Why I re-launched my wine business
I've been working professionally with wines for 10 years now and have been fortunate enough to do some cool things, from making wine in Italy to publishing a book in the Republic of Macedonia. Recently I've been taking stock of where I'm up to though and thought I'd share some reflections.
Last month I woke up and had a panic attack. The business I started in my mid 20s was simply not motivating me any more and unless it radically changed was not going to see much of my 30s. I was toying with the idea of giving it up and pursuing something else. I played with countess spreadsheets and forecasts trying to work out what was possible and what wasn't. I questioned this and questioned that and looked at the motivations behind why I started the business and why I was still doing it. I didn't really want to give it up but at the same time I knew something had to change.
As many of you know, the first thing I did was go and work in a gorgeous new shop that had recently opened and, surrounded by fine wines, I passed my WSET exams. It was great. The shop looked the part; it was kitted out with expensive oak racking, slate tiled floors and a tasting table that encouraged people to stay, chat and engage with the product. It couldn't fail.
It did of course. With the onset of the 2008 recession sales dropped off a cliff. It was only a couple of years into the business and having yet to fully establish itself, the overheads soon started to eat into the cash flow. The owner started to reduce stock in order to free up a bit more money, but it dripped in and gushed back out, leaving us fighting the inevitable.
The once glamorous atmosphere of prestigious labels, glistening stemware and luxurious wooden Bordeaux crates took on a depressing feel. We couldn't afford stock and everyone could see it the moment they walked through the door. We put a brave face on it but our excuses and attempts to dress up reality wore thin. The writing was on the wall.
At the time I put it down to bad luck, but the benefit of hindsight has shown me it wasn't really bad luck at all. We would have found it just as difficult doing business in a strong economy.
There are fundamentals about the wine business that seem ever-present and, unfortunately, I see them played out and reinforced each year as people open and close new ventures. A few weeks of poor sales can undermine years of hard work. Of course, I didn't know that then....
I set off again for Italy and started to work on finding a way of commercialising the wine grapes grown in my family vineyards. The more I immersed myself in local wine culture, the more convinced I was of pursuing a career shipping wines. The early learning curve had only emboldened my belief in making it all work.
When I came home I started my business online. I opted out of the physical shop concept. I relied on my website and word of mouth to get me started. It was exciting. I found great wines and I sold them locally in the north west of England. I remember getting a mention by Jancis Robinson in her FT column as the exclusive shipper of Vigne Mastrodomenico's highly recommended 2007 'Likos' and it was all the more satisfying because it was from my family's region and I was the first in the UK to bring it over.
People were intrigued by my growing specialism in Italian wines and as I picked up new customers here and there, I was generally pleased with my progress. It was a lot of fun.
But as the years rolled on it became harder to differentiate myself. I didn't have the capital behind me to import large quantities of wines that would be exclusively available through me, and as the bigger companies started to get to grips with their online proposition, I soon became frustrated at how much difference 50p on a bottle, or £2-3 on an order could make to people. Something had to change, I was in a discount dogfight....a dreaded, unsustainable race to the bottom.
I started to look at other opportunities in the trade and began to write for some print and online publications as a way of highlighting my business, thinking this would be a good way of driving extra attention to my site. The alternative revenue stream enabled me to regularly travel without and continue to expand my knowledge, but (consciously and subconsciously) meant I took the focus off developmenting my e-commerce platform.
In the process though, I clarified a few things about not just myself, but also the things that motivated me into joining the wine business. I wasn't very good at sales and I wasn't very interested in the process of creating clever sales incentives. You know the ones, buy this and get that, cash in your points, become an angel etc. All I cared about was the wine and telling people the story behind it.
To really succeed in the wine business you need a lot of money. You need to buy customers one way or another. Most companies do it with cheap 'first order' discounts, before gradually ramping the margin on each case up, hoping more can't be bothered to cancel their plan than drop off the end. By the time the novelty has worn off you'll have hopefully repaid the cost of recruiting you and some more.
It is a business model and strategy I have no interest in pursuing. It is a space I have no interest in being in. Such a massive industry is inevitably competitive but these on not the terms on which I want to play.
So...to come full circle...
The thing about wine is, most people don't think about it, it's just something to drink, just fermented grape juice. It is only a tiny few who become so consumed, so absorbed by the subject that they have to know the micro details of every single wine, region, grape and producer. These obsessed, haplessly romantic souls usually end up in the wine trade, lamenting the state of play and searching for the magic answer. Some get by, some don't.
I'm probably one of those souls, more interested in the product than in business, sales and marketing. I had to ask myself what made me special and where was I genuinely adding value to my customers. It was tough to take, but I realised I probably wasn't adding value. I was fortunate enough to have some loyal customers who kept coming back, but I couldn't honestly say I was doing anything better than any other merchant.
When I analysed my motives and aspirations further I realised I have no interest in building a massive mail order business dependent on increasingly aggressive sales strategies. I have no interest in building an all singing, all dancing online shop that carries the heavy infrastructure of warehouses and staff and is required to send out daily, even twice daily email campaigns tweaking open, click and conversion rates.
I had to change things. I immediately reduced my stock and changed my website. I added some personality back into my communications and my writings because I no longer cared about getting more customers. Although so far so good, it was a difficult decision to pivot my business. For almost 10 years I had been doing things according to certain plans and principles, had made investments in websites and infrastructure in order to be able to operate in a certain way. To say to myself (and others) that I'm going to change it and this change will reduce its size and appeal probably goes against the advice of a hundred different business books. Yet I'm happier with my choice and
Many will say that this unsustainable or unscalable, that it's just a hobby and not a business. They are probably right. But knowing the limitations of an industry and of your resources can save a lot of time, money and heartbreak. The fact is the industry changed around me, the environment changed and the competition changed. In today's rapidly unfolding business world, being able to adapt is crucial. Deciding to keep my wine business small and concentrate on providing a much better service to a smaller number of people has already given me a new shot of motivation and the operation already feels lighter, more flexible and more efficient.