to travelers. Interests that have come through in research studies include skiing, tennis, adventure, charities, educational, and cultural events.
Interesting facts from Ship Compliant:
- 2% of wine is sold in tasting rooms, 1% of all US wine is shipped/sold direct, D to C is only 3% of US sales
- 98% of US wineries produce less than 30K gallons/12,000 cases
- 2% of US wineries produce 98% of wine (mainly grocery store wine)
- 49%-51% of wine sold direct is sold in tasting room
Sources:
- Barbara Insel – Stonebridge Research Group
- National Economic Impact of Wine study 2005-7
- Nielsen Study 2007 – Winery Tourism National Survey
- Paul Wagner from BALZAC
- TripAdvisor
- Michael Mondavi
- Ship Compliant
The other biggest opportunity in the wine business
Marketing tips for wineries in the hospitality business
The US Travel Association estimates that 27 million* Americans travel each year for the purposes of culinary or wine-related tourism. This is a big number, and it’s certainly big enough for many wineries to realize the opportunity and decide whether some fine-tuning is needed in their marketing strategies.
With the inaugural Wine Tourism Conference (#WineTourismConf) underway in Napa this week, the leaders of this ever-growing and substantial niche of the travel industry, and still underrated subset of the wine industry, are coming together for the first time.
At Lot18 we’ve just completed two successful hospitality marketing webinars where we had almost 40 wineries participate. Since then, I’ve had so many people reach out to me, from winery owners to tasting room staff for additional sessions. Wine tourism has never been in the limelight more than it is right now.
If you’re not involved in the wine business, you probably think the wineries are doing okay with this. The truth is that most wineries in America are not big names that have big marketing budgets. There are thousands of wineries with fabulous wines and/or winery experiences but they don’t have promotional budgets. Some of them focus their marketing activity solely on their wines, and by default this attracts some visitors, but many of them are looking at new ways of approach this – and they should. The most successful wineries see hospitality marketing this as a long-term approach to building their brands, which includes selling wine and getting people to visit.
Most of the wineries I talk to are small family-run businesses who are not looking to be tourism destinations. They just want the right people. One of the biggest reasons that wine tourism in this country hasn’t developed to its full potential is because there is a gap in knowledge. When it comes to visiting wine country, many travelers don’t know what they don’t know and go to the wineries they have heard of, or whatever is near the hotel. And, there are a lot of wineries that don’t know or haven’t thought about marketing strategies to reach today’s traveler.
I was really thrilled that so many wineries attended the our webinars and I’ve had a lot of requests since, so I thought I’d post some of what we covered here. This is the first of five posts geared to wineries. Most of this can be applied to other tourism businesses, and marketing in general.
Who do you want walking through your tasting room door?
Now, if you’re not in the wine business, here are the basics: Wineries want to: 1. Reach a large audience of actual wine buyers, 2. Introduce wine buyers to their brands, 3. Get people into the tasting room, 4. Turn them into lifetime customers.
There is a big difference between the connection a consumer feels about your product when they see it on the shelves, versus coming to the place it was made – and meeting the people who make it. In the case of many wineries that have a long-term vision for their businesses, appealing to an audience of travelers is critical to building a long-lasting, high value brand.
Tips:
- Many travelers are “Destination Collectors”: Luxury travelers particularly may have either already visited the region, or may be considering visiting, but need a compelling reason. What will it take to get them to return to your region, then your winery? Developing an experience that is unmatched and highlights what is unique and special about your winery (and wine brand) will get this on their radar.
- Travel marketers will tell you that travel decisions tend to be heavily influenced by women (usually about 70%) and the destinations they visit are heavily influenced by family and friends (81%). Think about it, how often have you heard about a friend’s great trip then planned your own trip to that place?
- Put yourself in the shoes of someone planning a trip to wine country: Where would you start? What are the touch-points online and offline, and in-destination? What are their expectations of a tasting room visit? You really need to walk through this process and then evaluate how your winery does in each of these consumer touch points.
Stay tuned for more tips & updates from the Wine Tourism Conference. Please post your feedback below.
* US Travel Association 2007 Survey
Don’t forget to remind people to like you
Wine IS Social
I often visit winery tasting rooms and I always love to see wineries, or any location for that matter, remind guests or customers to tell their friends. People do need to be reminded to check in sometimes, and they will check in or post information about your business. Nielsen reports that 70% of people turn to friends and family for advice when making purchasing decisions. It doesn’t have to cost a lot of money to be part of this conversation. Simple things like store front signs and stickers can really help remind people to tell their friends – all of this helps keep your brand top of mind and helps you attract new customers.
