Cornell Study Sheds Light on Factors Impacting Wine Sales in Restaurants

wine sales, restaurant menus, cornell center, hospitality research, increase restaurant wine sales, build wine sales, optimize wine in restaurant channel, wine marketing, increase wine distribution The recently published a that evaluated more than thirty attributes of restaurant menus and their impact on wine sales in nearly 300 restaurants. The study identified only a few factors that were positively correlated with higher wine sales. Restaurants that sold more wine included the wine lists in their food menus, did not put dollar signs on the wine prices, had a “reserve” section, and offered multiple wines from the popular wineries on the menu. In more casual restaurants, a large selection, approximately 150 wines including low cost wines, improved wine sales as well. The full study is available on line: click on one of the links at the beginning of this paragraph to view it.

The study noted that metropolitan area, liquor sales volume (a proxy for total sales volume), and cuisine type accounted for more than half of the variation observed in wine sales. The average Chicago and Miami restaurant in the study sold approximately twice as much wine as the California and Las Vegas restaurants. Surprisingly, the New York metropolitan area restaurants in the study averaged half the wine sales of those in California and a quarter of the wine sales of those in Chicago or Miami. Steak houses, seafood restaurants, and American restaurants sold approximately 25% more wine than Italian and French restaurants. Asian restaurants sold only a third of the wine sold in the average steak house in the survey.

These results have significant implications for wineries. Most important, wineries can use these results to target their sales efforts towards restaurants that sell the most wine. This will make the sales process more efficient. Wineries can also evaluate the effectiveness of the restaurant menu in selling wine, based on the results of the survey. Additionally, wineries can use this information to evaluate the effectiveness of their broker and distributor partners, as well as their direct sales force.

Using this type of information effectively can help wineries succeed in today’s challenging economic environment. With the growth of the internet, a tremendous volume of information is available at no cost to wineries that know how to find and separate relevant data from irrelevant information. The wineries that survive and ultimately thrive will successfully create small advantages in their business strategy using this type of information and then execute relentlessly and with discipline against their strategies. These wineries will be positioned to maximize their sales and profits when the business climate improves.

How to Grow Your Business When Everything Else Is Shrinking

consumer marketing, madison avenue, new opportunities, wine marketing, direct to consumer wine sales, using customer information, using brand advocates, building wine sales, building wine brands Let the ‘4% Factor’ Help You Tap Into the Right Data to Create New Opportunities – Article by Scott Morgan – Published: July 15, 2009 in Ad Age Daily News

Wine marketers should pay attention to Madison Avenue, especially when trying to map out strategies and tactics to get the most out of social media and Direct to Consumer marketing.

Particularly relevant is the article’s discussion of the 4% Factor. Marketer’s talk about “casting a wide net” and it is widely accepted that 20% of your customers typically do 80% of your business. Where Mr. Morgan is spot-on is that 4% of your customer base contains the “true believers”, the “evangelists” and your friends and families that love your brand and will help you succeed if you ask. Brands from Yahoo to Coca-Cola use transaction and behavior data to sort out their best consumers, targeting specific types of messages via specific channels of communication.

According to Mr. Morgan, President at independent, full-service agency Brunner, “Four is the significant digit because it is this relative number that seems to rise to the surface every time a study is conducted or a program is measured, proving that those impacting your brand (typically characterized as volume, margin or advocacy) tend to be a relatively small number of the whole customer universe.” Brunner’s clients include GSK consumer brands, Cub Cadet outdoor power equipment, Golf Pride club grips and Zippo lighters.

One example Mr. Morgan cites in the article is Catalina Marketing: its Checkout Coupon system identified that 1% of IAMS’ pet-food buyers accounted for 80% of the annual volume of the brand’s sales in the supermarket channel. LaRosa’s Pizzeria chain, another example, discovered that a small percentage of its customers account for significant portions of various menu items (for example, 4% purchase 65% of calzones).

The specific steps Mr. Morgan points out to grow a business or product line successfully and to react and adapt more quickly to future opportunities are particularly relevant for small wineries (some of the steps have been edited):

1. Find: Discover and define your main source of volume, margin or advocacy by tapping into existing customer data.

2. Filter: Sift through the data and intelligence by segmenting, profiling and using predictive modeling to develop a pool of target segments and markets. Who are your best customers? Organize them into groups.

3. Magnify: Examine, select and prioritize the top three to five target groups. Listen to what they say on-line, on the phone and in your tasting rooms. Dig deeper into why they buy your wine and ask them if they have friends you should be inviting to your winery for events and private tastings.

4. Expand: Build out the selected communities via holistic communications strategies ranging from broadcast emails to social media in order to establish dialogue and grow the universe of new entrants and new advocates.

Mr. Morgan admits that this has been said before but I like the way he puts it. “Today, brands are built by communities of like-minded individuals who share their brand experiences with others and those with whom they have some connection. Pinpoint those communities — or markets of business opportunity — and find creative ways to get them to help recruit your next customers.”

Creating Content for your Wine Site

Good presentations and white papers on the genetic makeup of social media sites and Web 2.0 participants are available. Forrester Research published a book in 2008 called Groundswell: Winning in a World Transformed (by Charlene Li and Josh Bernoff – available at Amazon.com) and Gary Hayes produced a good presentation on SlideShare titled Creating Online Buzz , Growing Communities . In a nutshell, to be successful you need to have a stable of Creators who come up with original content for your social site.

If you look around the winery talent pool and you can’t find content Creators you may need to hire a “ghost writer” for you or your winemaker or whoever that persona is you want to be positioned front and center on your social site; remember that more people view videos and photos on-line than articles and blogs.

Additionally, you will need Editors who will edit content created by others or submit content created by others. Critics are a plus, not a negative. If you make good wine you should not have to worry about criticism of your wine. Nobody likes mean-spirited hackers and, if lacking spam-filters, most SNS’s have applications for the community to self-police, register complaints and remove disruptive miscreants (ex.: Craig’s List). In the social atmosphere critics comment on the content submitted by others, such as, photos, videos and jokes that may have surfaced at your last wine tasting event.

You want lots of Sharers who will forward content to others. If your Creators and Editors are engaging your membership then you will attract more Sharers. Finally, you need Consumers. This is the silent majority who are attracted to your site, contribute to traffic but only passively consume content and either post by personalizing it, OR NOT. The graphic up above shows the levels of influence and impact of participants in a social networking community. Think about it, the guy snapping photos on his smart phone at your tasting bar is a creator. 1st try to get your wine label in the picture and then ask him to post his photos on your site.

Remember that you are creating your social site for your friends. Provide some incentives for your friends to contribute content, edit, share, and invite other friends to your site. Free invites to events at the winery always get attention and here’s an idea featured on Oprah. Invite your content contributors from anywhere in the world to a Skype wine tasting. Now that is what I want to do next time I’m flying cross country on a crowded 757!