Farmers’ markets and winemakers: New ways of creating profitability in today’s market

I’ve previously written about the rise of farmers’ markets in the US, and the urbanisation and corporatisation of them in stores like US Whole Foods and Australia’s Thomas Dux. These farmers’ market-style stores are places where shoppers want to go to be as close to the produce, and sometimes the producers, as possible.

I’m talking about stores where shoppers are willing to pay more for better or smaller runs of high-quality items. Organic beans and handcrafted beer, individually grown wheat grass and small batch wine are examples of products that have benefited from shoppers’ desire for quality. It’s interesting to see this market growing when the move to low-priced commodity and retail-own brand is also rapidly expanding.

I’ve also written about cooperatives, farm regions and independent farmers moving closer to small groups of like-minded shoppers in order to maximise the value of their products. Basically, these farmers are selling directly to small groups of loyal consumers either via the web, the farm gate or farmers’ markets. Their target consumers are shoppers who return each time the wine bottle, garlic bowl or craft beer case begins to empty and they want to shop again for that particular brand.

Independent wineries in Australia are also experiencing a period of marked fluctuation. A lot has been written about this recently, particularly about the rise of the AU dollar and retail-own brands hurting their businesses. Medium-sized winemakers are struggling to make money. From the small players, like Brown Brothers, Tahbilk, and Margan, through to the giants, such as Treasury Wine Estates and Casella, these wineries are all working hard to make profit from great produce.

Last week I spent a wonderful evening as the guest of my colleague Brendon Walker, who is a member of Saddlers Creek Club Equus. The club allows people who love Saddlers Creek wines to maintain a relationship with the wine and the winemaker. I love Brendon’s passion for fine food and wine. Prior to joining CROSSMARK, he ran restaurants and bars and has kept that passion alive over the years. He also remains an outstanding cook and wine aficionado.

That evening, I sat with around 50 diners in a private area at Matt Moran’s latest restaurant, Chiswick, in Sydney’s eastern suburbs. Great food and wine was brought together in an engaging, interesting and entertaining way by the winemaker, Nick Flanagan, and his team.

Throughout the evening we learnt, talked, tasted, laughed, consumed and shared our opinions on the wines. At the end of the evening many of us bought very good wine at a fair price from the guys who make it. The winery benefited from hearing their loyalist, core shoppers’ feedback on the new wines Saddlers Creek was making and ideas they had for wines they had not yet developed. And it appears to be a very successful formula.

According to the Saddlers Creek website, its Equus Club accounts for the majority of its wine sales. It states: “We in fact sell 85% of our wines directly to our loyal band of wine-loving customers.”

It seems that this is becoming the norm for many high-quality small and medium-sized wineries if they are to stay profitable. Tahbilk’s Wine Club reportedly sells about 65% of the total Tahbilk branded sales direct to its club members. Having been to an evening like this I can see why it works for the winery and the shopper.

I know a little about wine (just from consuming it over many years). Apparently, if you treat vines too gently, give them lots of water and nutrients they become complacent and grow leaves and roots, but not many grapes. If you treat them tough, limit their water and nutrients, they use all their limited energy to reproduce, which means they grow fewer leaves but grow more and better tasting grapes. Maybe this is what’s happening with our smaller wineries. I hope they survive and are sustained by loyal shoppers.

As CROSSMARK CEO, Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores. In this blog, Kevin covers retail news, ideas, companies and emerging opportunities in Australia and across the world. His international career in sales and marketing has seen him responsible for businesses in over 40 countries, which has earned him grey hair and a wealth of expertise in international retailers and brands.

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