StateWays is the only magazine exclusively covering the control state system within the beverage alcohol industry, with annual updates from liquor control commissions and alcohol control boards and yearly fiscal reporting from control jurisdictions
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StateWays | www.stateways.com | July/August 2017 9 BUSINESS w i n e I am a voracious reader and spent a lot of time digesting books on sales and marketing. In 2002, I was impressed by the best-selling book, "Why we Buy: The Science of Shop- ping" by Paco Underhill. I purchased over a dozen copies and gave them to my executive team at the Pennsylvania Li- quor Control Board (PLCB), including the directors of mar- keting and store operations. A few years ago, it was the book, "Contagious: Why Things Catch On" by Penn Professor Jonah Berger that I distributed to my team to inspire them. While it was well over a decade ago, I took my marketing team to learn from leading retailers and industry leaders and see what they were doing right. We visited with the affable Michael Binstein at Binnys Beverage Depot, Sam's in Chicago, Michael Aaron at Sherry Leh- mann, Jeff Zacharia at Zachy's and Total Wine in Claymont, Delaware. Since that time, I have visited hundreds of retails stores and have learned best busi- ness practices from so many talented retail- ers. In particular, I have spent a lot of time and visited every major wine and spirits store in the state of New Jersey. Compe- tition is so keen there, and having studied that market carefully, I believe I understand why certain retailers thrive and others struggle. Some wine retailers effectively trade up their consumers and make sales more profi table, while others stagnate. Trading up your customer BY JONATHAN H NEWMAN It is important to understand that consumers have an ambition for the good life and that wine is an affordable luxury. Selling that more expensive bottle with better profi t margins is one of the most important keys to success. On the other hand, it is important to know your customer and your price points. You can't sell wines that don't fi t the demographics of your store. If you fi nd that special wine for your customer that is a trade up, it's important to intro- duce special wines and create a lasting relationship with your customer. I recently chatted with Chester Mal- loy, who has been at the iconic Circle Liquors in Somers Point, New Jersey for 40 years, about trading-up consumers. "I'm really not working at upselling my customers because you certainly can't make it seem like you're trying to get people to spend more," he said. "It's about service and making a lasting friend- ship with your customer. I ask them lots of questions about what they buy and what they like and start a discussion. I then fi nd a superior wine for them that matches their taste profi le that over-de- livers in every way. I want to make the shopping experience very special." I remember presenting wines to re- tailers after the fi nancial crisis, and 2009 was a bear of a year. Consumers were trading down and retailers watched their inventory carefully because it seemed like the sky was falling down. But since then the ultra premium wine category (in the $15-20 range) has been on fi re, with gains every year. Consumers are feeling better about the economy with the stock market at record highs, unemployment low and infl ation in check. Offering wines with an outstanding Quality Price Ratio (QPR) is the key to success, and this only happens when all three key factors fall into place: Cus- tomer service, superior selection and at- tractive pricing. If you have not focused on this, then you've lost the advantages of the premiumization of wine. The wine consumer is adventurous and willing to discover, therefore knowl- edgeable and enthusiastic staff is a must. And the bottles you want to sell must be nicely merchandised, capturing the con- sumer's imagination with shelf talkers or point of sale materials. One thing for sure is that once you trade up that customer to a more special bottle of wine, they will never go back down. • JONATHAN NEWMAN is widely rec- ognized as a leader in the wine indus- try. As chairman of the Pennsylvania Liquor Control Board, he was the na- tion's largest wine buyer and brought a number of popular innovations to bear, including the Chairman's Selec- tion program and opening of local stores for Sunday sales. Jonathan has received signifi cant industry accolades during his career. Follow him on Twit- ter at @NewmanWine and visit his website: www.newmanwine.com.