I was thrilled to see this at Kunde Family Estate in Sonoma when I visited, and again at Bodegas Torre de Ona in Rioja, Spain. All over the world brands are embracing social media to help tell their story. Wine is social and so is travel, and food, dining…basically any kind of location can incorporate simple marketing tactics like this to build word of mouth. I encourage everyone to think about the consumer touch points of their business and how they can make it easy for their customers to tell their story.
Is Rioja ready for wine tourism?
After visiting the Rioja wine region in Spain this week, and as a follow up to my previous post about whether or not the wine industry is ready for tourism, there appears to be a number of challenges this region faces, and perhaps some things other regions can learn from.
Rioja is an extremely impressive wine region to visit. I can’t think of another region that offers this kind of extreme contrast in winery experiences. From the hundreds of traditional wineries with their underground tunnels and caves, to the new, architecturally-designed modern wineries, Rioja is full of surprises and is visually stunning. There is so much old world history here, as you’d expect, yet there are many wineries with technically very sophisticated, and very modern production facilities.
The restaurant at Bodegas Baigorri
Here’s the challenge:
• Most wineries are appointment only: Rioja spans 3 different regions and consists of about 1,000 wineries. I visited Rioja Alta, the region known for the best quality wines. There are about 400 vineyards in this region. About 99% of the wineries are appointment only. Most of them are either set up for small groups or not set up for tourists at all. Visitors that come with expectations from other wine regions may be disappointed. It’s not like Napa, for example, and you can’t just drive to wineries and do tastings. The only one you really don’t need an appointment for is Marques de Riscal. It is one of the biggest wineries and they do several tours a day in different languages. But, if this was your only experience of a winery in Rioja it would only tell you one side of the story of this diverse region.
• Two other issues: language and language. If wineries are open to visitors, staff may or may not speak English. If they speak English, it may not be easy to understand.
• Popular producers may not offer the best visitor experiences. Wineries consumers may have heard of (i.e: wine that is imported into the US) either, may not be open to the public, may not offer a good visitor experience, and/or may not make good wine. At this point the consumer would need to do a lot of research to find the right wineries to visit.
• Iconic wineries may not offer the best visitor experiences. Wineries consumers may have seen in magazines and guidebooks because they were designed by a famous architect, may not necessarily offer great winery experiences or maybe they do not make high quality wine. In some cases, these were not designed with the winemaking process in mind and are more of statement by the architect. It does not necessarily mean they do not make good wine, it simply means that other wineries may offer a better experience, perhaps top quality wine is not the focus. The same goes for hotels, an iconic lobby may not mean the hotel rooms/staff/restaurant will be fantastic. Sometimes these architecturally designed properties set consumer expectations so high that it makes it very hard to live up to them. But, understandably, the reason for doing this is to attract attention.
Bodegas Ysos, Rioja, designed by Santiago Calatrava
The hotel at Marques de Riscal designed by Frank Gehry
I visited Bodegas Baigorri and it’s definitely one of the most impressive wineries I’ve ever seen. The winery is designed with the winemaking process in mind. It has a gravity-based production facility with state of the art equipment. There are about 7 levels that hug the side of a mountain so all of this is done underground. All you see from the outside is the top lobby area. They hare a fabulous restaurant that offers 5-course tasting menu with a spectacular view of the valley.
Production facilities at Bodegas Baigorri
Bodegas Torre de Oña was also fantastic. It has a beautiful tasting room, great information and excellent wines. It combines old building style with elements of modern design. I think what makes both of these experiences so great was my fabulous wine expert/guide Jenny and the tasting room manager Paola, whose English was perfect and very easy to understand. I got so much out of my visit with a guide than I ever could have on my own.
So where does the opportunity lie for wine tourism?
• For small group/wine tour companies: There are fabulous tasting rooms and incredible experiences, but you absolutely have to know where to go. I think the opportunity for Rioja lies in small group tours with a multi-lingual guide that is also a wine expert. I think these small companies need to let wine lovers know who they are and how easy an amazing wine experience can be. Small group tours are also the way to go to satisfy wine lovers. The last thing people want is to go through a factory with a lot of people with a guide reading a script of how wine is made.
• For wineries: Wineries that want to attract visitors should make it easy for people to book appointments on their websites and give them a way to signify which language they understand. Websites need to offer language options for all their content.
