J Vineyards & Winery Improves Business by Monitoring ItselfBy Deborah Gage | Posted 2005-07-08 Print
The 9/11 attacks dried up the market for J Vineyards' sparkling wines. Sure, it could cut costs. But it really needed to figure out what it could sell instead, and to whom.
It was the 2001 grape harvest in Northern California, the season everyone in the wine industry lives for. Nobody was celebrating at J Vineyards & Winery, just south of Healdsburg on the edge of the Russian River Valley.
Al Qaeda's attacks on New York and Washington, D.C., a few days earlier had crippled the market for the fine sparkling wines that were the 250-acre winery's flagship product.
Robert Watkins, on the job for three months as vice president of sales and marketing, was calling on potential customers in Indianapolis when the attacks occurred. Unable to fly out of Indianapolis International Airport, which was flooded with passengers trying to get to Chicago, he drove 250 miles west to the St. Louis airport and paid $200 to a fellow traveler to jump ahead to the front of the line at the ticket counter. When he returned to Healdsburg, the winery was planning layoffs. Ultimately, around 10% of employees would lose their jobs.
"The wine business is on a 10-year cycle," Watkins says. "The dot-com bust had started a down cycle, and 9/11 confirmed it."
How could J Vineyards survive?
CEO Judy Jordan and general manager Bruce Lundquist posed that question to the 40 or so employees at an emergency meeting in the winery's elegant Bubble Room, named after the kinds of wines the company sold. The room, overlooking the gardens at J Vineyards, is normally reserved for visitors to taste how J's various wines pair with appetizers made fresh daily by the winery's chef.
Within six months, they were told, J Vineyards had to cut $700,000 in costsmore than 7% of its revenue. And it had to find ways to boost sales, even in this downdraft.
J Vineyards had little to sell customers other than sparkling wine. Its "still wines"in particular, Pinot Gris, a white wine, and Pinot Noir, a red, which are cheaper to make than sparkling wine and are drunk on more varied occasionshad barely entered production.
And it didn't have a good handle on what was sellingor who on its sales staff was selling it. Quite simply, Watkins didn't know which salespeople were more successful, why customers bought what they did, or how much it cost J Vineyards to sell a case of wine.
Finding out would mean everyone who was left would have to make sacrifices. Many were already working 14-hour days, routine during the fall harvest. Employees then took pay cuts and squeezed costs out of businessfrom recirculating the hot glue used to seal the wine cases to finding a mechanic to repair an obsolete circuit board instead of replacing it.
That helped, but the winery still had to grow, somehow, to survive. With sales of 31,000 cases in 2001, J Vineyards was in the top 20% of 2,034 U.S. wineries, according to the National Association of American Wineries. Part of its plan was to expand production of the Pinots.
Yet, J Vineyards was still small compared to the 50 biggest wineries, which sold more than 370,000 cases each and hired teams of programmers to handle their information systems.
Nonetheless, J Vineyards' management committee, which included Watkins, got serious about using computers and software to capture data to turn around the company.
Over the next four years, J Vineyards invested about $100,000 in hardware and software, double the investment made in 1999 and 2000. The payoff was clear: Armed with a better picture of who on staff was producing and what was selling, J Vineyards built up $13 million worth of inventory in wine, hired about 30 more people, and increased sales by more than 52% from 2001 through 2004, to $14.6 million in 2004.
"From the owner on down, there's always been a willingness to invest in technology," says Dana DiLuvio, J's facilities manager, who is also in charge of information systems. "And it's great that they believe me when I say it's worth it."
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