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Protecting Your Blind Side: How to Keep Up with Changing Consumer Tastes

Posted on  | May 4, 2012   Bookmark and Share
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Was it only a decade ago that we were all happily drinking our Merlot while barely giving a sideways glance at Pinot Noir? A time when few drinkers had ever heard of Malbecs from Mendoza? When we delighted in ripe, fruit-forward wines without ever objecting to their high alcohols? And who can forget a decade ago when Australian Shiraz was still a juggernaut? Oh yes, and a time when all the experts were predicting a boom in Riesling sales…

Keeping up with changing consumer tastes is not as easy as it sounds, yet making the wrong decisions about what customers want, or not making guesses at all, can have many ill consequences:

• Having the wrong inventory at the wrong time
• Missing out early on volume-buying deals
• Misallocating store display space and location
• Ultimately, losing customers to competitors

We asked a cross-section of retailers and suppliers how they keep ahead of changes in customer tastes. Here are some of their suggestions:

First, decide who you are.

“The wine and spirits business is so fragmented that it’s hard to be successful in every category,” says veteran importer David Milligan of Joanne USA and DM Selections. “For example, we aren’t following those customers who are going into sweeter red table wines. It’s not who we are.”

Similarly, many retailers in recent years have looked at their customer bases and made painful—but savvy—decisions to cut back or abandon their practices of offering Bordeaux futures to customers. Another store in an eastern suburb with few Jewish residents in the neighborhood abandoned their once permanent display of kosher wines and used the space to take advantage of demand for flavored vodkas.

“I tend to spend more money on Burgundies,” says Theresa Rogers of Horseneck Wine and Liquors in Greenwich, CT, “because it’s something that we’re known for locally.”

Follow the evolution of your customers.

Many stores pride themselves in getting to know new customers, however unsophisticated their buying habits. Not only can they move people up the buying chain individually, but the feedback also gives them insight into what customers collectively find intriguing and what bores them.

“Customers always start somewhere, and they are always moving somewhere,” says John Murray, an owner of State Line Liquors in Elkton, MD. “At a certain point, they are ready to move from drinking all whites to trying a Malbec.”

And sometimes, it may not be as much as a change in their tastes as it is change in how they perceive things. Take people who like sweeter wines, such as white Zinfandel, but know it is considered to be socially lowbrow. Enter Moscato. “Sweet wine drinkers have always been treated as unsophisticated, mainly by restaurants,’ says Julie Swift, a sales and marketing executive for Valckenberg. “So when a national chain like Olive Garden puts Moscato on their menus by-the-glass, it gives sweet wine drinkers something new to try.”

“You have to keep your ear to the ground,” says Chris Adams, CEO of New York-based retailer Sherry-Lehmann. “For example, we’re always attuned to special orders of items that we don’t normally stock.” That in part led Sherry-Lehmann to begin offering a wide variety of artisanal spirits. “We’re big believers in regional producers,” he says. But what about their limited production? “When there’s more demand than there is supply, price generally goes up,” he says, practically smiling over the phone as he gives a lesson in  Economics 101.

Listen outside the box.

Listening to customers face to face is obviously valuable, but it’s not the only means of watching for trends. Think “new school,” as in social media. “I follow what is happening in the wine world with online blogs and through social media, which is the easiest way to keep up,” says Gary Burhop of Great Wines and Spirits of Memphis.
And don’t forget “old school,” as in your friendly neighborhood distributors, so you can hear what’s jangling in the supply chain. No new product can slip by you as long as you listen to the pitches being made by distributors.
Trey Beffa of K&L Wine Merchants in Los Angeles believes in keeping his personnel active in the field, where they can see and hear what is going on. But he also believes there comes a time when you need to turn information into action—and lead, not follow, the customers. “Once we’ve made a decision on a product, we need to show our passion and our belief in the product to our customers,” he says.

Think twice before becoming a trend-setter.

Just because you do listen to the supply chain doesn’t mean you have to be the first in your neighborhood to stock everything. There are a couple of things in play here. One, on-premise sales are usually the testing grounds for new products, particularly in the trendy bars. It’s easier for them to experiment by saying, “I’ll try a bottle of something,” and not a case.

Second, within any consumer sales industry, there are early adopters and late adopters, as well as—all too often—people who fail to adopt at all and gradually lose business. Determining which kind of adopter you are depends both on your self-image and your positioning as a business squared with how experimental and responsive your customer base is.

One aggressive Delaware shop owner got into flavored tequilas early—a good move as “they flew off the shelves,” he says-—but he also believed the “green fairy” tales he heard and overstocked early in absinthe. The bottles are still gathering dust.

Learn to manage product introductions.

Practically everyone we spoke to had the same message: Whether it’s about a new brand, a new region, or a new trend,  first test the market.

“You need to handle your inventory, particularly if you have a wide selection,” says Rogers of Horseneck: “Take a case or two and test the waters.”

“Our strategy is buy a little of a lot,” agrees Burhop of Great Wines of Memphis.

“Don’t go heavy on it. Limit what you buy,” cautions Murray of State Line.

At the same time, Valckenberg’s Swift warns of “razor-thin inventories of popular items,” especially if distributors are as hesitant as retailers to stock heavily and take on the financial burden of carrying large inventories. “The pipeline can flow at a trickle, with constant out-of-stock issues,” she says, if neither retailer nor distributor wants to budge, even in the case of increased customer demand.

If you have sufficient volume of sales, taking large-volume discounts—even on introductory items where prices may go up—may make sense and allow you to establish market position. “Discounts are very big in our buying decisions,” says Adams of Sherry-Lehmann. “If it’s good price, good quality and good supply, we’ll get behind it.”

Watch spirits more closely.

Perhaps it’s because spirits, unlike wines, are less likely to be drunk with food and are consumed for their own pleasure. Perhaps it’s because most spirits trends start with young people who are less brand- or category-loyal than older drinkers. Whatever the reason, K&L’s Beffa warns: “What’s happening with spirits changes a lot quicker than it does with wines.” The message is that, with spirits, you may have to move more quickly and more cautiously than with wine.

Keep an open mind.

Beyond all these recommendations on how to keep ahead of changes in customer tastes for wine and spirits, Rogers offers an interesting idea: Maybe we’re looking at the new generation of customer which is more interested in taste profiles than they are about where a wine—or a spirit for that matters—comes from.

“They aren’t interested in whether a wine I recommend is like a Bordeaux,” she says. “They may not even know or care what Bordeaux is. They have a flavor they like and are much less interested in learning its background.” Of course, some stores already display their wines according to flavor profiles, rather than by region or grape variety.
If there is an overall takeaway message from the people we talked with on how to keep up with changing customer tastes, it’s a paraphrase of an old aphorism: “Listen before you leap.”


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