Rioja is ready for wine tourism, but it has to be done the right way. How does this compare with your experience in other wine regions? I look forward to hearing your feedback.
The guest house at Bodegas Torre de Oña
Hot on the tail of a $40 million round of funding last week, Bloomspot have now started a new email called “Bloomspot Travel”. Even I am having a hard time keeping up with who is doing what in the private sales and group buying space in this category. Here is a refresher on some of the happenings we’ve seen over the past few months:
Groupon and Expedia create Groupon Getaways
Ideeli & Voyage Prive team up to provide even more content on Ideeli, and Ideeli Travel is born
Off & Away goes private
Bloomspot adds travel email
BuyWithMe adds “Destinations” travel email
Jetsetter brings back the travel agent – adds Travel Planning Service
Groupon knows what it’s doing. It’s no surprise they partnered with Expedia to create Groupon Getaways. I do wonder though, how the industry is faring with this. The hotels featured in these offers are surprisingly good for the consumer, and the hotels involved may fill rooms, but I also wonder if they thought about maintaining their brand’s image, and attracting the right kind of guests.
Take a look at this example of Jefferson Hotel, a Relais & Chateaux property, now seen on Groupon. This is a luxury property and even I was surprised to see this. As we know, high end hotels are reluctant to show discounting like this. Relais & Chateaux certainly pride themselves on maintaining a luxury brand. What I don’t know is whether they realized their relationship with Expedia would result in this kind of “extra exposure”. I am not saying Groupon Getaways is not a good marketing platform – for certain types of hotels it is.
Before you do your next Groupon or group buying site promotion here are some tips:
1. Know which sites your offer will appear on beyond the site you are promoting the offer with. For example, this Groupon is coming through Expedia. Did the Jefferson just work with Expedia and do they realize they are a Groupon? Perhaps it is just a way to syndicate content and the hotels are not involved in the decision. Make sure you know where your brand is going to end up. Know which sites have partnerships with others. Will your offer be syndicated or end up on other sites?
2. Know your target audience and make sure it is aligned with the site’s demographics.
3. Educate yourself on all the options. There are other group buying or flash sites that may be a better fit for your brand.
4. What is your objective? Do you want to quickly fill rooms or attract high quality guests? It is a quality vs quantity play.
5. Test small promotions on sites that fit what you want to do. All group buying sites let you cap the amount of room nights. When you find something you are happy with then offer more inventory. Do not try to go with a site that can offer mass volume because they have a lot of members when you don’t know how it is likely to perform or what quality it will create.
6. Think about your brand alignment. Does being listed on the site make my brand look better or not? The last thing you want to do is work with a site that will diminish the years of work that has gone into creating value of your brand in the consumer’s mind.
7. Think about your drive markets and which are the top cities guests are already coming from. Ask the site to give you a breakdown of subscribers by geography. I don’t know why Groupon is showing it’s Las Vegas audience a Washington D.C. hotel.
Travel industry friends, speak up on this topic. What do you think?
My back story: Creating the life you want
The highest compliment you can get is for someone to say that you inspired them to make a change and take the steps to create the life they want. Mandy Gresh and I worked together for 4 years. She was one of the people I interviewed with in 2005, and ironically she was the one I resigned to in 2010 when I decided to follow my next chapter. This year she too took the plunge and left her job to create the life she wants.
Every week Mandy features people who have inspired her and who are creating the lives they want on her blog. This week she asked me. Check out Mandy’s blog, My Six Months Off, to see the other people she has featured. I’m always fascinated by stories of what others have done to create the life they want. I’m so glad I inspired Mandy and honored to be part of this group. If you’re thinking about taking the plunge yourself, I hope I can inspire you too.
As told to Mandy Gresh for 5Q Friday for her blog, My Six Months Off
5Q Friday with Mindy Joyce
1.) Who are you?
I’m a lot of things; a marketer, idea maven, entrepreneur. I also love to travel and learn about wine. I’m definitely a risk taker. I was born in New Zealand and moved to the US when I was 21. Now 35, I’ve lived in Los Angeles, New York and now across the Hudson in Jersey City. My life during the week is in Manhattan, and I’m a Jersey girl most nights and on the weekends.
2.) What do you do/what’s your business?
