Unless you have been living in a cave for the last six months, then you are aware we are in the midst of tough economic times. The financial crisis has taken a toll on everyone and Clos LaChance is certainly not immune.
So what are we doing about it?It’s hard to predict what is going to happen with sales for next year. So if we can’t guarantee additional revenue, then there is only one thing left to do: cut expenses
What are we cutting back on as we plan budgets for 2009? Christmas cards, for starters. Between our investors, wine club members, vendors, wholesalers, accountsand growers…we were sending over 500 Christmas cards per year. With the cost of the card, postage, labor to address and stamp them all….we are talking over a grand to get our Christmas cards out.There has got to be a better use of $1,000. Don’t get me wrong, I love a good Christmas card from friends and family, with pictures of the kids and updates of where the family traveled (as long as it’s not too braggy).But business Christmas cards…eh, I can leave them.
So this year we did an electronic card. With a custom Christmas Carol. Didn’t get it? Click here. Yours truly wrote the song.
What else are we cutting back on? On an annual basis, we have two departments that book the most expenses: Production and Sales and Marketing.
On the production side, Mother Nature solved our expense cutting decisions for us. Yields in 2008 were very, very low. We did not pick as many grapes as we expected to, so we are bottling less next year.By not bottling, we save on the costs of the packaging, the transport, the storage. Also on the production side, we purchased more barrels then we needed to in 2008 (again, low yields)—so we will be buying less in 2009.
In addition, we have consolidated a lot of our supplies for labels, bottles, capsules, corks….and are streamlining everything to be as simple and economical as possible. For example—our Vineyard Designate Pinots have traditionally been packaged in heavier, more expensive bottles. The fancy bottles cost A LOT more per case (we were buying very small quantities and they are pricey models), as was the transport because of the extra weight. So we ditched the expensive bottle and are now using the same Burgundy bottle as our regular Pinot Noir.
In addition, we have been re-evaluating all of our outside service contracts (thanks to Tom our Maintenance Supervisor) and made some major changes to our landscaping maintenance and regular deliveries of things like water, linens and doormats. We are saving a ton of money by hiring someone part-time for landscape maintenance and using our own crew vs. hiring an outside gardening service. Next up for review: phones, Internet, fax, cell phones for everyone that has one on the company. Telecommunications is expensive! But I bet we can get a better deal then we are getting right now.
On the Sales and Marketing side, our other major expense category, marketing expenses have been cut in half. Absolutely zero advertising (stop calling me if you are in ad sales), dropping out of a few trade organizations and tastings, and putting a hold on any press events or tours in 2009. However, on the sales side, this is not a good time to scale back. When times get tough, the big suppliers pull out their giant marketing budgets and start flying buyers around the world, giving huge incentives, and selling wine at a giant discount (can you say “2fer?”). So to cut back on my miniscule sales budget—which pretty much includes only salaries, benefits and expenses for 6 people—is not an option. We would be completely ignored by distributors and accounts—who can be easily mesmerized by the flashy things offered by the “big boys.”
There are many more examples of the “little things” that are being done around here to cut expenses. And we are doing them so we don’t have to raise prices or lay people off. Because two of my favorite things in life (outside of my family) are the people I work with and drinking good wine that is not crazy expensive. I also like to combine the two. Bring on the Clos LaChance Christmas Party!
We start planning for 2009 in October, putting together budgets and revenue plans. It’s a nightmare process…with 30 different products at different price points across different channels. Makes my head spin every year. But a necessary exercise.
Monday we had fun planning meetings—production and vineyard. It also make my head spin, because once again I have to predict sales numbers for the bigger ticket items in the Hummingbird Series. But the fun begins when we talk about the little, esoteric things that we can make….exclusively for Tasting Room, Web sales and Wine Club.
Here are a few of the things we discussed.
*Sales of Syrah are tough. Syrah was supposed to be the next big thing, but never really took hold. Did the Aussies flood the market with too much cheap Shiraz? Are people confused by the whole Syrah/Shiraz “mystery?” Over planting?All of this and more has probably caused varietal to never really taking off big. Oh yeah, and Cab is still king when it comes to red wines. So we are going to make more Cab and less Syrah. This means a combination of budding over, selling fruit, selling juice. We will have some Syrah in our portfolio…its damn good from the Estate Vineyard. But less of it.
*The sweet version of our Muscat Blanc is not selling well in the tasting room anymore. We had a good run when we first released it. But that was when we did not have anything else in the sweet category. It’s a low alcohol, a little spritzy, fruity aperitif (Asti Spumante style). Nothing fancy, but a nice, refreshing drink. Now, its competing with Nectar, our late harvest Semillon, and the Zin Port and Late Harvest Zin. And Amber’s Cuvee, our sparkling Blanc de Blanc.
