Monday, March 30, 2020

New video: Rob McMillan talks about the future of the wine industry

In the latest edition of Intoxicating Conversation with W. Blake Gray, I welcome Rob McMillan, one of the leading experts on the business of wine, to talk about how the wine industry is and will be affected by the pandemic.

Rob is Executive Vice President of Silicon Valley Bank's Wine Division, and he is well known for his annual State of the Wine Industry presentations.

So much has changed since he gave his last presentation in January that I thought it was time for an update.

Rob and I talk about the trends we see already, such as wine shipments and certain types of retail sales being up, as well as the impact of the disastrous situation for restaurants. We also talk about the availability of labor, and whether many wineries will be sale when this pandemic finally eases.

I was hoping for these completely unedited conversations to be roughly 25 minutes; that's the email I'm sending to potential guests. I wasn't watching the clock so I have to give Rob the credit: precisely 25 minutes. That's the kind of precision one expects from Rob McMillan. And good conversation too.

I have more of these conversations recorded so you might want to subscribe to my Youtube channel.

Take it away, Rob! Your background is nicer than mine. (That probably is true on multiple levels.)

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1 comment:

Bob Henry said...

Might I modestly offer some post-interview observations?

While the quality of "secondary labels" might rise as more "reserve" level juice is used as an enrichment component, we won't see those 2019 vintage "secondary" wines for two-plus years in the marketplace.  (A marketplace still selling through its 2016 and 2017 and 2018 releases.)

The plight of California farmworkers was addressed today on the front page of the Los Angeles Times.  Found here online:

"Farmworkers face coronavirus risk:'You can't pick strawberries over Zoom.' "


Millennials are more likely to be hourly wage earners (possibly working in service industries such as retail).  Less likely to be salaried workers.  More likely as new college grads to be burdened by student loan debt repayment commitments.  Less likely to have a "nest egg" of savings to tide them over in bad economic times.

And those Millennial wage earners are more likely to be among the first wave of workers furloughed/laid off due to the closure of non-"essential" (retail) businesses, as shopers adhere to "stay at home" directives to diminish the spread of COVID-19.

Wine is an elective purchase, not a necessity when you are without a paycheck.

(Updated dour statistic: the number of new unemployment claims over the past two weeks exceeds 10 million.)

In the consumer packaged goods industry, the rule-of-thumb is that a grocery store shopper will expend (on average) about 2 seconds reading the front label of a product positioned on the shelf.  No guarantee that the shopper will pick up the product and read the back label.  (That's about the same time spent reading an outdoor billboard while driving down the road.)

Retaining existing (say, mailing list) customers -- the "low hanging fruit" -- is more important than acquiring first-time customers.  Underscored by this often recited business statistic:

Excerpt from The Wall Street Journal “Marketplace” Section
(November 26, 2008, Page B6):

“Marketers Reach Out to Loyal Customers”


By Emily Steel
Staff Reporter

"It’s an adage of the business: Persuading a satisfied customer to return is cheaper than attracting a new one.  Now, in the struggle to do more with less, that concept is becoming even more important.

"Acquiring a new customer costs about five to seven times as much as maintaining a profitable relationship with an existing customer, says Marc Fleishhacker, managing director at WPP’s Ogilvy Consulting . . ."