If you want to build a winery brand -- if you want to grow beyond the tasting room and wine club -- you've got to get your product out there. But getting your product out there means retail and restaurants, and it means retailers and restaurateurs telling you what they can sell your wine for, regardless of what you think it's worth.
Let's say the sommelier at Wine & Dine is a model of restraint and lists his wines at only triple wholesale (more is not uncommon). Let's say your Cabernet sells in your tasting room for $20, a 30 percent markup over your proposed wholesale price of $14. So, you'd like to see it on his list for $42. He shakes his head, sadly. He's got Rutherford Ranch -- a Napa Cabernet -- for $30. Same for Kunde, an established name from Sonoma. Heck, he's got Clos du Val for $42. You? A local winery in a region that has yet to win national acclaim? He'd be doing you a favor to list it at $25, and if your wholesale price doesn't allow him to do that, then he can't help you. Oh, and don't forget your distributor -- the one who actually sat down with the sommelier and pitched the wine. He needs his cut. To grow the brand, you've got to be ready to make a lot less per bottle than you would selling in your tasting room. Depending on your production expenses, etc., you may actually end up losing money at first, hoping all the time that sales volume will eventually make the model worthwhile.
And that's just restaurants. Retailers can be harsher still. You may mark up your wines for a 30 percent profit on each bottle -- lots of folks do. But a discount retailer, the kind that can really move wines, may mark up far less, because they know they've got the sales volume to make it work. Less than 20 percent is common, which can lead customers to ask why the wine is so much more expensive at the winery than at Vons. And there, too, you've got the distributor to consider.
And yet...if you can make it work, if the brand hits, then you can really do something. All you need is a way to survive until things take off.
Ira Gourvitz, who owns Fallbrook Winery, had a way to survive -- buying bulk wine in the bottle, adding a customized private label, and supplying hotel and restaurant accounts with their house wine. That gave him capital to improve his winery. Over time, he bought new equipment, hired Duncan Williams, a smart winemaker with a knack for blending to produce a consistent style, and started sourcing some choice fruit. Merlot from the Fess Parker vineyards in Santa Barbara. Chardonnay from the Sleepy Hollow Vineyard in the Santa Lucia Highlands. (Gourvitz, once a grower himself in Sonoma, knew a lot of folks up north. He and Williams started in Santa Cruz and worked their way south on a grape search, and that was how they discovered a winery that couldn't use all of its Sleepy Hollow fruit. "They didn't want to give up their allocation, so we agreed to buy half.") Plus local vineyards where he and winemaker Williams could have a say in the farming.
And the private-label business gave him time to grow the brand. He started with restaurants, getting accounts who had bought his private label to put Fallbrook on their list. To help stay competitive, he turned the local angle to his advantage and dispensed with an in-state distributor, which allowed him to charge less per bottle. "The distributor adds 25 percent. We have a guy who does deliveries in our own truck."
The restaurant accounts grew in number and stature. "The Cohn group pours it, Primavera in Coronado, Osetra, Panevino, Greystone, Fleming's, Donovan's...." Retail was the next step -- in particular, the biggest wine retailer in the country: Costco. "They decided to do a road show, where you have table displays, but you can't taste the wines. They said, 'We'd like to carry some local wines, but we want to see what the response is.' I said, 'This is our chance. Duncan, you and I are going there at ten in the morning and we're leaving at six, and we're going to sell enough wine to get in.' He said, 'How are we going to sell if people can't taste it?' I said, 'Just watch.'
"They had four wineries. Everybody shipped in the same amount -- I think it was eight cases. The show was three days, and we sold the most wine of all. We actually had people buy a bottle, come back, and take a case. We'd stop people walking by, say, 'I'd like you to meet the winemaker from Fallbrook. We won medals for these wines" -- the Chardonnay nabbed a Platinum at Robert Whitley's Critic's Choice Competition) -- "and they're specially priced today.' It was the worst" -- the closest thing to cold-calling in the wine business -- "but I knew we had to win. And we did. Costco said, 'We're just going to try yours.' They bought the Chardonnay for their Morena store, and it sold. They said, 'We'll put Cabernet and Chardonnay in.' It just kept expanding. We're in ten stores with the Cabernet, the Chardonnay, and the Special Selection Cabernet -- we've got three bins. Their bottle price has to be cheaper than anybody else's," but since Fallbrook was in very few retail locations, "they had no comps. Now, we ship them 70 cases a week."
Gourvitz knows that something has to get a person to buy that first bottle. The by-the-glass offerings at places like Fleming's and Firefly help. So does the recommendation of "the wine guy at Costco who says, 'Try this -- it sells pretty well. '" But he and his employees still work to get the word out. "We go to almost every wine event we're invited to. At Wine & Roses, six hundred people go by and taste wines." They know how important the medals were in selling folks at the Costco road show, so they enter competitions: the L.A. County Fair, the Orange County Fair, the California State Fair. And they still visit restaurants. "Somebody from the winery is downtown twice a week. It's been four years. I think we're on the right track. It's like anything else: if you keep at it, that's what it's all about."