Several years ago, a major newspaper did a review of wine clubs, concluding that some “had become dumping grounds for excess inventory.” While that may have been partially true for some brands, it was not true for others. Nevertheless, the perception was out there, hanging in the air creating a cloud of doubt for consumers. In the years since, wineries have done a fantastic job at creating clubs that guests wanted to belong. This was in large part due to curating wine selections with smaller production offerings, giving members control by offering customization, and by upping the perks and benefits. With the cataclysmic shift in 2020 in online shopping and delivery as well as limited travel, where do wine clubs go from here?
Clubs Aren’t Dead. To be sure, subscription wine clubs are not dead by any stretch of the imagination. Wine clubs remain one of the strongest DTC channels with scheduled timing on revenue. However, they may be entering the next phase of their lifecycle, partly due to where the winery is located and how it is structured. Location and structure factor greatly with the regional consumer’s expectations and desires. Members in some areas are used to ordering online and having everything from shaving cream to Community-Sponsored-Agriculture (CSA) produce boxes delivered weekly. Others are not quite there, relying on Amazon and their favorite retailers for occasional deliveries. Many wine club members, especially for wineries that depend on local traffic, are will-call members and don’t deal with shipping at all.
Evolution. The evolution varies by region. Developing wine regions may not have as a robust wine club channel compared to their well-established counterparts. For example, five years ago, wine clubs had a very different structure in New York than they do now. Historically, it was common around the Finger Lakes for any guest that visited and purchased a case to be considered a wine club member for the next 365 days, with complimentary tastings and discounts. A case purchase equaled a membership. However, when that year ended, most, if not all, wineries did not have an automatic charge to the member’s credit card, nor was there any active marketing to retain that purchasing member. Today, in New York, wine clubs are structured more like traditional annuity clubs, charging member’s cards regularly – perhaps quarterly – and ongoing until the member says otherwise. More metrics are in place, and predictable revenue is flowing throughout the year. In addition, wineries have developed better, more profitable relationships with their biggest ambassadors and fans. This evolution from a more ‘casual’ to a more robust program is common and continues to evolve in every region.
There are a few concepts that transcend regional differences, and can be applied to wineries in all regions, of all sizes.
First, define an objective for your club and write a roadmap against that. Beyond the revenue, why do you have a club, and what do you want to achieve?
- Is it an extension of your brand? For example, is your club to cater to locals and is very social in nature?
- Or, is it about your product mix? Are your wines sold primarily through direct, or do you have some wines in distribution and some exclusively direct to consumer?
- Is this a brand building activity, or specifically about being your primary source of generating revenue?
Based on your answer, consider the members benefits – do they help achieve this objective? Next, identify the relevant metrics, and benchmark whenever possible. Metrics and benchmarks might include attrition/retention, club size year over year (month), conversion rates, etc. but they may also include ones based on your objectives – achieving a percentage of local/day-trippers versus out-of-state members, number of club-only SKUs/products, event tickets sold, etc.
Next, consider if your club been around for decades? Perhaps it is time to do a competitive-set survey and see how our club stack up to our neighbors. Do research of your competitors and compare their structure, price point, benefits, etc. Or you can start by surveying your members to see what they like most about your club, and what other clubs they belong to. It can be helpful to ask what they like most about those other clubs. A good club manager leads with curiosity, and wants to ensure their club is relevant to both active members, alumni members, and prospective members. Doing some fieldwork can help identify areas of opportunity and new ways to engage members.
Structure, Trends & Communication
Third. If you only offer semi-annual releases at a high price point, it may be time to consider a smaller investment subscription model. If you have some members that always want six bottles of your light bright white from April through October, do you have an option for them? Consider offering a regular shipment of what they want, when they want it. Check out Amazon’s Subscribe-and-Save model, or Dollar Shave Club. There is even a club for replacing your kitchen sponges, toothbrushes, and fridge filters. Why not a club for Rose-All-Day that delivers during Rose months? This is about finding opportunities for people who are loyal to your brand but may not want to commit to your club – now or at all. Finding trends can help identify opportunities for more engagement, more revenue, more retention. Regardless of frequency the shipments/releases, reach out to members regularly and not only to let them know they have been charged. Find ways to communicate across multiple platforms.
Measure What Matters
Finally, measure. You can’t manage what you can’t measure. What is success if you haven’t defined it? Measured it? Having well-defined metrics that are benchmarked against your own performance, as well as that of your peers, is crucial to understanding your blind spots, and where there may be opportunity. By understanding how your club behaves seasonally, and compared to your neighbors, you can better understand the health of your club, and if it needs tweaks to be successful in the future.
Wine club continue to evolve, and if we, as an industry, don’t evolve with the needs of consumers, our wine club may become a thing of the past. Are we keeping relevant?