First and foremost I’m an entrepreneur and like to collaborate with others to create meaningful businesses. In 2010, I created my own company, Sugarfly Marketing because I saw a need for a strategic approach to marketing using social media and PR. A lot of brands still can’t figure out how to interact with their customers through social platforms, or don’t have the resources internally, so Sugarfly was born.
Anyone who knows me will tell you I love wine, not just drinking the stuff, but can actually tell you a few things about it. And, I’ve also had a ton of years in or around the travel industry. About six weeks ago I was approached about an opportunity at a private sale site for wine called Lot18. The job was to create and build a business segment called “Experiences” (travel and winery experiences) for a community of wine and food lovers. If the stars would ever align in my career, this was it.
Now, I get the best of both worlds.
3.) Where do you do it?
My work life is based in New York. I’m also a student at the International Wine Center in New York where I’m studying for my Diploma of Wine & Spirits.
4.) When did you decide to take the plunge and “create the life you want”?
One of the toughest things to do in life (but of course all entrepreneurs go through this) is to say goodbye to a nice paycheck. I left my job in 2010 after a lot of hard thinking and finally came to the conclusion that 1. If I was ever going to have my own company this was the time; 2. I have nothing to lose/I’m still employable if this doesn’t work out; and 3. (my mantra) No regrets.
So, I resigned from my job on a freezing New York day in January and started wine school the next day. I did not have enough savings (stupid me) to fund my marketing company immediately, so I sold health and life insurance for a few months to beef up the bank account. Within 3 months I was in Jamaica as Sugarfly, and another month later I fell into another great client, the group buying site, BuyWithMe, followed by several other clients. My one piece of advice here is to really know what you are truly passionate about and be prepared to do whatever it takes.
5.) Why do you love it?
Unless you’ve had your own business this is hard to describe. It’s rewarding, it’s invigorating, it challenges you in so many more ways that a regular job ever could. I think I learned more about myself and to trust my instincts in the first year of business, than I ever have before. One of my goals was to work with people I truly respect and enjoy being around. This has happened time and time again. I just want to pinch myself when I get to meet the incredible people I do. The feeling of freedom to create your own life is probably the biggest reason to do it.
Wine tourism is increasingly being sought out by travelers. But, is the wine industry ready?
When you combine tourism with wine, what do you get? Well, it’s called “wine tourism”, “vinotourism” or “oenotourism”. It’s an opportunity for both the tourism and wine industries to connect. For this to happen, much of the wine industry may need to think about their businesses differently, as not only producers of wine but how they can enhance relationships with new and existing customers by delivering on great wine experiences.
It all starts with the consumer
Consumers these days are savvy and they want to know more about the wine they are buying that what is written on the label. Wine, is one of those purchases that tells a story, every bottle comes from somewhere and is unique to the region and place it was made. In the case of wine, consumers want to know where the wine comes from, the terroir or something about the producer.
There is nothing romantic or interesting about picking a wine from supermarket shelves – but, if that’s where the consumer wants to buy it then the wine industry should be thinking about how they can differentiate themselves by marketing the tourism aspects of their businesses and encouraging people to visit. Once they visit they will be a lifetime buyer of their wine.
So let’s take a look at the wine tourism industry:
At the global level, wine tourism is growing and is considered to be a driver for the economic and social development of many rural areas. This is a big deal. What other industry is fostering the economies in many of these small towns? It seems like an excellent opportunity for small communities to benefit from tourism dollars.
If we look at the US alone, the U.S. Travel Association estimates that 17%, or 27.3 million travelers, have engaged in “culinary or wine-related activities while traveling.” It is also good news when you factor in what they spend on travel (hotels, car rentals etc) as well as the estimated $3 billion they spend while they are in the region on wine and other items.*
In California, almost 21 million travelers visited wine regions in 2008, and Napa Valley alone received 5 million of them. What’s even more interesting is the money they spend and how the economy as a whole benefits. Napa generates over $1 billion dollars each year through wine tourism.** The potential for this to grow is strong: California’s tourism industry as a whole generates $95.1 billion per year.
Let’s look at the global situation. Last month, Great Wine Capitals Network recently unveiled the results of their global study at Vinexpo. This network represents 454 vineyards in 9 different countries and could be used as an indicator of the profile of the global wine tourism market.
Some interesting takeaways (granted, this is just an indicator as it is a survey of specific regions in 9 countries):
• The local/domestic tourism market is huge and equates to about 40% of wine tourists
• It’s still largely male dominated. Only one third of wine tourists are female.
