Early Bird Ends
Nov 20, 2019
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Creating a national on-premise wine brand requires a fundamentally different mindset from creating a national off-premise wine brand. The off-premise side of the market is all about product, price, and performance. In contrast, the on-premise side of the market is all about relationships, trust and providing solutions to business problems. For a high-end restaurant, bar or hotel to add your wine brand to its wine list, there has to be a deep-rooted belief that your wine brand is a powerful source of business advantage. So how, exactly, do you create these types of relationships with on-premise establishments?
Without the right preparation, it’s impossible to create a truly successful national on-premise wine brand. One starting point for this preparation is simply to understand what types of wines these on-premise establishments are looking for, and how your wines can become part of this overall portfolio. In other words, how can you help restaurants fill holes or address gaps in their overall range of offerings?
According to a recent 2016 survey of 110 casual dining chains around the country, the size of an average wine list is surprisingly small. The average casual dining chain offers 20 wines by the glass (BTG) and 22 wines by the bottle (BTB). Moreover, that list of wines is actually even smaller, because the typical wine list includes two or more options for each varietal. As of 2016, for example, the average restaurant offers 3 different types of Chardonnay and Cabernet Sauvignon as well as 2 different types of Pinot Noir, Merlot and Pinot Grigio, both BTG and BTB.
These numbers should help you understand the competitive landscape. Restaurants already have plenty of Chardonnay and Cabernet Sauvignon options, and if you decide to pitch them exactly the same wine, you might just find that they are a very unreceptive audience. Instead, you should be thinking about pitching them something that they don’t already have in their portfolio. Moscato, for example, is a very hot category right now, and on average, casual dining chains only offer a single Moscato, both BTG and BTB. That might be a more competitive point of entry.
Moreover, part of the preparation process needs to take into account the type of on-premise establishment that you are planning to pitch. In the example of fast-casual dining chains, for example, Sangiovese is a varietal only carried by Italian fast-casual restaurants. Likewise, a Tex-Mex or Mexican fast casual restaurant would theoretically be much more receptive to red blends from Spain (e.g. a Tempranillo from Rioja), while a big national steakhouse chain would be much more open to the idea of hearty red wines that offer diners an alternative to Cabernet Sauvignon (such as a big, bold Malbec from Mendoza).
As part of your preparation, too, you need to think carefully about what you are trying to achieve by going national and getting your wines into restaurants, bars and hospitality venues around the country.
Perhaps the best reason to launch a national on-premise wine program is simply as a brand-building tool. If you consider that 80 percent of all wine sold on-premise is sold BTG, this should be intuitively clear. The same restaurant patron that might blanch at the thought of paying $20-$30 for a bottle of wine for a varietal that he or she doesn’t recognize is much more amenable to trying that varietal at a much lower price point (i.e. under $10 BTG). Thus, by going national, you are exposing your brand to more people in a wider geographic area. Those same people who order your $10 BTG wine at a restaurant and enjoy it are going to be much more willing to purchase a full bottle at retail.
And that naturally leads to the second major reason to launch a national on-premise wine program: to take some pressure off your standard retail channel. In retail, you might be facing extreme pricing pressure just to stay on the shelf. That’s not the case when it comes to the on-premise market, where markups for both glasses and bottles of wine are fairly standard, and high-end restaurants are actually willing to pay a premium for wines that they know their customers will enjoy and order.
Finally, there are just simply certain products (such as dessert wines) that will sell best in a restaurant or hospitality environment. If your portfolio of products includes an ice wine from Upstate New York or Canada, for example, that product might have very little appeal outside of a narrow geographic region. However, what happens when that ice wine appears on the dessert menu of a high-end restaurant and comes with a recommendation from the sommelier? You’re much more likely to encounter success.
Now that you’ve given consideration to how and why you are going to become a national on-premise wine brand, it’s time to come up with the perfect pitch to win over a potential buyer. Here’s where things get tricky, however, because the same salesperson who has excelled in an off-premise environment is going to have a lot of difficulty in the on-premise environment. The reason for this is simple: sales success in the on-premise segment cannot happen without a mindset change.
At the end of the day, the off-premise market is all about product and pricing. The risk here, of course, is that price becomes the main “accelerator” for boosting sales. In other words, any time a sale needs to be made, you can simply lower the price and hope for better results. That might be a successful short-term strategy (i.e. helping your sales reps meet their quarterly numbers), but it is very destructive in the long-term because it risks turning your artisanal or unique wine into a commodity.
In the on-premise market, the focus should not be on price – it should be on adding value to the business partnership between you and the restaurant. In other words, you are not looking for a purely transactional relationship; instead, you are looking for ways to become a source of competitive advantage to a restaurant, bar or hospitality venue.
So what should you include in your pitch? One big thing to keep in mind is that customer service is extraordinarily important. Wines represent only a very small percentage of the overall budget at hotels, for example, and wine managers at these hotel chains want to be absolutely sure that they have your full support. They don’t want to deal with pricing problems, out-of-stock issues, or quality issues. So, at the very outset, you need to make sure that you have the back of the on-premise establishment, and that you are very accessible if any questions arise.
