Wine Clubs are considered one of the most important features that most wine businesses can establish for themselves with little effort. The addition of a wine club not only increases high-margins direct sales but offers a variety of other benefits to your customers and wine lovers.
In 2016 the Silicon Valley Bank (SVB) and their wine division estimated that wineries producing less than 5,000 cases needed to sell 70% through direct sales in order to break even. It is estimated that less than 30% of wineries in the US currently have an active wine club, and yet it accounts for more than 60% of profitability for a business.
If you don’t have a club, now would be a good time!
While these wine clubs offer incredible value for customers and the winery alike. Here is why your business should really have a club by now.
Club benefits to wine businesses
Increased customer base
The most valuable relationship a wine business can have is through direct-to-consumer sales (DTC). Wine Clubs are prime examples of how these direct sales can be done. Once a client has ordered wine through your wine club, loyalty toward your brand is much higher and this directly contributes to expanding your customer base. This is also the perfect opportunity to build strong, special, and personalized relationships with each customer.
When it comes to selling wines, word of mouth matters.
Minimal overhead costs
Selling wine to customers via retail stores, local restaurants, or even directly through a tasting room at the winery creates several different costs for a business. When selling wine through a wine club, however, there are minimal staff costs and running costs. A few hours of effort is all that’s needed to send 500 or 2000 club packs, with software doing most of the work for capturing payments, sending communications, and tracking each delivery.
Better margins lead to better profitability
The inclusion of subscription revenue to your business also means a predictable cash flow from these bulk direct sales. This is important since it does not only mean higher margins, but it also increases repeat purchases.
Compared to other direct sales channels (eg. the customers who purchase wine directly from the winery) it has been shown that wine subscriptions can increase your business’ revenue by up to 16 times per year.
Increased customer loyalty to your brand
Wine deliveries sent to your club members remind them about you and their first encounter with your business. Acts as a gentle reinforcement that your business is worth a purchase, and a perfect opportunity for you to get them to talk about your product and their experience with you.
Wine clubs sales generate 10 to 12 repeat purchases on average. That’s 10-12 opportunities for each customer to reminisce and share their experience. This is invariably a solid (and very exclusive) communication channel for you to secure more air time at the dinner table!
Club benefits to wine consumers
Take the hassle out of buying wine
In a retail shop, there are simply too many products, and each varies greatly in taste and style. Studies have shown that much like car-buying, consumers despise shopping for wine and are usually disappointed by their purchase. As club members, consumers subscribe to the piece of mind of a steady flow of reputable products, conveniently shipped to their door at an agreed price. Wineries take the complexity and uncertainty out of the retail buying experience.
Connect with like-minded people
When it comes to something as committed as a wine club subscription, members are interested buyers that are indulging in your best offer. Members also appreciate being part of an exclusive, or elite group, which some wineries leverage by offering access to dinners or special early tasting, allowing to “meeting other members”.
Access to exclusive wines
For many consumers, buying a bottle in a retail store is much like buying a mass-produced car, or a pair of shoes. Being a club member, however, allows the discovery and purchase of products otherwise difficult to come by. Some wineries even offer some products to “members only”, further contributing to each member being proud to share such a special wine with friends and family.