We have one acre of Muscat Blanc. The vines are not strong (might have a virus), so budding over is not really an option. The next step is to find something else to make with the grapes or to pull the entire block of vines and replant. Next year (08 Muscat Blanc has already been made) Stephen, Bill and I discussed making a dry Muscat. I-N-T-E-R-E-S-T-I-N-G. Maybe age some on its lees in the tank? Who knows….but it will be fun doing some trials and coming up with a new product. Muscat is a fun grape cause it tastes like, well, grapes.
*Talking about the Muscat got us discussing the need for another white wine in the Estate or Special Selection category. I need something for the Wine Clubs that is unique and exclusive. And good. We have Chards and a Viognier….I need one more. The dry Muscat has potential to fill that vacancy. But what else could we do?
Stephen and I remembered that we have a couple acres of Marsanne and Roussannethat came on line this year in one of our CK Vines vineyards. What about a white Rhône-style blend, the yin to Lila’s Cuvée red Rhône blend’s yang?And we could call it…AJ’s Cuvée! (Lila’s brother, and my son. Yes, I am biased about the name). Again, can’t wait till we get to the trial process.
None of these things are final until we get the wines and try them in their infancy. Sometimes I wish I worked at Ben and Jerry’s. One day you come up with a new ice cream flavor. A few weeks later, you get to try your big idea. In our case, we have to wait for the fruit, then the ageing process. It can take 1-4 years before a new product is ready. On the other hand, if I worked at Ben and Jerry’s I would undoubtedly be huge. I guess staying in my current position is a good trade-off to fit into my skinny jeans (on most days).
I thought I would address a question that we get all the time, in the tasting room, amongst our wine Club members and with potential new restaurant or independent retail accounts that we are pitching. “Your wine is at _______??” (insert Safeway/Vons, Lucky's, Costco). The tone of the voice can often be one of disdain.
My answer to that question is an enthusiastic “Yes!” and then an under my breath “Thank _____.” (insert whatever deity/higher power you believe in).
The signifigance of the grocery chain has grown significantly over the last few years, and is so very, very important, especially in these economic times. Restaurants are struggling as dining out has become a luxury. People are eating in more often and therefore buying more at the grocery store. Grocery stores are doing more to become “one stop shopping” for their customers, expanding their offerings in all categories to include higher end, “gourmet” or “luxury” types of items. For example—I use a shampoo called Pureology—something I could only get at the salon or a special store. Safeway and Target now carries it. Also, specialty and local breads from Watsonville and Santa Cruz is carried at my local Safeway and Costco.
This trend obviously expands into the wine department. About 2 years ago, Clos LaChance was lucky enough to get a meeting with the beverage managers at Safeway. The “Cluster 1 and Cluster 2” (newly remodeled or new stores) stores that have expanded wine sections (with approximately 1,000 different wine SKU’s, no joke) took on three of Clos LaChance’s Hummingbird Series Wines. Those are our best selling wines now—the Zinfandel, the unoaked Chardonnay, and the Cabernet Sauvignon. Not just via Safeway, but through other channels too…restaurants and other wine shops.
In my little control group of 1, I would venture to say that the awareness of those three wines has increased significantly over the last two years because of the exposure at 200+ California Safeways and Vons, among other things. So when I get a restaurant I am pitching that asks if our wines are in the chains, I say yes! And that’s a good thing because now people will recognize our name on a wine list. And those that recognize the name are more likely to order it.
However, the great thing about Clos LaChance is that we also have wines that are not in the chains (because of the small volume) and are only available at the winery or a couple of restaurants/specialty retailers (those that are buying right now, which are not many). So there is something for everyone. Our Estate Syrah, Grenache, Petite Sirah, Cabernet Sauvignon, our Vineyard Designates—the Biagini Pinot Noir and Chardonnay, Lila’s Cuvee, etc. I could go on and on. In total, Clos LaChance over 30 different products. Considering Clos LaChance’s total volume (approximately 60,000 cases annually), we are talking about 26 different, small lot (under 500 cases produced annually), artisan-type wines (we have 6 wines that are made inm qantities over 1500 cases).
Having the three wines that we do in the chains helps sell through the other, more expensive products on wine lists or in specialty retail shops. Customers recognize the name and the brand because of our broader distribution. And recognition is half the battle when it comes to marketing Clos LaChance—especially considering that we have 50,000 competitors (there is at least that many wineries in the world….probably a lot more. Couldn’t find an answer to this question online.)
