Thursday, January 22, 2009

A Period of Adjustment

It was Tuesday at 11:50AM, Eastern Time. I got a call from someone wanting to know about a place to stay in Italy. I asked them if I could call them back after the new president took his oath and gave his speech. “What you’re listening to that used car salesman?” was the reply from the other end of the phone line.

No matter what your political leaning, we were witness to a rare piece of history that wasn’t cataclysmic. A new era, a time when the torch has been passed to a new generation of leaders. But no, my caller wouldn’t have anything to do with that.

Yesterday in the office, I was overhearing conversation after conversation with our programmers (folks who deal directly with the wineries and importers about their mutual business). I couldn’t believe what I was hearing. We just finished a very difficult quarter for sales and January is traditionally a slow time. A time to catch our breath. To analyze our year and to plan our new year. But no, these well-rested (and well-tanned) winery folks wouldn’t have anything to do with that. They wanted to send palate after palate of overpriced wine into already bulging warehouses. As if they have been taking a siesta these last six months and think things are just as they have been. Business as usual. What a rude awakening they are in for.

The blatant reality is out in the streets. For two nights this week I have been in high-dollar Texas steak houses. And they have been empty. No one is picking up $150 Napa Cabs. They just aren’t. Sorry folks, but if you were to get away from your computer screen and go out and see for yourself, we wouldn’t have to push back so often.

Oh, I get it; the owners want to move their inventory. They’ve made big investments. We have to find a way.

Yes we do. But no we cant. Not right away. Not this time. If those same folks who were mocking the events in our nation’s capital had been listening that day, they would have heard that we all are going to have to make sacrifices. All of us. Well, the end of the line consumer already is making sacrifices and they still want to drink wine. But they want to be able to afford to pay for it. What is so wrong with that and why as marketers, do some of our colleagues not “get it?”

I sat in a few meetings lately and my mind wandered off. I wasn’t hearing any new ideas. I wanted to think we could brainstorm, but I seemed to be picking up the feeling of desperation from people who have run out of ideas and just wanted us to take their products off their hands. Or else.

Or else what? They’ll take their products to another house? As if the conditions on the other side of the road are any different? Large or small, these times are calling for new ideas, for folks willing to sacrifice their margins, or their pride, and get on with the show. Make ‘em laugh.

I heard the story of an uber-wealthy Napa Valley wine producer. They make a red that sells for $80-90. So already you can surmise their business isn’t tearing it up. But sitting in a second floor office with a 360 view of the vineyards on a beautiful winter day in Napa Valley, how can the sale manager not think the rest of the world is equally blessed. “Just take your allocation. Or else.” That’s the extent of his strategy?

Or else what? You’ll surprise all of us with an original idea? You’ll come down, off your lofty perch, and get on the dance floor? You’ll actually talk to a front-line retailer or one of those struggling steakhouses and make them see the sense of your argument? The evil of their ways?

And importers, too. They’re thinking Obama is going to save their world? Obama is drinking Prosecco, so now Prosecco will outperform Champagne. Poor, poor Franciacorta.

Or the Tuscan producer whose basic Chianti Classico has been designed to sell for $25? Now it’s not selling so well. But of course it is the fault of us here in America for not understanding the value of their product. Value is not the driving force. Money is. And money has dried up. Disappeared.

The French and the Italians, too, are being unbearably thick about this situation. This is not the time to cast a deaf ear. Don’t believe me? Just walk around Manhattan and see all the empty restaurant spaces that cannot sell your wine anymore, for any price.

The game is still the game. Folks still gotta want to be receptive. Ya dig?


Tracie B. said...

you tell 'em ace!!

'unbearably thick' is the most accurate description i've heard lately, for all of them, not just the fereners.

Anonymous said...

Well said. It's hard to understand why the operative words "creative thinking" aren't pulling at us to bring about change. We are not entitled and we will fall thinking that.

Do Bianchi said...

Obama may be drinking Prosecco (although I doubt he ever opened the case that Zonin sent over the White House).

In the meantime, Berlusconi's cronies were drinking Dom for New Year's!

David McDuff said...

What Tracie said, and then some!

We in the specialty wine retail world have definitely been forced out of complacency in the last year and will only have to get more and more creative to stem the bleeding, I expect, in the year to come.

It's been great to see how many of the small European estates whose wines I sell actually have demonstrated an understanding of the situation, holding back or even reducing their prices over the last couple of years. First, it was in reaction to the ever shrinking dollar relative to the Euro and now -- and it should be obvious -- in reaction to the painfully struggling US economy. They realize that maintaining and supporting their markets in the long-term is more important than raking in the dough in the short-term.

Those who refuse to adapt, who continue to hold up their products as immovable bastions of luxury, are in for a rude awakening.

Anonymous said...

Unfortunately, the Europeans will soon see that it's not just the US in a slump... Their attitude that Europe or the Asian markets will pick up the slack is a pipe dream. Read this article on Bloomberg "Pound Tumbles as U.K. Bank Plan Fuels Concern Crisis Deepening".

There are too many good wines at reasonable prices to maintain these producers' hubris much longer.

Some DO get it, when I recently met Enrica Scavino of Paolo Scavino in Barolo, I asked her "why do you still fly all around 'selling' your wines when you sell everything you have?" She responded, "we want to be ready for the difficult times, help our importer, distributors and drinkers of our wines..."


Anonymous said...


now Enrica will have to convince her importer to get realistic about his practices, such as compelling distributors to buy only from Italy in containers loads and also in regards to the importer's current high pricing model.

That will be a challenge!

Anonymous said...

The operative word is "partnership", particularly when it comes to bearing the burden and especially when addressing the situation. It's not difficult to manage the spreadsheets and still show up in the accounts, but partnership is key.
I love the use of "or else what?" That question should be asked more often, on both sides!

Linda H.

Alfonso Cevola said...

Tracie: you know it , from the street level, eh ragazza?

I wondered about that...

David Mc:
great points...glad to hear it from your p.o.v. - good healing words...

Linda H:
couldn't agree more, having been on both sides of the wall. Go get 'em, tiger!

BK said...

As a consumer, they can all go take a flying leap at a rolling donut as I walk by their stuff and buy something cheaper.

I hope you recommended a nice, umheated castle along a dried up river to the guy who couldn't wait... ;-)

Anonymous said...

Too many wines and not enough money to go around. Let's all take off our rose colored glasses "or else".

M.A. Gunter said...

The game is the always the game, as they say.

But try being a salesman in this climate. We get by, we hit the numbers because thats what's expected, but it clawing and scratching our way there, and even more so than before.

Tracie B. said...

clawing and scratching is right...just to survive...especially when we will be losing revenue from an important part of our portfolio, which shall *eh-hem* remain nameless.

that's right ace, from the streets. can you hear the crickets?

James Taylor said...

Could Obama & Michelle become this generation's Bob & Suze? Some outstanding images on this post. The problems of the wine/restaurant business are repeated in every other sector. Hopefully this period of adjustment will usher in an era of greater responsibility... from the wine industry to the White House.

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