Underrated Additional Income Opportunities for Wineries, Tasting Rooms, and Vineyards

With all of the market uncertainty this year, growing a winery or wine business in an ambiguous business environment can be tough. The number one tool businesses have at their disposal in growing their business and preventing collapse is managing cash flow. There are two (well really three, but we will get to that one in a later post…) ways to mange cash flow: Increase Income or Control Expenses. Here we’ll talk about the former, and identify several underutilized strategies and tools to grow gross revenue for a winery, vineyard, tasting room, or wine based business.

Not every strategy here is going to work for every business. Every business has certain assets in its purview that lend themselves to optimizing different strategies. The objective is to identify which strategies your business can implement that complement your current income streams, while also maximize your existing customer base.

Increasing income is simply what it is, increase the amount of gross revenue coming in every month into the business’s income account. This can be expressed in multiple ways such as getting more wine club members or increase the number of sales every day in the tasting room.

Underrated Additional Income Opportunities for Wineries, Tasting Rooms, and Vineyards

Strategy #1: Optimize your Wine Club

The easiest way to generate more revenue is always from your current customers and people coming into the tasting room everyday. If you don’t know your your conversion rate into the club and online, then make sure to check out a previous post on analytics. Sometimes simply asking wine club members if they’d like to add any wines to their shipment when they come in to pick up or by offering a free taste of a new release in their shipment can spark their curiosity about other offerings and create opportunities for them to access special wines.

Additionally, with the right incentives, your wine club offer will attract the wine club member and increase you in-tasting room conversion rate.

Strategy #2: Offer additional products and services in your tasting room

Sometimes businesses can get carried away with this one and have too much product for sale at checkout or in the tasting room, so as a general rule of thumb, if you have more merchandise for sale in your tasting room than wine, you’re probably doing it wrong. That being said, a modest amount of branded merchandise such as hats, shirts, vests, glassware and locally sourced products from some of your partners in the area can give your sales just the right amount of bump to boost revenue by 5-10%.

Always do things that are on brand when looking at merchandise and spend a good amount of time researching the right products. Source products that you believe in and weave that into your story line.

If you have a relationship with local farmers and beekeepers, offer things like locally made honey, jams, olive oil or nuts, if you think your avatar will be supportive of locally sourced products.

A lot of wine tasters are surprised by their wine tasting experience when they taste from proper glassware made from Reidel or Zweissel. Offering branded take home glassware as apart of your tasting experience or to new club members creates an opportunity to raise the value of each of those offerings and generate more revenue.

Strategy #3: Create a Rental House or Add Accommodations to your Vineyard

This strategy can be a little harder to execute but has been done numerous times by big brand wineries that have strong brand presence and wanted to add to their member experience. Take the Justin Vineyards offering of lodging and villas. They have multiple lodging options ranging from hotel rooms to your own villa or chateau on property. This create a wonderful sales funnel where people can come and not only stay on a beautiful property, but then join the wine club, buy wine, and spend additional money on other services on property.

Justin Vineyards Tasting Room and Lodging in Paso Robles, CA. On property is also a Michelin Star restaurant where guests and club members can dine at. From Instagram.

This strategy can be a little harder to pull off and will most likely take more work, but reaping the benefits is the great reward. Not only can you generate additional income on a monthly basis, you can add value to your property, generate a host of tax benefits, and offer more options to your club members to come and visit.

Strategy #4: Offer Premium Tours, Tastings, and Experiences

Building off the last strategy, premium experiences and tours can elevate your brand, create higher margins and profits, and bring in a higher caliber consumer to your tasting experience. This is something that does not take as much work to create, but can immediately generate new offerings to current and new clients.

• Side by side

• Food and Wine

• Library Wines and Verticals

• Estate Tours

Strategy #5: Offer services to other wineries and wine businesses

Are you a winemaker that knows how to work with specific varietals that not a lot of winemakers in your area work with? Do you have additional space on your crushpad or in your tanks this year? Can you make a case of shiners that someone else can sell? Collaboration goes a long way in the wine industry, and being able to help out another brand that is in an earlier business stage than your own can be rewarding. Finding ways to serve other wine businesses in your area will always provide value and it’ll come back to you one way or another.