Sometimes the chains offer some pretty amazing deals—especially at this time of year. At Safeway, they have a “Club Card” that gives incredible discounts across all departments—sometimes “2 for 1” offers (I got one of those this weekend on pickled jalapenos, go figure).Wine is certainly no exception. Knowing what I know about wine pricing and the distribution channel, the store and/or the distributor is making little to no margin on these deals. It doesn’t matter who is losing money at this point (well, it would matter if it was me, but it’s not)—all the matters is that the customer is getting a good product at an unbelievable price.
So when people call me and say “Wow, your wine is only $7.99 at Safeway, that’s almost half off!” I tell them…BUY IT. The pricing comes down so much because of larger deals our distributor makes with the account that are often across other brands. It moves wine, and raises awareness of our brand. Most people that drink it are amazed at the price (“I would have paid more $ for that!”) and keep coming back for more. These prices tend to be 30 or 60 day programs, so they won’t last forever.
I also get the question “Aren’t you afraid that the low price will bastardize the Clos LaChance brand?” I personally think that the only thing that will ruin a brands reputation is bad wine in the bottle. Everything goes on sale every once in awhile. Does that make you less likely to buy it in the future at the regular price? Maybe, but not if you have some brand loyalty.I tend to stock up on things when they are sale, but I don’t stop buying them all together when the price goes back to normal. If I get a wine for eight bucks, but it tastes like it is worth fifteen? Point me in that direction.
As for our wine club, we really try and focus on sending out wines that are not widely available. 90% of the time that is the case, no problem. Sometimes, when we are grasping at something to put in the club (usually a white wine, we only have 5 different white wines) it happens. No problem, give us a call if you have any concerns and we can take care of it. We are working next year to make sure this does not happen…as our Wine Club members are our most important customers and we want to make sure they are getting wines that no one else can get. Ironically, next year will be one of the first years that Wine Club members are the only ones to get our Biagini and Erwin Vineyard Pinots. Yields in the 2006 vintage were very, very low. We have just enough cases to send out to our Platinum Club members. These two wines won’t even be available in the Tasting Room. Fun!
Does any of this resonate with you? Am I in a vacuum here? I would love any feedback.
There is so much more to say on this issue, which I will get to in future blogs. Thanks for listening to my rant and go buy some wine!
This week everyone at the winery has been in a tizzy. This weekend is our second annual Art and Wine Fair. The weather is gorgeous, we have over 50 artists and a few food vendors AND it is the Santa Cruz Mountains Winegrowers Association's Passport Weekend (all Passport holders receive a complimentary tasting and a free glass).
We are expecting a big crowd. But I don't think we have ever been so organized and ready for it. We brought in extra bathrooms and we bought 2,000 new glasses. Our gift packs are arranged "just so." Melanie is making posters! And Cindy is the puppeteer, directing people and furniture, wine and cash registers.
If you are in town, please come by this weekend. It's an all hands on deck scenario, so if you know someone who works at the winery, most likely they will be here this weekend. 11-5pm. Please click here for more information and a list of the artists attending.
Melanie makes a poster showcasing personalized labels.
Dominic and Natalie pose with a pallet of new glasses and the SCMWA passports.
We picked the last of the grapes (except for anything Late Harvest) on Thursday, right before the rain. The crew is really excited about the Cab this year...the low yields made the flavors go through the roof. Looking forward to releasing that 2008 Estate Cabernet Sauvignon in three years.
We had a little bowling, beer and pizza celebration after the grapes were brought in. To spice it up, we added a little Halloween costume contest into the mix this year. First place got about $350 cash....(part of a pool we all threw in), second and third, some wine.
I will preface this by saying that yes, I am a poor loser (I came in second). However, my costume was completely homemade AND wine related. Anyways, next year I think we need a more offical voting system...I HATE losing to a blow up doll.
And the winners are.....
3rd Place, Winemaker Stephen Tebb, a bottle of Clos LaChance WIne (with his lovely wife Kathleen as a bunch of grapes).
2nd place: Me, Cheryl Durzy, VP Sales and Marketing, Cork Dork (here with the Murphy clan, Brenda as some kind of weird curly haired dancer, Bill a hippie and Kristin a Sharks fan).
And 1st place, Jason Robideaux, Cellarmaster, as Ken and Barbie.
Clos LaChance had the opportunity to pour at the first annual Wine Bloggers Conference in Santa Rosa on Friday. It was held at the very funky Flamingo Hotel and Resort, which I would totally go back to on vacation. Reminded me of a 1970’s hotel where our family would stay en route to another destination…but it ended up being the best part of the trip. The ground floor rooms opened up to the pool and the layout reminded me of those nights when my sister and I would run around, meet other random kids and play Hide and Seek or something like that. But I digress.
