Wine BIDS (merged thread, everything concerning the BIDS program in California)

WINE TALK
41

Not @Phil_Carpenter here, but I can answer some of these right now:

  1. Though you may feel SBC is well known, it truly isn’t as much as anyone would believe, even here in California. And I am serious when I say that most folks in LA, Orange and San Diego Counties truly do not know that we exist as a wine region. I know that sounds hard to believe but it really is true.

  2. It is clearly laid out how the money will be spent - and this is required by the state as part of the process. Anyone will have an opportunity to see this before any decision is made - including all wineries in our region, whether they are currently part of our Association or not.

I don’t think anyone I know wants to pay more for ANYTHING these days and I certainly understand the apprehension many here have expressed - and it certainly makes sense. Just understand that these efforts are being made out of necessity due to the fact that many members of our region have chosen not be active members; that regions north and south will be enacting these soon and we will be at a competitive disadvantage; and since we are not as well known as everyone believes, we are not able to attract sponsorship numbers other regions north and south of us have. We certainly hope by seeing this through, that will change and everyone will benefit - including all of you.

Cheers.

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42

I’m not really well informed about regional wine regulations in the US, but from my casual, uneducated perspective, which may be in line with other consumers, I don’t feel like the American system has created the same reliable quality baseline wines as European regulations (farming practices, what’s allowed after harvest, etc.). If I’m being charged a surcharge and it isn’t doing anything to improve this perceived gap, (right or wrong) it just feels like a fee to support wealthy people and their wine endeavors. Again, I know this isn’t fair to many businesses, but this is the impression of someone from the Midwest who doesn’t grow up in wine country.

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43

Its a great thought that everyone will benefit, but the reality is with more demand prices will go up and the existing customers will pay more. I still think its probably a good business decision, I just dont like it.

@Phil_Carpenter is there a way to see the BID plan if were interested? Ive been responsible for a couple of similar organizations and Im interested in seeing what the actual gameplan is.

44

Max,

The reality is that prices will go up regardless of demand these days and prices are going up for all consumers - just look at pricing in Napa, Sonoma, Paso etc. It’s rare that wines in any region are not increasing in price.

The pricing for most of SBC has remained quite ‘reasonable’ compared to most other regions, but we are seeing bigger than usual increases in fruit costs over the past few years as winemakers elsewhere are starting to understand the quality of our fruit (some pre 2020 but a lot starting with 2020 and the fact that our vineyards were not affected by smoke issues).

And if you want to see some of these differences, check out what wineries in Paso or Napa charge for their wines featuring SBC fruit vs wineries in SBC itself.

Cheers

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45

A great perspective - just know that though there may be some wealthy winery owners in every region, there are also many that are boot strapping it and not living ‘the high life’ . . .

Cheers

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46

Understood! Just passing along that, as others have noted, the average consumer just sees all of these fees and feels like someone is trying to scrape something from the top and externalize things that should already be budgeted for by each business. There is no way to communicate the good you might be doing for small businesses through a receipt, and consumers may be more skeptical of private trade organizations that have no legally derived goals.

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47

Yes, and this is actually my CEO’s forte. When she came into the organization in 2017, she instantly did intense forensic accounting and delivered the real story to the board about the financial status of the whole organization. Her budgets, projections, etc. are insane.

We have projections for the 1.6/1.7 million to the penny. Including marketing, government relations, social media, PR, staff (two people right now, I’m admin, web designer, Mailchimp person, sending maps, etc., as well as member relations, etc.), grants for our surrounding AVA organizations (aka, SRH Wine Alliance), etc.

The beauty of winning those two CDFA Specialty Crop Block Grants (say that fast five times!) was that it gave us an idea of how effective marketing and PR dollars can be. We won almost $800K over two years to market to L.A. (during pandemic) and then San Diego/Orange County. Also gave us tangible experience working with a budget like this. It is first time this Org has A) won a grant (Paso has won them for years), B) spend this much money on marketing EVER. P.S. These grants do not improve operations, can only be used on marketing and PR for a specialty crop (wine grapes). You cannot count on the funds since you have to write original grants every year…they are SUPER time consuming…and my CEO and I wrote them ourselves since we cannot afford Grant Writers (conservative quote to write a CDFA grant is $30K…and probably more in second round…and you can’t use Grant funds to pay for this if you win it)

Since the grant, we have had to go back to our original budget and dial back our PR/Social Media firm. The BID will allow us to get back to what we had during the grants, and beyond.

48

Not a fan. The beauty of the wine world is its localization. It has allowed for incredible culture retention and remarkable natural variety. Nearly anything done to centralize things, especially in the US where things are already too centralized, is likely bad for the longevity of the industry imo.

If there is money there, in time it will be hijacked/ lobbied, and it will be very unlikely that this money goes to its initial and benevolent cause.

49

“Resort Fees”

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50

Glad to hear it! I hope the social media/PR firm is a good value. That’s one area where we found agencies were charging $15-30k+, but we found a guy with experience who did effectively the same thing for about $7k.

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51

How the money is spent is quite public - and has to be kept that way or the BID is pulled

Cheers

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52

That’s of course better than it being opaque, but I am not sure it resolves the issue. If it becomes enough money, marketing will be done to persuade people of a new ideal cause.

We are just human, we naturally have agendas. They aren’t necessarily bad, but they are necessarily biased, and if we centralize the money, those biases will be magnified in time.

That is my take at least.

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53

As a mere consumer, I really dislike this added fee. Making it mandatory/legal requirement makes it even worse, though I see why wineries would want that. This fee is just one more in a universe of added fees that companies use to justify price increases that they otherwise don’t want to try to squeeze in. We all see where this goes with convenience fees, healthcare fees, service fees, fee management fees, credit card charge fees etc. etc. It’s a price increase.