Next, your pitch should focus on the needs of the on-premise establishment. This is more complex than you might think because it requires an understanding of how these establishments work, how they choose wines for their wine list, and what their average customers are looking for. As noted earlier, national restaurant chains are not in need of a new Cabernet Sauvignon or Chardonnay from California. You might be able to get their attention if you have a Cabernet Sauvignon from Washington State, however.
Or, better yet, if you have a product in a category that is catching on with customers, you have a very unique opportunity. One example here is organic wine. At one time, restaurant patrons would never have asked the sommelier about “organic” wine options. Now, however, customers are much more interested in where their food comes from, how it is grown, and how it is prepared. So if you have an organic wine in your portfolio, and are fully prepared to describe how and why it is made a certain way, then you might get the attention of a wine manager looking for an organic wine brand.
The more you know about the broader market, and how wine trend is changing over time, the more likely you are to catch the attention of a buyer with your pitch. At one time, for example, Shiraz was the hot grape varietal that everyone had to have. But according to the 2016 survey of 110 casual dining chains, Shiraz didn’t even appear on the list of typical BTG or BTB options. Instead, both Moscato and Prosecco – two hot and trendy wines at the moment – are showing up on restaurant wine lists.
The larger a national restaurant chain is, the more important that will be placed on supply. These large on-premise accounts simply cannot afford – and will not tolerate – any break in supply. That’s why, when you look at the most popular white and red wines on the list of the fast-casual dining chains, all the “big names” show up on top. The most popular Chardonnay brand, for example, is Kendall-Jackson. The most popular Cabernet Sauvignon brand is J. Lohr Vineyards and Wines. The most popular Red Blend brand is Apothic. You get the idea – these are all wine brands that can offer national distribution and supply in whatever quantity the on-premise chain desires.
So does that mean that smaller wineries and very local wine brands are never going to become national brands? No, of course not. Every restaurant in a national chain, for example, has a selection of wines that are unique to a local location, as well as a selection of wines that are “mandated” by corporate headquarters. Obviously, larger brands have a better chance of winning these mandates, but smaller brands can easily prove their worth at the local level, and eventually become eligible for national mandates. Thus, one starting point for any pitch is simply recognizing how many wines are mandated (i.e. “required”) and how many are at the discretion of the local wine manager.
In pitching new accounts, just realize that not all accounts are created equal. In the best of all worlds, on-premise hospitality accounts should include hotels with a large number of rooms, a lot of meeting space for business travelers, and be located close to the city center. Likewise, on-premise dining accounts should focus on restaurants with private dining rooms, a large outdoor dining space (such as patio or veranda), and lots of foot traffic. Some of the accounts that you pitch should also include “prestige restaurants” that sponsor plenty of wine events, have a large wine list, and have a celebrity chef or sommelier on staff. By focusing on these accounts, you will have the most attractive and most responsive accounts, thereby ensuring your future success.
Once you’ve started to get your wines into a few national on-premise chains, that’s when the hard work really starts. The on-premise industry is all about “service,” and that has significant implications for your soon-to-be national wine brand. You need to make customer service a centerpiece of what you offer your business partner. You need to be able to respond quickly, remedy any issues very efficiently, and act at a moment’s notice. Most importantly, you need to make sure that there is never an interruption in supply.
So, let’s assume that things are moving along smoothly, and your wines have started to show up on wine lists of national chains. Here is where you can continue to offer value. For example, all of the following are examples of an on-premise brand building that offer value for both you and your business partner:
Ever wondered how Robert Mondavi became a famous national wine brand? The winery used two elements to its advantage – staff training and wine dinners. Wait staff training is especially vital if your portfolio includes relatively unknown wine varietals or wines priced in the super-premium range. If wait staff do not understand how and why your wine is different, they will not recommend that wine to patrons. It’s as simple as that.
Moreover, you can continue to provide value to your new on-premise partner by offering promotions. Just keep in mind, however, that every promotion on-premise must be geared to the needs of your partner. All restaurants are looking to increase the amount of foot traffic stopping by each night. They are also looking to increase the average check size of patrons (naturally) and to increase the “incidence” of wine orders (i.e. the number of people ordering wine).
In helping to deliver on these marketing promotions, you have a number of tools, both “hard” and “soft,” at your disposal. The list of hard tools includes things like table tents and dummy bottles, while the list of soft tools includes brochures, product catalogues, brand messages and marketing ideas. Independent restaurants often do not have a designated marketing person on staff and are in desperate need of new ideas – such as wine dinner concepts, Happy Hour BTG promotions, and social media marketing concepts. Here, then, is one area where you can provide immediate business value to the account.
With the right mindset and approach, it is possible to transform a local or regional wine brand into a truly national brand. If you prepare in advance, design a pitch that resonates with specific buyers, offer exceptional customer service, and are focused 100 percent on delivering business value to your accounts, you will have success in the on-premise market.
In the on-premise market, it’s no longer about product and price; instead, it’s all about service, dependability and value. Getting these factors right will convince any national account that you “get” the on-premise market and would make a trustworthy business partner moving forward.