Can you offer cellar space to other startup wineries in your area?

How to Implement these Income Strategies into your Business

In the end, only some of these strategies and others will be applicable to any given business. You need to assess which ones will best line up with your avatar, and current offerings of tastings and wine club experiences.

Some of these strategies will also require more capital upfront, but hopefully will be worth the investment once your consumers begin selecting your new offerings.

A great way to see if one of these strategies will work before investing a lot of capital or time into training staff is to just run tests to see if people are interested in the new offerings by creating the offering on your website or asking in person tasters if they would like the new experience or merchandise. This is a great way to lower risk and get customer feedback on your new offerings at the same time. Often if you just listen to your customers, they’ll tell you your next great income strategy.

Ready to take the next step for your wine or hospitality brand?

• Connect with Kris on Instagram and Linkedin.

• Listen to the Podcast on Apple iTunes and Spotify.

• Ready to work with Kris on making your Wine Brand profitable? Apply Today

5 Key Analytics for Wineries Seeking Growth this year

After coming off of a flat year last year, a lot of wineries and businesses focused on selling wine will be looking at ways to increase sales in the new year. In line with that goal, I wanted to put together some key metrics I’ve found that really give a snapshot of the business which I’ve used to help diagnose why a winery or wine business is not profitable and not growing.

These metrics are only a snapshot in time and will never truly tell the full picture or directly point to why a winery is not profitable. But by wholistically looking at each of these metrics, you can assess different areas of the business that need to change to improve the business, or you’ll simply be doing the same things over and over again expecting different results, aka the definition of insanity.

After consulting with multiple wineries and wine businesses over the last several years, I’ve also found that the biggest challenge to winery growth is a proactive, engaged, and adaptable business owner/partners or executive team that truly wants to do the work to grow the business.

Simply by taking action and assessing your business on these five metrics, you’re already taking the necessary steps to get your business headed in the right direction this year, so here we go:

5 Key Analytics for Wineries Seeking Growth in 2024

Analytics #1: Monthly Cash Flow

The number one metric to judge the health of a business is monthly cash flow. If you can’t sit down and calculate your monthly cash flow, your business is either too complicated, you don’t have your bookkeeping set up right, or you don’t have clarity on where all of your cash goes every month. Cash is king when growing a business. Its a risk mitigation tool and growth accelerant. Monthly cash flow will tell you if your business if profitable in the long run or not and whether it is a viable business model, or if something needs to change such as increase income or cutting expenses.

Now that we got that out of the way, let’s look at analytics that can predict income side balance sheets.

Analytic #2: Wine Club Growth and Churn Rate

As we analyze our income sheet, the size of the wine club is one of our greatest assets, because it is a subscription that productions predictable, sustainable income on a consistent business. Not every winery or wine business has a wine club or is it the largest piece of the business for all wineries, but for wineries that are focused on growing their direct to consumer sales, it is a great metric.

As you analyze your wine club, two key metrics should stand out to you. How many new members you net every month, meaning taking the number of wine club members you gain in a month and subtracting out the number of wine club members you lose which will give you a net score of (+) or (-) x number of wine club members a month. As you look at this number it should tell you a few things, such as if you are gaining a lot of members every month, but losing nearly the same amount every month, that should tell you your wine club conversion system is great, but there may be something off with customer loyalty or service in your club which is causing people to leave.

The reason why this metric is so great, once we have our churn rate we can calculate out over the next year how many wine club members we expect to have at the start of the next business cycle, allowing us to forecast and budget for the year.

Analytic #3: Wine Club Conversion Rate

Now that we understand the health of our wine club better, let’s look at wine club conversion rate. As its been established for direct to consumer focused wineries that wine club growth is key, the wine club conversion rate both online and in the tasting room is the next key metric.

Wine club conversion rate allows your to analyze why people join and why they don’t join your business’s wine club.

This is a key piece of data because if we can’t get people into the wine club, we won’t grow, and it may point to a larger issue in the business such as an unfriendly employee who annoys customers or untrained staff who simply don’t know how to sell your wine club to patrons.

