Insights from the Stellenbosch Business of Wine Tourism Conference
In the last 14 months I’ve been to the Hunter Valley, Mudgee, all over Victoria, McLaren Vale, Adelaide Hills, Central Otago, Oregon, Napa, Sonoma & Stellenbosch visiting wineries as a tourist to try and understand where we’re at when it comes (amongst other things) to the practice of charging for tastings. I also attended the ‘Business of Wine & Food Tourism’ conference in Stellenbosch in November where Dr. Robin Black (Rosen College of Hospitality Management at the University of Central Florida) presented some new research on the topic, in addition to summarising past findings. (I’ve not linked to the research as it is currently unavailable – I will update as soon as possible)
It’s the norm to charge almost everywhere I’ve been, except Australia. I think we’re heading towards change, yet what’s clear is that the issue is inherently complex and the practice is inconsistent: deciding whether to charge is a significant strategic decision which demands a full analysis.
In the meantime though, here are some takeaways from the conference.
IF YOU’RE GOING TO CHARGE, YOU HAVE TO DELIVER
The more we pay the more we expect – so to charge to something which has traditionally been free in Australia is going to raise the expectations of the guests. Over 70% of wineries in the USA charge for tastings. The critical thing is, these venues deliver great experiences because they absolutely have to.
Would you complain about a $2 Bunning’s sausage? Probably not because you know it’s cheap. What about the $29 Bangers and Mash at your local pub though? It’s fair game: the obligation to deliver is proportionate to the investment; and the expectation is much, much higher.
IF YOU’RE GOING TO CHARGE, MAKE A POINT OF IT
This is the tricky one for Australian wineries: if no one in your region charges, how do you start? From an outsiders point of view, if you’re confident in your wine and the people who represent your brand, then go for it. Yes you may create controversy but if it’s been identified as an opportunity for your business, then the case should be strong.
No matter your strategy though, you have to own it, you have to communicate the reasons and you have to follow though. For example: if the staff don’t understand it, they’ll be hesitant to charge anyone and it will unravel. Introduce a trial period, create a policy on how to talk about the fee to guests and when (if at all) to wave it. And do plenty of training! Whether its $5, $10 or more, if it’s refunded or not, the point it consistency, good reasoning and clear communication.
ARE YOU IN THE WINE, OR TOURISM BUSINESS?
This is about how the cellar door is perceived in the business framework: is it the cost of acquiring customers, or is it a revenue raising activity. Chances are it’s probably a bit of both which is why it’s difficult to define. Dr. Black’s research suggests that for ‘tourism’ – where wine buying is just part of the subset of offers, charging a fee should be part of the strategy, as the business framework includes wine sales as part of the revenue targets. This gets complicated in reality though – if for example a new group arrives for a tasting having just finished at your restaurant, would you charge them again to taste your wine?
If the cellar door is perceived as a ‘marketing cost’ is it suggested that it is a worthwhile expense to offer free tastings as part of the promotional mix. It is a simple way to attract customers and lowers the risk of participation. Of course the cost of servicing visitors must be considered. I believe for many venues who rely on free tastings for their visitation, perhaps adding a ‘premium’ paid tier is a good way to generate revenue without sacrificing numbers.
NOT CHARGING PROBABLY SELLS MORE WINE, OR DOES IT?
The jury is out on this: 2009 research by Kolyesnikova & Dodd suggests free tastings sell more wine, an effect attributed to our tendency to reciprocate a free tasting by buying a token bottle (we’ve all been there!). The problem with this is, building a sales strategy on ‘obligation buying’ is unsustainable. Wineries must work harder on their offer and create sales as a result of good performance, not feeble obligation.
Dr. Black’s research found that ‘standard’ free tastings spend slightly more than ‘standard’ paid tastings. Yet ‘premium’ paid tastings customers spent substantially more than ‘premium’ free tastings, suggesting there are factors at play around status, expectation and also the attention received in a paid experience. His conclusion was that ‘a paid tasting will not alter purchasing behaviour, and in the case of premium tasting experiences, may deter visitors who have no real interest in purchasing wines’.
SIZE DOES MATTER…
However, Dr. Black’s research did find that large, busy cellar doors are generally easy to disappear from, lessening the obligation to purchase. So a fee in this situation may be a way to counter this. Small, intimate spaces increase our obligation so if this is the case, a tasting fee might not be necessary.
ON DETERRENCE & ASPIRATION
Do you want more or less customers? I’ve heard many stories about ‘being able to take our sign down and cancel the marketing budget’ and still have too many visitors. If this is truly the case (rather than just a sign of burnout) then a tasting charge may help the tasting room find a balance between staff and guests by deterring some people who seek out free wine. If you want to go the other way and charge to create exclusivity then you have to charge enough to attract the type of people you want to be drinking your wine. For example, in Napa Valley, the average tasting fee is $50 US. If you’re not wealthy, you couldn’t go there, it just wouldn’t be an option. So in a way, Napa has actually created this immense sense of status by exclusion – rather than inclusion.
~ COPYRIGHT CLARE BURDER ~
Thanks for reading! If you’re interested in learning more about this topic, or are considering adding a fee structure to your tasting room, please don’t hesitate to get in touch.