• 75% are over 36 years old
• They travel in the best times of year: 70% of tourists come in summer, 15.3% in autumn (attracted by the wine harvest). This indicates that they may be less influenced by off season rates and more likely to spend to be there in peak season.
• People spend more in Italy and Napa: Average spend in Florence, Italy is €141 & Napa Valley, California at €131. Bordeaux was lower at €52.
So what are vineyards offering tourists?
83% offered a tasting, 75% offered a vineyard tour or a tour related to wine production, 40% offered a pairing wine with food or similar, 29% offered accommodation ( e.g. chambres d’hotes or gite).
Wineries are benefiting from tourism by selling more wine:
32% of total volume was sold by the winegrower on the premises
18% of local wine is sold in bars & restaurants, 16.8% at independent wine retailers (cavistes), 16% in supermarkets and 4.5% via online sales.
So on the winery side, for those not incorporating a tourism experience into their business, they should be. Packaging wine tastings and tours add value to vineyard visits and are what consumers want, particularly international tourists. This all benefits the winery by increasing the number of sales at the premises and increasing the average spend per visit.
The world’s wine-producing countries are taking this segment very seriously. The South African tourism industry sees the strongest growth and highest profitability in the sector of wine tourism. In 2009, wine tourism contributed €440 million to total tourist income in South Africa.*** In New Zealand, 37% of international tourists participate in wine tourism and spend more than other international travelers ($3,543 NZD compared to an average spend of $2,710 NZD). Malbec’s worldwide success has led to an increase in wine tourism in Argentina. Over 500,000 tourists went through Mendoza wineries, an increase of 68%, compared with the same period in 2009 and a 10.5% more than the national average.
Wine tourism is definitely on the rise. Wineries and vineyards need to consider what they are offering as the tourism aspect of their business and be savvy about marketing to the wine traveler. For many, this is an untapped business, but surely will help them ultimately drive more wine sales and generate lifetime customers. Regions and marketing agencies should be actively seeking out ways to raise awareness for their wine tourism infrastructure and engage with wine and food enthusiasts. This savvy audience spends more and is more interested in coming to rural areas to seek out unique and authentic wine experiences.
If you have any comments I’d love to hear them. Please post below.
Sources: * US Travel Association 2007 data, ** The Vine Route, ***Vitisphère – 20 April 2011
A year or so ago noone knew who this guy was. How did a 14 year old from a small town in Canada become a massive global brand in only a few years? I finally gave in a few weeks ago and watched his movie, Never Say Never. I have to say, I was impressed.
Then I got to thinking about the similarities between building a celebrity brand and building a startup. They both start from nowhere and there are a ton of challenges to face. There will always be people who say it can’t be done and it will never work. The truth is this stuff doesn’t happen overnight and every company that is successful has had to dig in and make it happen for themselves. There are a few things that Bieber did that if startups were doing they would see a lot more success.
Even at 14 years old, Bieber knew that uploading videos of his songs to YouTube was a way to get them into the outside world, to build a fanbase, and get discovered. Fast forward two years, and now the 16-year old has since received over 15 awards for his music, released 13 singles, been nominated for a Best New Artist Grammy Award and performed in Madison Square Garden. His videos now have over 1.7 Billion views on YouTube. He has 30 million fans on Facebook (and growing by 70,000 fans a day), and 10.5 million followers on Twitter.
Sure, it helps to have Usher on your side, and you might say that Bieber is an exaggerated case study but the messages are clear; not only this a story about talent (or in the case of a startup, a great idea), but it is about the power of social media, pure hard work, an unbelievable will to win and a ‘do whatever it takes’ attitude.
Lessons that can be applied to startups:
• Your audience dictates your success, not other people. Once you build a strong audience it becomes impossible for industry influencers to ignore you.
• Heavy reliance on social media. YouTube, Twitter and Facebook are all tools to build your fanbase and allows you to build a 1:1 relationship with each fan. Done well, this will be the most important marketing tactic you have.
• Be a real brand. Be authentic, show your ups and downs, give people the inside scoop to develop a deeper relationship with your brand. This is a relationship and you need to communicate. Even in the tough times you can build character and people will love you for it.
• Don’t just be an online brand. People need to see you in other places. They will react to the opportunity to have a deeper relationship with your brand. (i.e. Bieber’s mall appearances)
• Caring and behind honest. From responding to tweets, to giving fans surprise tickets and seat upgrades, Bieber showed us how to build buzz. What might seem like small gestures that are so easy to do, these meant a lot to fans and ended up getting magnified through social media.