Our role in the conference was to pour one wine for the Live Blogging Tasting—i.e. 150 people (a mix of bloggers and sponsors, probably about half and half) sitting at 15 tables, getting 5 minutes with each winery plus 1 minute to write. It was very loud, a little chaotic, but fun in a way. I personally read about 5 or 6 wine blogs regularly, so it was interesting to meet some of those people face to face.
We had to pick only one wine to pour—so we brought out the 2005 Estate Cabernet Sauvignon. I walked and talked for 90 minutes while Sean from Benson Marketing Group (thanks!) handed out stuff and kept me flush with fresh bottles.
One of the things I have been reading about on various blogs and heard discussions about at this event was that old wine media is dead/dying and wine blogs are the way to capture eyeballs. I admit that I have been experimenting a bit with our media samples list—I added a few bloggers this past shipment, just to test the waters.
A few thoughts:
1.We (and every other winery out there that has wine to sell) send our wines out to publications for scores. I keep my fingers crossed for a good score—and if I get one, I crow about it to anyone who will listen—we put it on the web site, we put it in the tasting room, we tell our distributors etc—in hopes of selling that particular wine and increasing the value of our brand. And a good score = Point of Sale marketing: a shelf talker (that little piece of paper that goes under the bottle in a retail store) or case card (usually a full sized document pasted behind a case stack). Retailers love nice looking POS—it helps sell the wine without much work on their part. Anyways—to get to the point, I have yet to see a shelf talker with a bloggers score/quote on it. Wine Enthusiast, Wine Spectator, Parker and Wine & Spirits still rule, along with Connoisseur’s Guide (puffs!) and some local pubs in various markets (the SF Chronicle, Chicago Trib etc).
2.James Laube of Spectator, Steve Heimoff at Wine Enthusiast, Robert Parker of The Wine Advocate…these guys also have their own blogs. So they are in a sense old media AND new media. Which just raises the volume of their voices louder then anyone else.
3.The wine blogs that I read the most tend to focus more on issues in the wine industry—personal opinions on wine industry news and somewhat controversial subjects (drinking ages always seems to get people fired up). I also like the in depth discussions about wineries and people. Some blogs focus entirely on a tasting room experience, but digs down deep into it. I just don’t see blogs as the best place for wine ratings—yet. Hence my experimentation with the samples.
In any case, I think the conference was a good one. I was glad we got to participate and enjoyed meeting the bloggers. It will be very interesting to see how this new media translates in the future for this industry and ultimately the producers themselves.
A few of the reviews for our Cab from the bloggers I tasted:
We held our Annual Investor's Dinner on Monday here at the winery. About 100 people attended, and a great time was had by all. Bill, Stephen, Cheryl and Paige spoke about the overall "state of the winery," Harvest 2008, sales and marketing, and our growing private label business.
Le Papillon did the food. It was incredible, as usual. The pairings were spot on and the presentation was gorgeous. We also debuted our new retail items....clothing and gift packs.
Click here for pictures of the event, the food, the people and the fun.
The menu, prepared by Scott Cooper of Le Papillon in San Jose. If you haven't been there, you must go. It is a wonderful dining experience.
Passed Appetizers:
Housemade Mortadella with Grain Mustard
Lobster Brandade w/ Browned Butter Vinaigrette
Trout with Dashi Cream in Fillo
Truffled Hamachi Tartare with Preserved Lemon
Lamb Terrine with Horseradish Sabayon
First Course
House Smoked Sturgeon with Rasin-Almond Relish and Lemon Emulsion
Paired with 2005 Liebeler Vineyard Chardonnay
Second Course
Roasted Breast of Mary’s Organic Chicken with “Coq au Vin” Jus & a Foie Gras Biscuit
Paired with 2005 Biagini Vineyard Pinot Noir
Third Course
Duck Ballotine with Chestnuts
Paired with 2005 “Lila’s Cuvee” Special Selection Series Rhone Blend
Fourth Course
Braised Shortribs of American Kobe Beef with Parsnip Puree & Pressure Cooked Cocoa Nibs
Paired with 2005 Special Selection Series Meritage
Cheese Course
Vermont Cheddar with Dried Apricot & Lavender
Paired with 2006 Estate Late Harvest Semillion “Nectar”
Dessert
Black Mission Figs with Chocolate & Zin Syrup
Had a great dinner earlier this week...it was at the winery and hosted by us for a group of media from Europe. CordeValle provided all the food. Here's the menu:
Amuse: Marin Gold Brie with Huckleberry and Port sauce, paired with Amber's Cuvee Sparkling (new release coming soon!)
