The power of the cellar door
There’s been a quiet but consistent experiential retail success story in Australia and elsewhere – winery cellar doors. According to Wine Australia’s direct-to-consumer surveys from 2017 and 2018, cellar door sales are growing between 6 and 12 per cent every year and represent up to 44 per cent of direct-to-consumer sales (other direct channels include loyalty clubs, direct mail and phone sales).
Australia is the world’s sixth-largest wine producer and has nearly 2500 wineries. Up to 90 per cent of smaller wineries have a cellar door. (I’ve only visited around 400 of them, so I’ve got a few to go.) According to Wine Australia, approximately two-thirds of Australian wineries produced fewer than 5000 cases in 2018. And the smaller the winery, the more important the cellar door for sales.
Wineries producing 1000 cases rely on direct channels for 68 per cent of sales, and wineries in the 1000-to-5000 case bracket achieved 40 per cent of sales through direct-to-consumer channels. So if cellar doors are approximately half of direct-to-consumer sales, small wineries rely on them for up to one-third of their entire sales. In the US, it’s up to 60 per cent.
So what makes cellar doors so successful as a retail environment? Experience.
Giving buyers a taste
Testament to the power of sampling, according to a Silicon Valley Bank US study, cellar-door sales conversion rates are typically between 63 and 73 per cent. And the way the sampling or tasting is conducted plays a part. Standing tasting bars tend to have lower conversion rates and an average spend of $75, but the highest proportion of visitors. Formal, seated private tastings may be the lowest proportion of visitors but have the highest conversion and a whopping $400+ average spend.
Interestingly, in the US study, paid tastings have a higher conversion rate than unpaid, perhaps because the visitor wants to get their deposit back or the deposit has already counted towards the cost of a bottle. Psychologically, the consumer has already invested. The Wine Australia direct-to-consumer report sample indicates a current paid tasting penetration of 29 per cent.
More than a nice view
Yes, a lot of cellar doors sit in picturesque landscapes. And old European wineries may be situated in castles and monasteries. But wineries are increasingly investing in interesting architecture. The d’Arenberg Cube restaurant in the McLaren Vale is a recent example, along with the crumpled metal, multimedia Loiseum cellar door in Austria’s Wachau Valley, and Frank Gehry’s curved titanium Marqués de Riscal in Spain’s Rioja.
Around a third of Australian wineries offer at least one attraction or service aside from tasting samples and many run tours. Some offer tractor and horseback rides or live music. Art galleries with artworks for sale are common. The Yarra Valley’s Tarrawarra Estate hosts international art exhibitions.
Then there’s the food. A number of winery restaurants are award-winning destinations in themselves. Eighty-six per cent of the 2018 Wine Australia direct-to-consumer respondents offered food in the form of restaurants or platters. However, only 28 per cent offered experiences matching food and wine, so this is an area of opportunity.
Product-wise, many cellar doors often have cellar-door exclusive products. Most also range condiments and other products from local region producers, much of it artisan.
Recent years have seen an increase in the quantity and type of events wineries offer. A number of French wineries offer cooking classes and winemaking conferences.
While Margaret River’s Leeuwin Estate is justifiably noted for its concerts featuring national and international artists, the Day on the Green series has scaled up the idea. Capitalising on the outdoor cinema trend, some wineries, such as Gapsted near Bright in Victoria, have installed movie screens and offer summer movie viewing picnics, with wines supplied by you-know-who.
A 2015 study indicated that in the six months after a visit, over half of visitors bought on average nine bottles of the winery’s wine. Mailing list and club conversion assist here. A US study found that between 10 and 25 per cent of winery cellar-door visitors converted to mailing list.
Forty-seven per cent of the 2015 study participants reported an increase in the quantity of wine consumed from the region where they visited a cellar door, and a very impressive 83 per cent recommended a wine from a visited winery to someone else within six months of their visit.
The idea of a brand launching its own store isn’t new – wineries have been doing it for decades – and continue to up their game.