Eliminating the melon squeezers at winery tasting rooms...

WINE TALK
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I think it bears saying, even though its likely understood, that nothing is free. The price of the tasting room, the free or subsidized tastings, the lavish (or not so lavish) tasting room, the personal attention, the 20% in samples – it likely ends up in the bottle price. Kinda goes back to the brief interchange Hardy and I had on page 1; I’d love to see an average gross return of $37 on a bottle of wine, but that’s not terribly realistic. So we keep things lean. One full time, year round employee over a 15,000 case facility (75% custom production), no tasting room, no marketing staff or budget to speak of, maybe ten new barrels a year. We don’t make a lot of mega-ultra-premium wine, not because we can’t (we do make a little), but because there’s an ever-expanding gaggle of small wineries competing for the attention of a small customer base, with several already well-established brands and winemakers occupying that space. Small wonder it takes tons of effort for meager sales. New businesses have to find green pasture in which to grow.

Ergo skin fermented semillon.

We do tasting by appointment only. We make ourselves hard to find. The winery is in a gritty industrial section of a farm town (like the Lompoc wine ghetto when it was really a ghetto). No sign on the door. Although appointments often cut into my family time on the weekends, I think they’re great. Sometimes the kids come and draw all over the winery floors in chalk. I’ll often claim we have a pretty steep tasting fee on the phone, but I’ve never actually charged anybody. I’ve also never had anyone leave without a heap of wine in tow.

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Ian,

That all sounds perfect. Discourages the tyre-kickers and rewards the genuinely interested.

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Doug - it sounds like we’re in the same boat. I said that if I go out tasting, I’m prepared to buy - which means that 90% of the time I will. A bad experience would account for that other 10%, but that hasn’t happened for quite a long time. After my first extended trip to wine country with mixed experiences, I started using wine boards and other resources to research wineries before I visit. Doing a little bit of homework before going out saves everyone a lot of grief.

What I don’t do is just go out on the weekends to local wineries, use my business card to get tasting fees waived and then enjoy their hospitality - all while expecting that I shouldn’t show some gratitude. It would be very easy to provide low-cost entertainment to friends who visit on the weekend, but I recognize that while tasting rooms are often written off as a marketing expense, the people behind the counter often have sales goals to meet and I’d prefer not to waist their time. Do unto others…

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I find this thread/topic fascinating (enough so that it prompted me to finally register here) as I have wrestled with this issue from the consumer side of things for some time now. I love Chris’s analogy of the clothing store/car dealership, and for the most part that’s how I view tasting rooms – I know I’m going to buy wine (a shirt/car), but I don’t necessarily know if I’m going to buy your wine (shirt/car, etc.), and I’m not necessarily going to buy today.

At the same time, is there a subset of tasting room visitors who view the experience as nothing more than the grocery store giving out samples? I’m sure there is, although I suspect they make up a small, if not non-existent, portion of WB readers – a group that has generally self-selected as one that appreciates wine beyond looking for a free or convenient place to drink. (I think the ice cream parlor analogy only applies in the relatively rare case where a winery is not open to the public at all, but has made a special exception to allow you to visit and taste, in which case you should absolutely be planning to buy if given the opportunity to do so.)

The big problem is see with the article is how it might change winery behavior in an attempt to reduce the “melon squeezing,” at the possible expense of alienating people who may be customers but not buying directly (we could get into the evils of the three-tier systems, but that opens a whole new can of worms, so best not to, at least for now). A quick (ok, not so quick, but I had some time) review of my purchase history on CT shows that more than 40% of the domestic wine I have purchased (and more than 50% of my domestic wine spending) over the past 3-4 years has been from wineries I have visited and had a good tasting room experience (I tend not to buy from those where I have had a bad experience, even if I otherwise liked the wine). You can’t ship directly to me (thanks, Massachusetts legislature) and it’s a hassle to travel back home with more than a handful of bottles per trip. Does that make me a “melon squeezer” in your tasting room? To those working there (and, admittedly, often working on commission), probably so. For the winery as whole? I would argue certainly not.

