Napa Valley struggles to escape “time warp”!

“We have to upgrade everything! Get me Facebook and Twitter!” So says renowned Napa winemaker, Mike Grigich, age 87, in a story in today’s NYT dining section. The story elaborates on the difficult times of selling expensive wines from Napa and how wineries are struggling to adopt new sales techniques, including social media.

It’s hard to know from that quote if a presence on Facebook and Twitter is a part or all of Grgich’s social media strategy. But, as we’ve discussed before, social media are no panacea for wineries, especially since they are too often a regurgitation of marketing pabulum. At best, social media are a part of (Napa) wineries’ new efforts to reach out to consumers directly and bypass the distributor tier, which can lead to increased profits for the winery. The NYT story cites a “meager” 10 percent of average winery sales in Napa are direct to consumer, via tasting rooms and mailing lists.

One thing that businesses can do well via social media, particularly since the demographic skews younger, is to alert consumers to deals. Unfortunately, deals are in scarce supply from wineries directly. The story cites the 2006 Stag’s Leap Wine Cellars merlot available at the tasting room for $45 when it is available at Target in the Bay Area for $31.99. Will Stag’s Leap be tweeting about this? Doubtful.

The article alludes to a “curious time warp” with winery tasting room practices and pricing. More evidence of the pricing time warp came last week when a Napa cab from Stephane Derenoncourt launched at $220. While the pricing showed a tin ear to the current economy, the press release contained something unusual that may have been a sign of the times: a plea to write about the new wine.

If Derenoncourt were releasing a $20 Napa cab, that would be worth tweeting.

“Try the Red: Napa Learns to Sell” by Katrina Heron.

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12 Responses to “Napa Valley struggles to escape “time warp”!”

  1. “The story cites the 2006 Stag’s Leap Wine Cellars merlot available at the tasting room for $45 when it is available at Target in the Bay Area for $31.99. Will Stag’s Leap be tweeting about this? Doubtful.”

    See thats the problem, it should be cheaper at the winery and more expensive retail I mean that just makes sense argh

  2. Perhaps it should have read…

    Today on the front page of the New York Times Dining Section ran a headline that read “Try the Red: Napa Learns to Sell.” Now had the headline read something akin to “Napa Hones its Skills in Down Economy,” the stage would have been set for a much more appropriate story. The piece by Katrina Heron goes on to tell about the challenges of selling wine in the current down economy—and it is no secret that there are challenges—and not just in Napa Valley. Wine sales, and nearly every segment of commerce, are struggling world-wide. But to write that Napa vintners are just learning how to sell wine is uninformed.

    Let’s think back to a time before any of our last three or four recessions to 1966 when Robert Mondavi opened his winery with a crazy concept of a tasting room that actually rolled out the red carpet to greet visitors to taste his wine. This concept blossomed locally and has served Napa Valley vintners well and now serves as the model for winery hospitality and direct to consumer sales around the world—as it has for decades. The Napa Valley Vintners trade association founded Free the Grapes, the wine industry’s engine that has helped open wine markets for direct to consumer sales across the country back in the mid-1990s.

    Napa Valley is the undisputed leader in the American wine industry, and this is based on a coalition of small family businesses—95% of wineries in the appellation are family owned. I estimate that nearly half of our wineries are already using social media to engage wine consumers, which speaks to their ability to react to emerging technology while maintaining their direct and personal connections to wine lovers. That direct connection has been a hallmark of the Napa Valley experience and will continue to be today and in the future.

    Terry Hall
    Communications Director

  3. $220/bottle – clever marketing!

  4. I have dropped all my winery wine clubs due to the high price of their wines when the ridiculous shipping costs are added to the cost of one bottle.
    Why can an online retailer ship for less than half the cost than the shipping from the winery? One wine club ships for $32 for 1-3 bottles, a retailer shipping from the same state charged me $18 for 6 bottles!

  5. Right on, california cab lover — shipping costs ARE ridiculous! I bet I’ve spent at least $100 in the last 6 weeks in wine shipping charges alone! For that I could buy one nice bottle here in town. Hmm, now there’s a thought. . . .

    I read the referenced piece in the New York Times earlier today, and laughed out loud when I got to the bit about Mike Grgich saying, “get me Facebook, get me Twitter!” Hilarious.

  6. I totally agree, Weston. That’s how it works here in Italy – if you actually visit a winery they sell their wine onsite cheaper than you can find it in any store. Doesn’t that make sense? A friend recent went to Napa and mentioned that the wine was the same price or more expensive at the winery than in the stores. That makes no sense to me. When it’s in the store, there’s a markup for all the various middlemen. What’s the reason for a higher price when buying direct?

  7. Funny that Heron’s story never once considers the quality of the product itself.

  8. Wirh respect to why a wine may be more expensive at the winery – I think this is how it works in California. As the NYT article says, a winery sells to its distributors for half the winery’s retail price. Distributors sell to retailers and traditionally as the winepasses through these two “tiers” it gets marked up twice and the wine ends up selling at its original retail price. If the retailer or distributor takes a smaller markup then the wine sells for less like it did in the Target example. If a winery tries to sell its wine at the winery for too much of a discount then the distributor will says he’s being undercut and stops selling the wine. It’s a crazy system but it’s locked in by the laws and traditions left over from the ending of prohibition and the fact that each state controls how alcoholic beverages are sold within its borders.

  9. In Europe, when you buy from a cellar door, you generally buy at close to retail price.. here you pay more than most stores.. The club discounts frequently bring the wines down to store prices, then shipping makes them more, unless you pick up..
    The Napa greed carnival must end.. nobody is interested in your “aspiratonal lifestyle choices” anymore folks, and Twitter will never sell much wine.. really folks, get real..
    The American economy has been propped up by bubbles for the last20 years while the illusion of continuing prosperity was palpable. Now the reality of eviscerating the middle class is apparent.. it ain’t coming back.
    So .. a few rich people will be able to afford cult wines,, but the 60 buck stuff.. time to get real about that stuff folks.. that market may never come back.

  10. I meant close to wholesale when you buy at cellar doors inEurope.

  11. Here’s another angle: Infrastructure can’t support the traffic that would be generated by discounting, especially in places such as the Napa Valley, the northern Willamette Valley in Oregon, or Woodinville and Walla Walla in Washington. I may be wrong — anyone here who actually makes these sorts of decisions, chime in — but it seems to me that non-refundable tasting fees and full retail pricing are defensive tactics for those well regarded wineries that get mobbed. It’s been my experience that refundable fees or no fees, discounts to move product, and general friendlyness grow as the geographic concentration of wineries lessens and distance from urban centers increases.

  12. When I first moved to the Bay area, wine tasting was free and you could get a great bottle of wine for $20-$25. The wineries all charge to sample now and I hate to pay for a sample that tastes terrible to me. That same bottle is close to $100 now. Hmmm, my wages as a teacher didn’t increase at the same rate so wine’s off the menu boys! I stopped buying 4 years ago and I loved wine. I live in Napa, pay taxes and pay more for my water then the wineries do. I do not sympathize with the wine glut that happened here nor the greedy and arrogant attitudes I encounter from those people who aren’t sympathetic to the average persons plight right here in the valley. To charge so much off the labor of immigrant workers is shameful.
    As for wine clubs maybe new packaging so it looks more book-like and market it through Amazon. They get great shipping deals.
    Meanwhile cut your locals a deal…


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