I was recently invited to put together a roadshow for Wine Tasmania presenting some ideas around ‘diversifying the offer and adding value’. Or in plain speak, how to add paid tastings and experiences to your cellar door to increase revenue and profit.
This is an area I have long been focused on, as Australia slowly shifts away from free tastings and explores opportunities for diversification. The latest report states about 30% of our cellar doors now offer a paid experience, contrasted with about 70% in the USA. Our visitors have it so good!
With plentiful resources, it’s not surprising that the bigger producers are leading the change; being able to invest in extra labour, for example, is a luxury. But for the average small business, resources are limited and so it’s often more a case of trying something small and assessing the outcome. So, if you’re currently offering free tastings and are considering changing, there are some big factors to consider:
Make sure you have the fundamentals under control first // As a training provider, it is my imperative to begin with this. Can your business implement change in general? Are your staff engaged in their work? Are they delivering exceptional service to every customer? Are you selling enough wine? Is your wine club growing? Is your POS working well? If you try to implement more complex offerings to your customers without being able to carry out the base line functions, it will not only distract from improvement, but any new initiatives will falter.
You must invest in training // If you’re asking more from your staff, you absolutely must offer more training. There is an article here on What a good training program looks like, and How to teach your staff about wine. Essentially, good training = good business: there is no way around it.
Try to start with a clear objective // This is all about the ‘why’. An objective should place parameters around your options. For some, the objective is reducing visitation, where a tasting fee can help to dissuade visitors who are there for free wine and entertainment. For some, the objective is to cover the cost of the wine used – so a small (non-reimbursable) tasting fee is appropriate. For some, the objective is to appeal to high status/high involvement visitors – so the offer is positioned as such.
But our objective is more profit // Of course! This is key for all operations. As an objective though, ‘increasing profit’ is insufficient. It is a more sustainable approach to consider your customers (and potential customers) first, and develop initiatives to appeal, that are manageable to implement. The profit is derived by a) being able to sell the offer and b) ensuring that the offer is properly costed.
What can you sell? There are two major factors to consider here: a) business capability and b) your customers. Where they intersect should start to highlight your options. Consider partnerships with local businesses and tours, tasting flights of special wines, masterclasses and guided tastings from key wine leaders, walks and tours around the cellar or vineyard, VIP access to special sectioned off areas, matched degustation dining (plus mini ‘tapas’ options), build-your-own picnic options, gift concierge, packages for corporate clients etc. Do your research, a lot of brainstorming and be brave – the worst thing that can happen is that it didn’t perform to expectation. Better to know than still be thinking about it.
Hybrid offers are a great starting point // Particularly if you have some products over $50-$60 per bottle, adding a tasting fee to this ‘reserve’ range can be really effective alongside a free option. The benefits here are obvious – low set-up cost, wide appeal, low risk of dissatisfaction, costs covered on premium wines etc. The best part is that you can measure the outcomes in real time – guiding future initiatives.
When customers pay, they expect more. Can you deliver? Australian wine tourism consumers have been spoilt with free tastings since the beginning. Now, as we manage our evolution to paid options, these same consumers are being asked to pay for an experience that was traditionally free. So, the question often is: ‘what do I get for my money?’. As unfair as it is, it does help to offer something beyond just the standard tasting. A little slice of local cheese, chocolate or charcuterie, or a taste of something expensive can soften the blow. I believe that in ten years, our visitors will have adjusted to the idea that wine tourism involves a fee and we can move beyond this mentality to evolve further.
In part two of this series, we will explore some of the challenges around reimbursement. Stay tuned!