And therein lies the bigger potential problem with the issues raised in the article. How will that sort of analysis change winery behavior, and what will be the unintended consequences? Additionally, as an aside, and with all due respect to ericleehall (“I figure that anyone who walks across my threshold costs $10 in rent, utilities, marketing, insurance & labor before they taste or buy anything.”) – if this is way you’re viewing it, you’re thinking about it incorrectly, at least from an Economics 101 standpoint. Except perhaps for labor, all of those items mentioned are fixed costs that you would have anyway, unless you’re willing to shut down your tasting room completely. At the margin, every “freeloader” that walks through your door only has to cover their marginal costs (the wine you pour and perhaps labor, if you have to hire extra staff).

Now, are some wineries (and maybe yours) losing money on those marginal costs? It’s certainly possible, though I would argue that either you’re not charging enough in tasting fees, or you need to reconcile with the idea that it is a marketing cost.

As a further aside, one thing that has bothered me about this discussion is the blurring of the line between those that are charging tasting fees and those that aren’t. If you’re charging me a fee, this whole issue is kind of moot – I’m a paying customer at that point, even if I might not ultimately be spending quite enough for your liking (though again, you have the option of raising your price, and I have the option of deciding whether or not that higher price is worth it). If it’s a free tasting, and I like the wine, I’m buying at least one bottle, and I’m that more likely to seek your wine out later.

Anyway, that was long winded and perhaps questionably additive to the discussion, but, hey newhere .

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Ian, Le P’tit Paysan is being poured in Carmel at Trio Carmel isn’t it? That’s an entirely different concept as they sell other producer’s wine in addition to olive oil and balsamic vinegar (which are awesome).

How has that concept worked for you guys? Or do you merely sell bottles to them to pour? In which case, does it make sense for producers to rely upon some type of retailer to pour their wines, sell them and “tell the story”?

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Just to stir the pot a little here, almost everyone posting here BUYS wine and lots of it and thinks nothing of traveling with one of Todd’s wine totes or shipping a case or five home.

BUT, for a lot of folks, “going to wine country” is a VACATION / LEISURE issue and lugging back a bunch of wine or even signing up for a club is just not on their agenda. At least part of this is due to promotion by the local chamber of commerce or even producers’ associations of “wine country” as a purely tourist destination.

Discuss…

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That’s exactly what we (and many other retailers) do in our tasting bar for producers from all over the globe. It works.

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First off, I could not imagine a wine tourist area without wineries with tasting rooms. They attract crowds and that makes them more attractive in turn. It also helps that I’ve met two of the most beautiful women I have ever met working those tasting bar counters, so I have a soft spot for them. Swoon.

In regards to melon squeezing the wineries, I have very mixed feelings about this as on occasion I have been the rabid buyer and others the melon squeezer. It’s not intentional, sometimes I genuinely don’t find something I want to buy or its out of my price range. Sometimes I’m just there for the experience. However, I always offer to pay if I can and conversely I have generously been turned away sometimes when I have done even when neither I nor anyone else in my party with me have purchased.

This has resulted in my eternal loyalty to the wineries involved and a guarante of future visits, positive word of mouth, and possible purchases when they craft an icewine I like. :slight_smile:

All this said, I too am against freakin’ freeloaders though I notice a lot less of them in the Niagara region.

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Interesting thread with a lot of great comments and concepts. Ultimately there are two factors - the immediate impact of hosting a visitor for a tasting (tasting room or private appt) and the broader and perhaps unmeasurable (but I posit) still very significant impact of building a brand, customer base and recognition.

There may be a lot of casual visitors to tasting rooms and many who don’t buy but that doesn’t mean that the wineries that they just visited on their trip to Napa haven’t become their go to wineries at retail or in Restaurants because they know they like the wine. Having tasted a wine and experienced a winery, the customer is left with an impression that is very hard to replicate - if it is a good impression then they have now likely obtained a customer at some point in the future.

However, though real, I have no idea how you measure that and weigh the customer acquisition cost including that second factor as well as the first. I know from my own experience that many wineries that did not sell me anything on the day that I was there have ended up selling me quite a bit of wine, in some cases I was so taken by the visit and wines that I have bought dozens of cases of their wine thereafter.

If spreading the word and winning over the group of potential customers isn’t critical enough to provide tastings, then why do so many wineries travel to events around the country and world to let people taste their wines for free? It costs them an arm and a leg to travel and open cases of wine, so why do it if merely having a lot of people get a chance to experience the wine wasn’t valuable.