Analytic #4: Total Monthly Wine Orders and Tastings

Another great metric to watch is Total Monthly wine orders and tastings. This metrics is great for measuring foot traffic and seeing if the number of people coming in every month is actually going up, not down. It is also important to compare alongside the other metrics above, because this number can be misleading and not give you a full picture of things like your wine club or profitability.

Once you know your monthly wine orders, you want to calculate the value of each of those orders, which is next.

Analytic #5: Average Wine Order Value

To calculate your average wine order value, simply divide the total value of gross sales that month by the number of orders. This is should give you a rough number that can tell you the value of a customer that walks into the door every day. This number is important because we want to measure how much wine we are able to sell to each individual customer and know what they are worth to us. It also allows us to watch and monitor our sales process, because is this number starts to go down, then we need to work on sales training with staff or find out why customers are spending less.

Analytics that didn’t make the list:

Marketing Insights and Data

Is marketing important in growing a business? Absolutely. Do vanity metrics like instagram follows and photo likes equate to sales? Absolutely not.

I love marketing, and love working with businesses on their marketing, but in my experience I have found that if a business has a profitability problem, its usually not because of bad marketing or low marketing analytics

There usually is another reason why the business isn’t growing.

Gross Revenue

As they say, “Revenue is Vanity, Profit is Sanity.” Gross revenue is good to watch to see how the business is growing on the income side, but as a business grows its gross revenue, typically expenses also increase to support the new income streams, such as payroll and professional services. Which is why you should look at gross revenue right next to monthly cash flow to make sure you are actually scaling your business and not giving up all of your hard earned wine sales income to random and uneccesary expense lines.

Number of Employees

Have you ever met that business owner that loves to brag about how many employees they have? I think creating jobs for others is one of life’s greatest joys, but if you can’t sustain that payroll, why hire that additional employee in the first place? As Mike Michalowicz states in his accountant-shattering book Profit First, pay yourself first, then take care of all of your expenses. And if you don’t have any money left over to pay payroll, you have a problem, that is probably related to one of the analytics up above.

How to Implement these Analytics into your Business

These analytics are a great guide and way to diagnose your wine business in this year. But they shouldn’t replace sound financial advice from a financial expert or Chief Financial Officer. As you look at these analytics, make sure to ask yourself the biggest question with regards to each of the numbers, “WHY?"

Why is our sales number low? Why is the wine club growing and our monthly cash flow not growing?

Analyzing our business allows us to be strategic and identify potential risks and opportunities to grow our brand and deliver amazing wines to more wine lovers every year.

Ready to take the next step for your wine or hospitality brand?

• Connect with Kris on Instagram and Linkedin.

• Listen to the Podcast on Apple iTunes and Spotify.

• Download Kris’s Wine Brand Power Hour Checklist, A checklist for brands who want to grow their business and generate more traffic to their business, get new club members, and sell more wine.

• Ready to work with Kris on making your Wine Brand profitable? Apply Today

Leveraging Data Analytics: The Key to Elevating Winery Business in California

In the idyllic landscapes of California's wine country, the art of winemaking has flourished for centuries. However, in today's fast-paced and competitive market, wineries need more than just traditional craftsmanship to thrive.

The number one place I see small businesses fail is they don’t use good data to make good decisions. A lot of small business owners have this misconception that “data” is about technology, and social media reach, and having all these algorithms that crunch these huge data sets and spit out models that have no practicality in the real world.

“Old School” business owners believe that data giving up the old way of doing business, which is simply being people oriented.

I think a lot of business owners would be surprised to find how well data lines up with the “right” way of doing business and focusing on people. Data is simply the way to track and capture what is actually going on day to day with your business. The better our data is, the better we can forecast and project what kind of investments we need to make with capital in our business and what the actual ROI should be from that investment.

Identifying what kind of data you need to make the decisions you make in your business is well worth the time and effort investment.

Data analytics has emerged as a game-changer for businesses across industries, and the wine industry is no exception. In this blog post, we will explore how wineries in California can harness the power of data to make better business decisions, elevate their operations, and ultimately craft exceptional wines that captivate the modern consumer.