Watsonville Artichoke Soup with Crisp Pancetta and Lemon Oil, paired with 07 Sauvignon Blanc
Semolina Dusted Crab Cake with Fennel Celery Root Slaw, paired with 06 Santa Cruz Mountains Chard
Prosciutto wrapped Angus Beef Short Ribs, Butternut Squash, Potato and Blue Cheese Gratin, Pomegranate Port Wine Jus, paired with our 2005 Estate Cabernet Sauvignon
Spiced Warm Apple Dumpling, Mascarpone Cheese, Whiskey Carmel Sauce, paired with our 2006 Late Harvest "Nectar" Semillon
OND stands for October-November-December. It is our busiest season (usually about 40% of our business happens in the OND timeframe).
It is only the first day of October, and I can already feel the pressure of OND start to build. And in the midst of it all, harvest is in full swing and the grapes are steadily being brought in for processing.
A few snippets of things going on here at the winery:
-Paige is working with Dimitar and the bottling team to bottle and label up 9 different products, today. It takes about half an hour for EACH label change on the line. And this is if things go smoothly. She has also been on the phone with a client and label printer dealing with "issues."
-Kristin is dealing with a vineyard customer that is angry about not getting the fruit yields he was hoping for. No comment...just click here or here or here.
-Melanie is working on closing a big corporate holiday gift program. Keep your fingers crossed.
-Cindy just ran Wine Club, so her phone hasn't stop ringing with people updating their credit cards, changing addresses, canceling (we hope not!).
-Colleen is dealing with our sales reps requests and trying to help them with computer issues. As well as developing the International channel for the brand. She's getting ready to go to India and Korea this year!
-Linda is plugging away at "retro-fitting" our accounting systems to be more streamlined.
-Cheryl is writing this blog entry, doing label approvals for the next vintages, running end of month and quarter reports, reviewing orders and depletions, filling out forms for potential National Account placements, writing sales materials, creating POS. And has her fingers in (or has at least heard about and expressed her sometimes wanted, sometimes unrequested opinion on) all of the above.
-Bill is playing golf with a customer today, left after the third hole to come back to the winery to help with the corporate presentation, then went back to playing. Should be on about 14-15 by now? Tough work, but someone has got to do it (I need to learn to play golf).
-Not sure where Brenda is, but she's on email somewhere.
-Stephen and Ben are bring in grapes, grapes and more grapes. Stephen cut his hand pretty badly yesterday while giving a retailer a tour. He is doing one handed grape sorts today.
-Dominic is celebrating his Saturday today (since he works on the weekends).
I am sure there is a lot more, but I have got to get back to multi-tasking. Welcome to OND!
The weather has cooled significantly. We had a number of dramatic heat spikes in the early part of the month. The cooling trend has slowed things down, which is perfect. The sugars can catch up with the flavor development of the grapes. The tonnage is still looking pretty light, but from what we hear, that is the story with most wineries around the state due to the Winter/Spring growing conditions. But low yields can often mean more concentrated, robust wines. Things are tasting that way thus far.
More details straight from winemaker Stephen Tebb:
And this video is proof that no matter what our winemaker says, he is always working very hard. We recorded this today, September 24, despite what Stephen says in the video.
At this time of year, our vineyard manager Ben Scorsur is very concerned about the birds. Birds love to eat sweet grapes. So when the sugars get high enough, the birds flock, ready for a feast of a lifetime.
For many of our small vineyards, Clos LaChance uses bird nets. The Estate Vineyard is much too large for nets. They are expensive, take a lot of labor to put on and take off, and birds do get caught in them from time to time. Last year, Ben looked into more sustainable bird control options. He came up with what I like to call the Squawk Box.
The Squawk Box is a series of distress calls from different types of birds, on tape. A horror movie for birds, if you will. Turn your volume way up and check out this video. The device is located up in the tree.
And voila...no birds! It seems to be working. It replays every 30 seconds or so. Although the birds do get smart, so Ben and his team move the box around the vineyard from time to time.
It's officially the harvest season! Our first few bins of Estate Sauvignon Blanc came in on Monday, August 25. Winemaker Stephen Tebb gave a nice toast....and sabered a bottle of sparkling to officially start the 2008 Crush. Tom took this great video of the monumentous event.
This makes me wonder about other wineries' harvest traditions. We always do a toast over the first bin of grapes. We also have Family Dinners, Crush tee-shirts, a Bocce Ball/Bowling event at the end of the season with slideshows and a hilarious awards ceremony hoasted by Stephen. This year we added a "Family Day" event at the winery...since we have so many employees here with young kids.