If encouraging interest in the winery and brand wasn’t important, why would so many wineries in France and Italy who have no wine to sell out the cellar door take visitors? On one of my first visits to Burgundy I had a visit with Lafon (sent him a random direct fax and he said yes as did Dugat) - tasted everything, including Montrachet - hadn’t tasted his wines before but was floored by them - no matter how we pled with him, he had no wine to sell us (well, I have bought quite a few cases since then in the US).

So, why are tasting rooms or hosting visitors looked at differently in Napa/Sonoma? Seemingly a lot cheaper to have the customers want to come to you than flying around the country and standing in hotel ballrooms or retail store aisles pouring tastes at customer events.

Marketing may not be cheap and therefore brand recognition and customer acquisition costs aren’t cheap and so I think it is a mistake to merely view the success or failure of tastings rooms and visitors by the immediate sales.

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Huge +1 to this.

And this.

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Todd, I’m so glad you joined our little community of wine nuts here. Welcome.

I think you’re looking at it the right way on the issue of marginal cost. Let me ask this question to those who operate tasting rooms:

If there is a visitor who is 40% likely to make a meaningful purchase or join the club, would you rather he did or didn’t walk through your door?

What if it is 30%?

What if it is 20%?

Remember, the rent, salary, utilities, improvements etc. are already paid; the only marginal cost is the few ounces of wine you’re pouring. Would any winery really prefer that someone like this simply go elsewhere rather than walk in?

And if the answer is no, should someone like Mike Sai or Clint Squier really feel like he’s doing something wrong visiting a tasting room where he’s only 40% or 30% likely to make a purchase? Do those of you operating tasting rooms really not want those guys to visit unless they aren’t pretty sure before arriving that they’re going to buy? Or do you want a chance to impress them with your wine and hospitality and make them want to become buyers?

It seems to me that to the tasting rooms that are getting 20 or fewer visitors per day, the problem is less that you get some non-buyers walking through the door as it is that you’re only getting 20 people to visit each day. If you could get visitors 21 through 50 to visit, even though each of those 30 were only 25% likely to make substantial purchases or join, I think you’d welcome those 30 per day with open arms, wouldn’t you?

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No. Especially on the small scale. Wine is finite as is space and staffing- It is about spending time with the people that are the best fit for your wines vs trying to get more heads in the door.

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Hardy,

I think your comment about scale is important, and you seem to have already established a highly successful following with full or close to full mailing list sell through. But what are the lessons for others? – namely, the intended audience of the original article, which presumably includes wineries that are less successful than yours. How do they get the “right” 20 people to walk through the door, and do so without alienating people who might actually be (or might down the road become) part of that ideal target demographic? That’s the balance that I think needs to be struck here, without simply declaring war on freeloaders, or those who might be perceived as such, and accepting the collateral damage that could accompany such an approach.

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Chris - yes, i’d want the guest who is 40%, 30%, or even 20% likely to purchase or join the club to walk in my tasting room door. it’s incumbent up on me, as the winery agent, to provide a positive guest experience and then sell product. since we have tasting fees in place, waived with purchase, it’s likely going to be win-win as opposed to win-lose for me: either i’m going to sell some wine, or be compensated for the experience provided, knowledge imparted and wine poured.

ideally, every person who comes in to the TR is ready to buy multiple cases and join the club. the reality, that guest is in the tiny, tiny minority of people who visit. i’ve had days where five guests have come in to taste, and their combined purchases exceeded the previous day when i poured for 30 people. the key, trick, or challenge for the small tasting room is getting that clientele in the doors more often, or more consistently, than the “melon squeezers.”

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^^^This.

It also occors to me that we have a great divide - those who can’t imagine walking into a tasting room without first having real interest in the wines (most who participate on this board). And those (99% of people who walk into a tasting room) who can’t imagine geeking-out about wine on the interwebs… [wink.gif] Too many times I’ve seen the blank stare of surprise on the other side of the tasting counter when the topic of buying wine comes up. Many visitors are in wine country to drink and post selfies on Facebook, nothing more - as crazy as that might sound to some…

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^^the bold^^

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The tourists are exactly who some wineries target for their clubs. You may be the first winery they’ve ever been to and make a good impression. That’s a big catch compared to selling a bottle or two. Low percentage score with a bigger pay-off.