The Rise of Data Analytics in the Wine Industry

In recent years, the wine industry has witnessed a significant shift towards data-driven decision-making. As technology advances and consumer behaviors evolve, collecting and analyzing data has become imperative for wineries to stay ahead of the curve. Embracing data analytics not only allows wineries to understand their customers better but also enables them to optimize their production processes, identify market trends, and enhance overall business performance.

Collecting Data: The Foundation of Informed Decisions

The journey towards data-driven decision-making begins with effective data collection. Wineries can leverage various sources to gather valuable data, such as customer information from online purchases and wine club memberships, website traffic, social media interactions, and even weather patterns that impact grape cultivation. By consolidating these datasets, wineries can obtain comprehensive insights into their operations and customer preferences.

Unearthing Consumer Trends

Understanding consumer preferences is crucial for wineries seeking to create wines that resonate with their target audience. Data analytics helps identify popular wine styles, preferred price ranges, and emerging consumer trends. By analyzing customer feedback and purchase patterns, wineries can tailor their offerings to align with market demands, enhancing customer satisfaction and loyalty.

Precision in Production

Data-driven insights can revolutionize the winemaking process itself. By analyzing historical data on grape yields, weather conditions, and soil compositions, wineries can optimize planting, harvesting, and irrigation schedules. This precision in production ensures that grapes are cultivated at their peak, resulting in wines that showcase the full potential of their terroir.

Inventory Management and Supply Chain Optimization

Data analytics can also be applied to manage inventory efficiently and streamline the supply chain. By monitoring sales data and demand patterns, wineries can adjust their production volumes to avoid excess inventory or stockouts. Moreover, data-driven supply chain optimization minimizes costs, reduces lead times, and improves overall operational efficiency.

Enhancing Marketing Strategies

Effective marketing plays a pivotal role in establishing a winery's brand identity and expanding its reach. Data analytics empowers wineries to develop personalized marketing campaigns based on customer preferences, demographics, and behavior. This targeted approach leads to higher conversion rates and a more significant return on investment for marketing efforts.

Customer Relationship Management (CRM) with Data

CRM systems integrated with data analytics allow wineries to build stronger, long-lasting relationships with their customers. By tracking customer interactions, purchase history, and engagement levels, wineries can provide personalized experiences and targeted offers, fostering customer loyalty and advocacy.

Predictive Analytics for Business Forecasting

Predictive analytics helps wineries anticipate market trends, demand fluctuations, and even potential challenges. By leveraging historical data and external factors, wineries can create accurate sales forecasts and plan production and distribution accordingly, optimizing resource allocation and mitigating risks.

Competitive Intelligence

Staying ahead in the wine industry requires an understanding of competitors and market dynamics. Data analytics enables wineries to monitor their rivals' performance, pricing strategies, and marketing efforts. Armed with these insights, wineries can identify gaps in the market, capitalize on opportunities, and make informed strategic decisions.

Ensuring Data Security and Privacy

While harnessing the power of data, wineries must prioritize data security and customer privacy. Implementing robust data security measures and complying with relevant data protection regulations is vital to maintaining consumer trust and safeguarding sensitive information.

Concluding Thoughts on Data

In conclusion, data analytics has transformed the way wineries operate and make decisions. You’ll never be able to get a perfect model, as they say there are no perfect models, but all models are useful. Having good data allows for conversations about revenue, financial projections, and risk so that business owners can make better decisions around new product lines, hiring and firing, and capital expenditures. Data can be the fancy python setup, scraping every social media post, it could also be a simple pivot chart in excel tracking number of customers who walk through the door by day of the week. Data empowers wineries to craft exceptional wines that resonate with their audience. As the wine industry continues to evolve, the integration of data analytics will remain a cornerstone of success for wineries in California, shaping a prosperous and thriving future for the industry. Cheers to data-driven excellence!

Ready to take the next step for your wine or hospitality brand?

• Connect with Kris on Instagram and Linkedin.

• Listen to the Podcast on Apple iTunes and Spotify.

• Download Kris’s Wine Brand Power Hour Checklist, A checklist for brands who want to grow their business and generate more traffic to their business, get new club members, and sell more wine.

• Ready to work with Kris on making your Wine Brand profitable? Apply Today