Will this price increase affect my travel and purchase decisions? No, not at all. But every time I see it I’ll be annoyed.

As a business person, I understand it completely. Forces every winery to participate, which is big. No more arguments about people not supporting the region. And I have zero doubt that well spent marketing funds can drive business. If Temecula gets 18% increased tourism from a 1% fee, every wine region in California should be getting in line to make similar investments, tax or no. And theres no way very small individual wineries can market effectively. The cost of entry is low but it’s in the thousands or tens of thousands of dollars. In order to market effectively small wineries have to work together, period.

By the way, I don’t accept the logic of “Temecula is spending more on marketing, therefore they are taking business from us, therefore we have to spend more, too.” This is a hypothetical and would be very hard to back with data. Impossible without. I think it much more likely that Temecula is taking $$ away from every other form of entertainment. Netflix, sitting at home drinking beer, movies, restaurants, driving to the beach, watching sports on TV or going to a local game, etc. etc.

But, with the business logic of this being so clear - they should be willing to pay out of their revenues and not pass off this bogus charge as a benefit to consumers.

Finally, as someone who works in the advertising/marketing world, I say yippee. There will be more clients seeking our expertise and products. I’m sure some slick Willies will creat a wine marketing agency and utterly screw all these newbies, sadly. Buyer beware!

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54

If a district wants to spend its own money to improve its opportunities, be my guest. But once you tell me you all agreed to raise your prices and pass this cost along to the consumer for your own benefit, is when I say GTFO. It is not my job to fund your marketing or projects designed to improve your area.

I am well aware that a lot of this has to do with perception too. If the collectives in the region jointly just said “our wines are great and we should all agree to raise our prices.” Then no one would be the wiser as to why the prices were raised. Maybe its inflation? Maybe its because the demand for these wines has risen? Maybe its shipping costs?

If Walmart one day just raised all its prices by 1-3%, people would just assume its due to keeping up with inflation. But imagine if instead, Walmart made the announce they were raising all their prices by 1-3% so they could fund their superbowl ads - which are designed to just market back to the consumer. People would be up in arms. The consumer would view this as them funding ads designed to have the consumer buy more. This only benefits Walmart, not the people who have to experience the cost increase.

Perception matters. So if someone tells me they’re raising prices for marketing reasons and deferring this cost to me, then I won’t buy your products anymore out of spite.

It is just like how many restaurants have added a fee to credit card users (or cash discount) to defer the fees they owe the credit card company onto the consumer. It pisses everyone off!

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55

Consumers won’t care because they’ll barely notice, as long as it’s change not worth picking up off the floor. The BID fee isn’t advertised upfront, it’s just a line on the receipt, just like a line for restaurant workers’ health care, hotel tax, airport district fee, etc. California now has a bottle recycling fee of 10 cents as of Jan. 1, and customers shrug their shoulders about it. They don’t even ask for a paper receipt anymore at the winery, so most will be oblivious.

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56

[quote=“J0hnEhrl1ng, post:54, topic:316650, full:true”]
If a district wants to spend its own money to improve its opportunities, be my guest. But once you tell me you all agreed to raise your prices and pass this cost along to the consumer for your own benefit, is when I say GTFO. It is not my job to fund your marketing or projects designed to improve your area.

Prices have raised in all regions for various reasons…demand…marketing…cost of goods going up…etc. The BID will not force prices to go up universally. It would be a line item at the bottom of a receipt for 1% for the SBC Wine Preserve.

If Walmart one day just raised all its prices by 1-3%, people would just assume its due to keeping up with inflation. But imagine if instead, Walmart made the announce they were raising all their prices by 1-3% so they could fund their superbowl ads - which are designed to just market back to the consumer. People would be up in arms. The consumer would view this as them funding ads designed to have the consumer buy more. This only benefits Walmart, not the people who have to experience the cost increase.

*I would argue this happens anyway. Private businesses can raise their prices whenever they want and for whatever they want and aren’t required to tell us. If a business pays more for marketing, it is passed down to consumers. When they lower their prices, most likely, the marketing budget seems to be first to go.

Where with the BID, we are 100% accountable and cannot deviate from the structure until it comes to renewal every five years. We cannot fluctuate like a private business. As I mentioned up top, we have not projected a built in increase at all.*

Perception matters. So if someone tells me they’re raising prices for marketing reasons and deferring this cost to me, then I won’t buy your products anymore out of spite.

I get it, but this is not requiring our wineries to raise prices…they would have to add the line item. This BID is movement born into making our world class region more sustainable for the WHOLE region, not just our members anymore. Make sure we bring a steady, reliable stream of people to our region and make sure we are relevant and competitive with our neighbors. An effort to match the quality of our wine!

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57

How about under the 1% BID fee on the receipt we add another line…
1% discount - Thanks for coming.

That way 1% is guaranteed to go to your project across the board but isn’t passed to the consumer.

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58

If wineries would like to do that, they are more than welcome to!

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59

Hi Phil,

I understand your perspective and I hear you. It really is all perception. Yes, private businesses can do as they please, and sure there is a chance their price hikes are due to marketing. But as in the example I gave regarding credit card fees at restaurants - it REALLY rubs people the wrong way.

It is no difference from “convenience fees” when you buy tickets online. Especially when there is no offline options available anyways.

Additional fees piss people off.

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60

IMO the only real reason to do this is that the members of the consortium don’t all see the value in what these funds are used for, so they won’t voluntarily contribute. So since you don’t have consensus and buy in from the members, stick it to the consumer who has no vote on the matter.

From my (berserker?) POV these marketing campaigns are geared towards herding sheep to the area, not geeks, so I don’t see the value. In fact I often find tourist focused marketing annoying and dumbed down.

(get off my lawn)

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