Wednesday, August 11, 2010

Orlando's Long-Term Specialty Wine Retail Survivors? Contrasts in Styles

According to a recent article in the Orlando Sentinel, area residents have shifted their buying preferences to lower-priced wines and are increasingly purchasing these wines at supermarkets and warehouse stores.  The problem for wine stores and wineries alike, as pointed out in a Medill Reports article, is that the market for wines priced between $30 and $100 is in a depression.  While the Sentinel article focused on the impact of these trends on large beverage retailers, such as ABC Fine Wine and Spirits and  Total Wine and More, the specialty wine segment of the market has not escaped unscathed.  The recent demise of Park Avenue Wines and Pierre's (prior to its subdued eastern re-incarnation), the "temporary" closure of The Wine Warehouse, and the consolidating activities of Put a Cork in It, all testify to the pressure being applied to the specialty wine retail segment in the Greater Orlando area.  It is my contention that these pressures will not abate any time soon and that less-well-positioned market participants will continue to fall leaving three or four survivors providing specialty wine services in the core Orlando area.  In this post I will identify the most likely survivors and compare and contrast the styles that have made them successful and that will ensure their continued relevance over the long haul.  Before we continue, however, some definitions are in order.

In the foregoing paragraph, and throughout this post, I use the term specialty wine retailer to identify an entity whose main business is the sale of wine for off-premises consumption and with no restriction as to the location of the purchaser.  This definition thus excludes affiliated wine stores (such as The Vineyard Wine Company and Vines, which both have substantial restaurant-associated businesses) and wine bars (such as Sanford Wine Company) which have retail components but which have substantial on-site consumption through the bar side of the business.

Three of the prime candidates for survival are (WOTW), The Wine Barn (TWB), and Tim's Wine Market (TWM), three entities with significant differences in their business models.  WOTW sells wines rated 90+ via a commerce-enabled web site and special-offer emails to customers on its mailing list.  The company does not have a brick-and-mortar facility.  In addition to the aforementioned revenue generation activities, the company holds two to four large tasting events per year and customer orders emanating from these events contribute handily to the company's revenue stream. There is limited direct marketing beyond emails, promotional hardware, and the advertising value of a logo-emblazoned Smart car.

TWB has a warehouse-style retail outlet just south of downtown Orlando but also has a commerce-enabled website.  The company offers customers products at the "lowest price in the nation" and repeats these offers vociferously and repeatedly via email blasts.  The company provides tasting events of varying sizes to customers at varying times during the course of the year.  The company has extended beyond wines and wine accessories to offering hams and cheeses and has an on-site chef available to help customers with these purchases during the course of the day as well as to prepare food accompaniments for in-store tastings.  TWB deploys a very knowledgeable team to assist customers and has demonstrated expertise in Spanish, Bordeaux, Burgundy, and domestic Cabs and Pinot Noirs.

TWM is one of the oldest -- if not the oldest -- "just wines ma'am" establishments in the Orlando area.  TWM offers its customers artisanal wines from around the world at price points that resonate with today's wine market realities.  Tim Veran, the owner, communicates with his customers in a professorial fashion through information-rich offering emails, a monthly newsletter, and a blog.  As does TWB, TWM offers beginning wine classes to its customers.  TWM eschews events of the type favored by WOTW and TWB and also lacks a commerce-enabled website.  The company closes that revenue gap, extends its brand, and increases its buying power through franchising its name, expertise, and processes to willing wine entrepreneurs.

These three different business models have allowed these three entities to capture customers with aligned needs.  So, for example, if you go to in-store tastings at TWM and TWB, you will encounter a different customer demographic, customer wine expertise, and drinking preference.  For those customers to whom an in-store experience is not critical, but to whom the opinion of prominent experts matter, the WOTW business model is "right up their alley."

The application of these models to the market has resulted in loyal customers who have continued to spend with these companies all through the throes of the recent (and coming?) recession.

No comments:

Post a Comment