The field of managerial accounting is for internal analysis and incorporates micro economic principles. I was touching on this earlier. Really, you want to try to attribute specific costs to specific revenue to eliminate inefficiency and identify unprofitable practices. There’s a bit of an art to this as these allocations can sometimes be a bit subjective, but it’s an excellent tool. The simplest way to do it would to allocate all fixed costs to sales, and allocate variable and marginal costs to tasting fees. In the example I posted rent, insurance and such, as well as wages for 3 pourers and a cashier could be counted as fixed costs. Those non-buyers create the need for an extra pourer (marginal cost). The cost of wine poured relates directly to the amount poured, so it’s a variable cost. You then can check the costs of pouring for non buyers plus the cost of that extra employee are covered by what they pay in tasting fees. Also, if you waive tasting fees (or are thinking about it), you can see where the break even point is for doing so. You might find all the production costs plus the allocated fixed costs of an $18 bottle total $15. The waiving a $6 tasting fee on a single bottle purchase for that $18 bottle results in a $3 loss. Though you may also be able to attribute a certain goodwill value to that sale.

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For my personal stuff, we only do tastings for our mailing list / or trade, but I managed 2 different tasting rooms for about 3 years total and getting the right people in the door was a constant challenge. Appointment only worked for us- But that can be the kiss of death for folks if you just hope the phone is going to ring. Just going appointment only probably doubles the amount of work the winery has to do-- It involves constant reaching out to somms, retailers, other wineries, hotels, drivers, and existing customers to try and get them to refer people that are a good fit, and also doing the same thing for them. At the same time, it requires communicating, listening, and generating content and conversation via social media. The communication and outreach alone is a crazy amount of work even before someone walks in the door-- but it is worth it.

And then once the phone rings, it is so important to talk with the guests before setting the appointment. What do they like? Are they familiar with the wines / style? How did they hear about you? What are they wanting to experience? Etc. Then once they arrive, provide a great set of wines and pour your heart and soul into the guest experience.

I was lucky to work with amazing & distinctive wines and for great people. I loved pouring for folks.

With all the upfront leg work, we saw fewer guests, but were always better fits for each other. Even with all that, we got our share of tasting fees, but if they left without wine, they usually left vocal fans and that came back to us. But to keep the lights on, we always hoped to have more fans leaving with wine vs fans leaving without any.

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I am outraged by this thread. It is revisionist history to even imply that Greedo may have shot first.

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Someone brought up how do you account for people that taste and purchase later. I certainly fall into this camp from time to time. For example, my spouse had a business appointment out in Oregon so we made it a long weekend with some skiing at Mt. Bachelor. On the return trip to the airport we stopped at 5 tastings that are open to the public. Normally I like to buy a case shipper or two at the first winery and then fill it as I go and send it home via checked luggage. Well this trip, with skis, etc., there was no room for checking an additional piece of luggage (my spouse and I are frequent travelers and all free bags had been used up with gear).

Of the approximately 25 wines we tasted, there was one that stood out and was on my radar for purchase. I asked at the winery if they offered any type of discount or free shipping on a case. They did not, so I happily paid the tasting fee and left.

At home the next day, I searched for the wine on the web and purchased a case for about $10 less a bottle than the winery was charging. All in, I saved about $60 by purchasing once I got home and doing a little due diligence. If the winery had offered a case discount or free shipping, I probably would have purchased while standing in their tasting room. So what I’m getting at, and some wineries both big and small are great at this, make something special to get someone to buy on the spot. Maybe its a winery only release, shipping discounts for out-of-staters, quantity discounts, etc.

As for the melon squeezers, how about giving them a rebate offer that you can only get via your tasting room. Something to the effect, once home, if they call and order a case, free shipping or 20% off first case purchase. This would be something different than your standard practice but not out-of-line with your standard practice. Kind of like, first time buyers rebate on a car. Or if your wines are distributed in their locale, send in a copy of their receipt and the special rebate card they received in your tasting room and you rebate, $10, $20, $30, etc. based on number of bottles purchased.