Distribution: Pursuing the Electronic Channel
Chances are that you've never heard of Long Vineyards, in Napa Valley, Calif., best known for its expensive, award-winning chardonnays and high-end sauvignon blancs, pinot grigios, and cabernets. For 30 years the vineyard's founder, Bob Long, has been growing grapes and choosing to sell only small allotments, mostly through traditional distribution channels.
The tiny $750,000 producer doesn't elicit much enthusiasm from most distributors, who see a lot more cash from selling low-end, high-volume wines. So a little over a year ago, when Peter Granoff, a master sommelier, started up a virtual wine-retail site on the Internet called Virtual Vineyards, Long gave it a shot. "It's always a battle to find an effective marketing tool," says Long, who chose to get his feet wet by pitching a small proportion of his output -- 50 of the 3,500 cases he produces annually -- to start.
Even though Long had never imagined selling wine to customers who couldn't taste it, smell it, or even admire the bottle's label, the electronic medium has its benefits. For one, Granoff does lots of on-line and off-line marketing, which helps Long, who claims, "I am virtually all of our sales and marketing staff." Long spends half his time and 3% of his revenues on direct mail and on giving away wine during promotions. Granoff's efforts, Long believes, hit his target audience, whom he defines as "individuals with a better education, a larger income, and a higher level of curiosity." The roughly 2,000 potential buyers who visit Virtual Vineyards daily can read about Long Vineyard, check out wine reviews, get advice about wine from Granoff, or find food recipes to go with various wines.
"It's been an effective way of expanding a little without having to do it ourselves," says Long. What's more, selling via the Internet can mean as much as 25% extra in pretax profits for Long, since Virtual Vineyards acts as both distributor and retailer. It sells, ships, and bills customers for the wine and then remits the proceeds, less a commission (typically one-third of the retail price), to the winery.
But Long didn't really get on-line for the cash, since the $15,000 Virtual Vineyards has brought in so far is nominal. He, like all business owners, wants to know where his customers are and where they're going. "There is only a very small segment of the adult population that wants expensive wines and wants to know about them," says Long. "The question is always how to best reach them."