• Get a great team around you that really cares and shares your vision. This is one of the main keys to Bieber’s success.
• Start by cultivating a small, loyal fanbase and using them to tell your story. The quality of your audience/fans is way more important than how many you have. Know your audience and be targeted. The quantity will come if you do this right. (Bieber is completely focused on the teenage girl segment and understands what they want)
• Take advantage of every PR opportunity. No PR opportunity is too small. To combat the disbelievers and radio DJs that refused to play his music, Bieber was on the road all the time, performing at radio morning shows, event in the smallest of towns….and of course, tweeting about everything you’re doing really helps. The city by city, small town PR approach actually does work.
• Set a big goal and aim for the top. An idea without goals or plan is just a dream. You need to set big goals and work towards them. (Bieber’s goal was to sell out Madison Square Garden, which he did in 22 minutes)
• An intense will to win. Be prepared to work 24/7..even when you’re sick.
• Align yourself with other superstar brands
• Attitude that anything is possible: Never say never
In the last few years, technology has changed the way America buys things. Yesterday’s New York Times article about Groupon’s success, Funny or Die: Groupon’s Fate Hinges on Words, once again highlights how tech companies are changing the way America buys. In only a few years, Google, Facebook, Groupon, Gilt Groupe and thousands of clones have transformed how people shop, and how businesses and brands sell products and services.
One industry that many of you know is close to my heart, is wine e-commerce. This is still very much an under developed space in the tech world, and if done right, is a gold mine of opportunity. But, why hasn’t someone really nailed it yet?
The size of the market is huge. The opportunity for wine e-commerce is estimated at between $30 Billion to $40 Billion in the US. This makes it larger than the music industry, or even larger than Hollywood’s entertainment industry, if you look at it on a global scale. In addition to pure wine sales, we can also look at sub-categories like Vinotourism. This is estimated to be a $5B business – again with no dominant players.
But despite these numbers, wine e-commerce is also known as a VC graveyard. It seems like a no brainer investment, but the industry is complicated and riddled with legal issues. There are so many companies that have tried without success. Alcohol is probably one, if not the most highly regulated products to sell in the US, and even makes the travel industry seem so easy. If we look at the most dominant players in US wine sales, Costco is at the top of the list, with 3% of the market and retail wine sales of $1.4B a year. It is interesting to see where America currently buys wine. The other interesting point here is that wineries that do have licences to direct ship to consumers in certain states, do not necessarily understand how to market themselves online and here comes the challenge for wine sites, especially flash sales sites. Just like the mom and pop merchants that Groupon has been able to educate on why they should embrace the group buying model, wineries are no different. There is still a disconnect with many wineries on how to reach today’s consumer and create demand for their businesses, hence there is an education challenge for many wine sites.
From a marketing perspective, the wine consumer is divided into three parts; the Wine Spectator crowd, a small part of the market but highly influential; the “two-buck chuck” crowd who don’t care so much what they drink as long as it’s cheap; and then everyone else. Everyone else is where the opportunity lies. There are 25 million people in the US that enjoy wine on a regular basis but don’t know enough about it. Although wine is not their primary passion, they will spend between $8-$80 per bottle. With a consumer that is becoming accustomed to online purchasing, flash sales and coupons it is certainly seems like a hot space to watch.
It’s not quite harvest time yet in the wine e-commerce business, but things are certainly starting to ripen. Just take a look at these players:
Flash sales sites to watch:
Lot18 – Recently closed a $10 million Series B round making total investment over $13 million. Investors include New Enterprise Associates (Groupon, CareerBuilder, Diapers.com) and FirstMark Capital (StubHub, TheStreet.com).
Invino – Formerly known as WineryInsider, rebranded in November 2010 as Invino
Gilt Groupe – although not a wine specialist, they have been showcasing opportunities for wine. With the recent launch of Gilt Taste this could be one to watch.
Cinderella Wine – Gary Vaynerchuk was quick to start this site after the huge success of Wine Library and his daily video.
Online retailers
Wine.com Over $40 million per year in wine sales
Wine Library – By 2008 Gary Vaynerchuk raised annual revenue in wine sales from $4 million to $60 million (and also launched flash site, Cinderella Wine)
Vinfolio - Sought bankruptcy protection in Jan 2010 and by May had landed an investment from Steve Case’s Revolution. Revolution also invested in LivingSocial and ZipCar.
Mindy Joyce
