J Vineyards & Winery Improves Business by Monitoring Itself

 
 
By Deborah Gage  |  Posted 2005-07-08
 
 
 

Harvesting Information

Winemaking is a balance of art and science, says Watkins. Winemakers rely on plenty of technology—they may use Global Positioning Systems to map vineyards so they can plan maintenance on different patches of grapes, or wireless sensor networks to monitor variables like soil moisture and sunlight.

Yet they still depend on their delicate palates to identify the grapes and ingredients they should blend to achieve a winery's signature taste year after year—even though each growing season makes the grapes taste different, and years may pass before the wine they are making is consumed. J Vineyards' sparkling wines, for example, take four years to produce.

Even before 9/11, the pressure on J Vineyards was growing. The winery had thousands of competitors where there used to be no more than 10, as dot-com millionaires from Silicon Valley and San Francisco poured money into Sonoma County wineries throughout the 1990s. Faster and cheaper shipping meant more competition from abroad, from Spain to Argentina to Australia.

One obvious way to increase efficiency—at least to DiLuvio, who started working at the winery in 1996—was to create central repositories for the sales, production and financial data scattered around Excel spreadsheets on an assortment of PCs. DiLuvio's background is in construction, but he was interested in computers and took classes so he could learn to administer Windows servers and networks.

By 9/11, DiLuvio had replaced the winery's sales tracking software with a package from Indianapolis-based eSkye Solutions, which he had installed in 2000. He had also installed new accounting software, Great Plains Dynamics, in 1999. A Windows server sitting on an upside-down bucket in the basement ran a DOS version of the PC-Blend software inherited from the previous owners that J Vineyards used to track production of its wines. But mostly, employees in those days used the server to play Doom, DiLuvio says.

Watkins, however, was committed to computerizing J Vineyards from the time he walked in the door in June 2001. He had studied computer programming at the University of Buffalo and briefly owned a computer consulting firm. In his previous job as national sales manager at Trefethen Vineyards, a maker of cabernets in the Napa Valley, he had developed Notes databases to track purchase orders and work flow. Even during Watkins' job interview, DiLuvio says, he knew Watkins would be an ally.

Within a month, Watkins had talked DiLuvio into dumping Novell GroupWise, the winery's e-mail system, for Notes so J Vineyards could use the database templates Watkins had created at Trefethen. One template, for example, is now used by each salesperson to track the details of his or her calls.

In the first six months after 9/11, J Vineyards cut $900,000 in costs, exceeding its original goal by $200,000, DiLuvio says. To get there, the winery temporarily slashed its capital budget and required employees to run purchases through a purchase order system in Great Plains, now owned by Microsoft.

In the meantime, Watkins scrambled to generate revenue. He hired three salespeople, raised prices and began a flurry of promotions to draw attention to J Vineyards' wines. He and his sales force hit the streets to find new restaurants and retail outlets for the Pinots.

It was only about a year later, he says, that J Vineyards had increased distribution and the financial pressure had eased enough that employees could "breathe." At that point, he was able to think strategically about what data the winery was missing and how he could get it.

A big challenge for J Vineyards back in the 1990s was to get control of the information it did have. The wine industry has been slow to computerize, and even today there is no single set of software products for wineries. Doug Campbell, who developed PC-Blend in 1990 for the Louis Martini winery in Napa Valley, says winemaking is too complicated and the industry is too small to interest big software vendors like Oracle and SAP.

Campbell's software, which he sold to eSkye in 2004, is now used by about 100 wineries, including J Vineyards, to track the composition of each tank or barrel of wine as it ferments. The lab can check, for example, when the winemaker last ordered an addition of sulfuric acid, or when the grape skins were last punched to the bottom to add color to the wine. Sparkling wine is particularly complicated, he says, because the winery may blend and track as many as 400 components.

For sales, J Vineyards uses a different eSkye package—the one DiLuvio installed in 2000—to track inventory, pricing, sales, shipping, invoices, and wine given away at promotional events. That data feeds into Great Plains and, since 2004, is also analyzed by Dimensional Insight's Diver, a reporting tool that tracks account-level sales. J Vineyards must sell through distributors in every state but California, so this information can be difficult to get, and it's a path eSkye chose not to pursue, Watkins says. But if Diver shows that Morton's Steakhouse bought 10 cases of wine last year but nothing in the last three months, a salesperson can try to find out why.

Watkins' two Lotus databases have multiplied into more than 20. The market visit request database, for example, tracks the history of sales calls—not just the salesperson's travel expenses and whom he visited, but how much wine the customer tasted, which ones he bought and what J Vineyards was competing against. Salespeople can enter this data into electronic forms on their BlackBerrys, which feed into the database, before they leave the premises. They are also equipped with portable printers and, soon, digital cameras.

By January 2005, with the winery's retail business at around $4 million, DiLuvio installed Microsoft Retail Management System to track sales in the tasting room and on the Web site. As inventory is depleted, the transactions flow into eSkye, which is the winery's invoice system.

Software for Growth

DiLuvio says he has tried to stick with software packages like Lotus Notes and Microsoft Great Plains that are scalable enough to allow the winery to grow—and even acquire other companies. The CEO of eSkye, Smoke Wallin, says J Vineyards pushed eSkye to move Campbell's Blend program from a Microsoft Access to an SQL Server back end a few months sooner than the vendor would have done otherwise. The move improved Blend's performance, DiLuvio explains, since the winery tracks so much data.

Watkins, meanwhile, wants to use Indianapolis, one of J Vineyards' most reliable markets, to figure out the return on his marketing dollars now that he knows the cost of sales. If he takes four sales reps and backs them up with four billboards, buy-by-the-glass promotions in restaurants, radio spots during the morning and afternoon commutes and a dinner, he figures he should be able to measure how many points he gains in distribution and whether sales go up in retail.

"[Business in] Indianapolis is slow and steady," he says. But a campaign developed in such a stable market could provide a good baseline for tackling mercurial and more expensive markets like Chicago, D.C. or New York.

J Vineyards Base Case

Headquarters: P.O. Box 6009, 11447 Old Redwood Highway, Healdsburg, CA 95448

Phone: (707) 431-5400

Business: Grows and harvests grapes on 250 acres; produces and sells sparkling and still wines

Facilities Manager: Dana DiLuvio

Financials in 2004: Privately held; $14.6 million in sales in 2004, up from $12.96 million in 2003.

Challenge: Find new ways to gather and analyze data to streamline operations and boost sales.

BASELINE GOALS:
  • Increase annual revenue by 12%, from $14.6 million in 2004.

  • Increase cases sold, from 68,000 in 2004 to 72,000 this year.

  • Grow retail operation, which was launched in 1999, from $4 million in 2004.