The Wine Business Institute at Sonoma State University recently joined forces with Pierre Lincoln’s Somm Digital, a specialist digital marketing consulting agency located in Napa, to survey wineries about their digital marketing experiences. The team surveyed 257 wineries across the nation, and the results indicated that while wine businesses understand the need for effective digital marketing strategies, many operations lack the knowledge and advertising budget needed to compete. The research revealed many areas needing improvement in the U.S. wine industry, but thanks to the efforts of this project and the school’s wine business programs, students at the university will be well-positioned to take advantage of these opportunities.
Somm Digital’s Founder, Pierre Lincoln, said, “we have to share knowledge...and help companies embrace digital marketing.” He likened the task of being rebels on a mission to change the status quo, which illustrates the revolutionary aspect of the new online, e-commerce reality.
Social media is one area of the digital marketing landscape that most wineries have adopted in some fashion, and 98% reported having a Facebook page, but the results demonstrated that while businesses are marketing across social media platforms, they are not using their resources effectively. Twitter is over-represented, video is under-represented, and the lack of understanding regarding the effect advertising has on rank and placement causes many businesses to miss opportunities.
According to winery responses, less than five percent of sales are currently conducted online, indicating significant room for growth in the e-commerce sector. As state regulations are relaxed to allow more interstate shipments, the ability to sell directly to consumers online will become an integral part of wine sales strategies, and digital marketing is the key to reaching potential clients.
Wine clubs and tasting rooms have been the backbone of direct to consumer retail sales for wineries, and one of the challenges faced with e-commerce sales is avoiding competition with one’s label and compromising existing wine club sales. Some strategies mitigate these risks and starting this semester, students in Professor Lincoln’s BUS467W Wine E-Commerce and Direct Sales course will be well-versed in these tactics.
Surprisingly, 36% of businesses reported spending nothing on advertising, and 75% of respondents spent less than 100 dollars per month. As Mr. Lincoln said, “that’s less than a bottle of wine per month,” and this is not enough to sustain a digital marketing campaign. Businesses in other industries typically spend at least 1,000 dollars per month to remain competitive.
Digital marketing with video platforms is another area of opportunity for wine businesses, and as Mr. Lincoln said, “Youtube is underused” and the platform should be a priority because “it has massive reach and low cost.” The fact that many businesses are not capitalizing on the potential for video marketing presents a golden opportunity. Many students have high-quality video skills, and these talents can be harnessed to fill industry needs.
Search Engine Optimization, also known as SEO, is one of the most important yet least understood aspects of digital marketing. Only 45% of respondents stated that they utilized SEO strategies for their business. As Mr. Lincoln said, “SEO is complex” and “companies need to go beyond Google Analytics.” To successfully rank, companies need to follow the perpetually evolving updates, rules and requirements of the elusive Google algorithms.
Half of all wineries reported using an in-house source for most digital marketing strategies, and 45% stated that lack of knowledge was the biggest obstacle to success. These areas represent a weakness for the industry as it currently stands, however, they can be seen as a vital opportunity for business graduates looking to launch a career by filling the dire need for talent in the field.
According to USA Wine Ratings, there are 3,674 wineries in California, representing 47% of the wineries in the U.S., and 3,189 of these are classified as very small wineries. The Wine Institute reported that California wine sales hit $40.2 billion in 2018, and direct to consumer sales grew 9% to “over 6 million cases sold with a retail value of $3 billion.” These statistics indicate substantial financial opportunities in the industry, and programs offered at the university are preparing students to fill these roles.
Sonoma State has a rich history of collaborating with the wine industry to educate students about upcoming trends and strategies while providing fresh talent to the wineries through internships and new-hires. The Wine Business Institute was founded in 1996 after leaders in the wine industry approached the University and requested a specific wine business curriculum. Thanks to those efforts, Sonoma State became the first University in the nation to offer a wine business undergraduate degree program in 1998, an MBA in 2008, and an Executive MBA in 2012.
The unique wine business programs offered by the University are accentuated by the campus’ proximity to the premier wine growing regions of Sonoma, Napa, and Mendocino Counties. Students have the opportunity to learn from and work with industry leaders, and as the survey results indicated, the wine business needs talented digital marketing experts.