What Makes a Top DtC Winery a Top DtC Winery? Focus

High performers in Silicon Valley Bank's annual Direct to Consumee survey mentioned pretty much the same tactics as low performers, Rob McMillan, SVP and Founder, Silicon Valley Bank Wine Division. They both talk about events, pricing adjustments, club programs, and tasting room improvements, but execute them differently.

• High-performing wineries focus outward – on customers and relationships.
• Low-performing wineries focus inward – on operations and costs.

High-performing winery managers ask, "How do we understand what our target customer wants and get them to want what we're selling?" while the low-performing manager asks, ""With our costs rising, how do we make what we're selling cheaper to produce?"

High-peforming wineries hold the line on price, but will discount something else, such as shipping. "Brand equity erodes when there are sweeping discounts across a winery's portfolio. The data backs this up," McMillan writes.

The rate of decline in total sales seems to be slowing, the market is showing signs of stabilizing, but stabilization is not recovery, McMillan says.

Tasting rooms and wine clubs remain the core of the premium wine business, but the model that drove growth over the past 30 years was built for a different generation, he says. Wineries responding to SVB's survey say they are using the playbook from the last 30 years, making facility investments, re-upping training and creating new experiences to attract visitors.

The tasting room will always remain king, he says, but "don't just lower tasting room fees, but "find out what will attract your target customer, then alter your pricing and positioning to attract new club members and paying guests," he advises.

Purchasing behavior in the tasting room isn't collapsing, but it is shifting, McMillan writes. "The number of transactions may be under pressure, but the value of each transaction is playing a larger role in overall performance. That said, there is a risk expecting average purchase to support declining visitation. There is a logical end to the trend."